M-F Rents Tick Up in April: Matrix Monthly Report
- Apr 29, 2015
Average U.S. multi-family rents rose in April after a slight decline in March and grew 4.3 percent year-over-year, according to the latest Matrix Monthly report on apartment market trends.
The report stated that rents averaged $1,105 nationally this month. That translates to $8.00, or 0.7 percent, higher than the March rate of $1,097. The February rate of $1,108 was an all-time high, according to the report produced by Yardi Matrix.
Strong rent escalation in San Francisco, Portland, Denver and Seattle accounted for much of the April increase, with demand for higher-end product contributing to the trend. All four markets are demonstrating strong job growth, and Yardi Matrix expects the rent escalations in those areas to continue.
“The perfect positive storm for multi-family continues. Good job formation, supply additions that are still reasonable, consumer desire and/or need to rent versus own are all driving continued positive rental performance,” Jeff Adler, vice president, Matrix, told Commercial Property Executive.
Of the top 16 markets in year-over-year increases, 10 are located in the West and four – Jacksonville, Fla., Orlando, Fla., Atlanta and Miami—are in the Southeast. Texas markets—Dallas, Houston, Austin and San Antonio—are clustered around the national average, the report states.
“Strength in the West and South continues unabated, as well as strength in the Lifestyle (higher end) properties,” Adler said. “Suburbs are performing better than expected as well.” He noted that the top 30 metros continue to outperform smaller metro areas.
For the second straight month, Yardi Matrix’s ranking of trailing 12-month rent growth was led by Denver, San Francisco and Portland with Seattle and Sacramento also in the top six. Three Southern markets—Atlanta (4th), Miami (7th) and Orlando (8th)—ranked among the top eight metro areas. Rounding out the top 10 were Houston (9th) and the San Fernando Valley of Los Angeles (10th).
Mid-Atlantic and Northeast metro areas continued to lag, with Washington, D.C, trailing in 31st place and Boston at 26th. But Yardi Matrix data shows that Washington, D.C., and Boston have improved over the last quarter, which indicates they may be moving up soon.
Boston and Washington, D.C., were even stronger in the trailing three-month ranking. Boston rose from 26th place in March to 7th in April with average rents growing 1 percent overall and 2.2 percent in the lifestyle segment. Rents in Washington, D.C., in April also rose 1 percent, pushing it up to 10th in the ranking from 27th, according to the report.
“In D.C., we think we are finally burning off the new supply additions with moderate job growth,” Adler explained. He added that Boston’s numbers may be a seasonal increase after the brutal winter in the region. “We won’t know there for a few more months,” he noted.
Metros that fell in the April rankings included Dallas (from 5th to 15th), San Diego (from 8th to 16th) Las Vegas (from 6th to 17th), Phoenix (from 7th to 23rd) and Chicago (from 9th to 27th).
The report also looked at job growth and supply. San Francisco, Seattle and Denver were cited as markets where the supply growth is about the same or exceeds the rate of job growth. “But pent-up demand and in-migration is good enough that none of these markets should have any problem filling new units,” the report states.
Markets in which job growth far exceeded the supply growth include Atlanta, Inland Empire in California, Las Vegas and Sacramento. “The upshot is demand is expected to be strong, which should produce solid absorption in most markets, despite the rate of growth in supply,” according to the report.
Adler said the team is predicting about 5 percent overall rent growth for 2015, aided by the higher-end properties. “So far, the upper end is holding up better than we expected and the lower end less so,” he told CPE.
Matrix Monthly highlights the results of Yardi Matrix’s monthly survey of apartment owners in 84 of the markets covered by Yardi’s Pierce-Eislen unit. It is used as a business development tool by brokers, sponsors, banks and equity sources that underwrite multi-family investment transactions. Yardi, based in Santa Barbara, Calif., is also the parent company of CPE.