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Apt Owners to See Outstanding Returns Through 2012

Apt Owners to See Outstanding Returns Through 2012

 
A new report points to continued growth in the U.S. apartment market over the next two years.
 
Dallas-based Axiometrics Inc., a provider of data and analysis on the multifamily housing sector, says strong April performance numbers will help the industry deliver “outstanding returns” for owners and operators over the next 20 months, as effective rent growth and occupancy rates remain at near-record highs.
 
The result most tenants—especially in booming markets—are likely to find their wallets lightened by the rising rental rates.
 
“After what we had seen in the first quarter of this year, our April numbers sound a bit like a broken record — effective rents and occupancy rates continue to grow,” said Ron Johnsey, president of Axiometrics. “Some markets, though still experiencing solid increases in effective rents, have slowed down a bit, but overall the trend is onward and upward. Also, we may be seeing that other regions, which so far had not experienced strong growth in occupancy and rents, are now joining the party too.”
 
Effective Rents
According to Axiometrics, national effective rents increased 0.68% between March and April 2011. Year-to-date effective rent growth of 2.45% outpaced 2010’s rate of 1.96%. While still quite strong, annual effective rent growth declined ever so slightly, from 5.02% in March to 4.96% in April.
 
Rankings for annual rent growth showed that since the end of 2010 there has been a bit of a change in the top performing markets. Specifically, Cleveland had one of the biggest moves up the list, with growth improving from 3.88% in December to 6.25% in April. In addition, markets such as Houston and Orange County have also moved up in the rankings, though their overall growth is still less than the national average.
 
At the other end of the spectrum, several markets, while still growing, have slowed and dropped out of the top 10 markets overall for annual effective rent growth. These markets include Raleigh, Nashville, the Washington, D.C. metro market, and Tacoma.
 
Occupancy Rates and Concession Values
The national occupancy rate increased for the 11th time in the past 15 months. Specifically, the rate grew 33 basis points (bps), from 93.48% in March to 93.81% in April. In addition, the 61 bps growth of the past two months was the best stretch since last April/May of 2010, when occupancy improved by a combined 65 bp. Overall, 10 markets had an occupancy rate of 96.00% or higher in April, five of which were in Northern California and New York.
 
Concession value, the amount by which asking rents are lowered to get to effective rent, declined nationally from 4.39% in March to 4.05% in April (a value of 8.33% is the equivalent of one month free rent on a 12-month lease). The last time there was a lower concession value at the national level was in September of 2008 (3.80%).
 
Markets with high occupancy rates and low concession value in April 2011 included San Jose, Calif., New York and San Francisco, while markets with low occupancy rates and high concession value in April 2011 included Phoenix, Orlando and Las Vegas.
 
Reprint from  OKCREview.com
 
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