Last year ended on a high note for the apartment rental industry, as Axiometrics early fourth quarter/year-end apartment data shows an annual effective rent growth of 4.7% in the fourth quarter, which is a seven-basis-point increase from the figure one year earlier.
That increase marks the fifth straight quarter of at least 4.7% rent growth, but ends the three-quarter streak of having at least 5.0% rent growth or above. Rent growth in the third quarter of 2015 was 5.2%. According to Axio’s report, never in the company’s 20-year history has annual effective rent growth been at 4.7% or above for such a long period. Also, the 2015 fourth quarter growth is highest year-end figure since 2005, when effective rent growth was 5.8%, Axio states.
The quarter-over-quarter effective rent grow was -0.6% in the fourth quarter, which is not surprising since there has been negative rent growth at the end of the last four years due to “seasonality.”
The first three quarters of 2015, though, were solid. “Quarters one through three were the most robust period we have seen since before the Great Recession,” said Jay Denton, Axio’s senior vice president of analytics. “Much of the fourth-quarter moderation can be attributed to several Western markets that experienced double-digit rent growth for most of the year but could not sustain that pace.”
After jumping Oakland as the metro with the highest annual effective rent growth among Axio’s top 50 markets in the third quarter, Portland, Ore. retained that distinction in the fourth quarter. Oakland maintained the second position. Those cities were the only markets with double-digit rent growth last year. Also, Axio states, annual effective rent growth was positive in 49 of its top 50 markets, based on number of units. Only Oklahoma City was negative, at -0.6%.
According to Axio’s data, occupancy was 95% in the fourth quarter, which is the highest fourth-quarter rate since the 95.9% at the end of 2000.
Top 25 Markets by Annual Effective Rent Growth for 4Q15
Annual Effective Rent Growth
San Diego-Carlsbad, CA
San Francisco-Redwood City-South San Francisco, CA
Tampa-St. Petersburg-Clearwater, FL
San Jose-Sunnyvale-Santa Clara, CA
Riverside-San Bernardino-Ontario, CA
Fort Worth-Arlington, TX
Las Vegas-Henderson-Paradise, NV
Atlanta-Sandy Springs-Roswell, GA
Los Angeles-Long Beach-Glendale, CA
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
Salt Lake City, UT
West Palm Beach-Boca Raton-Delray Beach, FL
Charleston-North Charleston, SC