Occupancy was up .3 percentage points nationally in the fourth quarter of 2015 and now sits at 95.8%, according to MPF Research, the rental market intelligence division of RealPage, It’s a statistic multifamily owners and operators can smile at, but it’s not the only one.
Rents for new residents of apartment companies jumped 4.8% in 2015, marking the sixth consecutive year of rent increases at or above the norm of 2.7%, with the total price increase reaching 22.5%, MPF shared in a release Monday.
As occupancy rates and rental prices climbed, so too have the amount of units that come online, although not as fast as predicted. A total of 232,168 units were completed across the country’s 100 largest markets in 2015, but that’ still fewer than the 300,000 units initially scheduled, MPF Research states. New supply in 2015 dropped 8% from 2014’s tally of 252,348 units, rather than jumping the expected 20%.
in deliveries is tied to labor shortages in select building trades that are causing a
significant impact on the apartment market’s overall performance, according to RealPage
chief economist Greg Willett. “Pushing back completion dates two or three
months is translating to a longer pre-leasing period for new properties coming
on stream,” he says in a release. “Those new projects are finally opening with
better-than-expected occupancy, and that occupancy premium helps boost rent growth.”
Since there is now a backlog of units in the pipeline, MPF Research states that 2016 could be a huge year for deliveries, as there are currently more than 440,000 units under construction, more than 310,000 of which are targeted for completion this year. If that’s the case, it could top 2015’s total by as much as 34%.
With all those new apartments, rent growth may slow, warns Willet. “That many additions would likely lower occupancy slightly and slow rent growth moderately,” he says. “However, if 20 to 30% of 2016’s scheduled deliveries are delayed until 2017, it wouldn’t be especially surprising to see another year of occupancy and rent growth like 2015.”
The nation’s seven strongest markets for rent growth in 2015 were all found in the West, including Portland at 12.7%, followed by Oakland, Sacramento, Seattle, San Diego, Las Vegas and Denver, all between 7.2 and 9.5%. Check out the rest of the top 15 markets, according to MPF Research, below:
Leaders in Annual Rent Growth for New Residents Year Ending in the Fourth Quarter 2015
Rank Metro Rent Growth
1 Portland, Ore. 12.7%
2 Oakland, Calif. 9.5%
3 Sacramento, Calif. 9.1%
4 Seattle-Tacoma, Wash. 8.6%
5 San Diego, Calif. 7.7%
6 Las Vegas, Nev. 7.5%
7 Denver-Boulder, Colo. 7.2%
8 West Palm Beach, Fla. 6.9%
9 (tie) Atlanta, Ga. 6.8%
9 (tie) Fort Worth, Texas 6.8%
9 (tie) Tampa, Fla. 6.8%
12 (tie) Fort Lauderdale, Fla. 6.7%
12 (tie) Phoenix, Ariz. 6.7%
12 (tie) San Jose, Calif. 6.7%
15 Orlando, Fla. 6.6% .