RealPage: US Apartment Market Shows Signs of Stabilization in July

The U.S. apartment market is stabilizing this summer, with steady occupancy rates and modest rent growth trends.

Jordan B. & Han-Gwon Lung
August 09, 2024

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Good morning. The U.S. apartment market is stabilizing this summer, with steady occupancy rates and modest rent growth trends. Some regions are performing better than others, but that’s to be expected.

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🎙️ No Cap Podcast: Tune in Sunday for Episode 5 as we sit down with Michael Mandel, former broker, and CompStak founder, about the impact of data and AI on commercial real estate.

Market Snapshot

S&P 500

GSPC

5,319.31

Pct Chg:
+2.30%

FTSE NAREIT

FNER

784.27

Pct Chg:
+0.95%

10Y Treasury

TNX

3.959%

Pct Chg:
-0.038

SOFR

1-month

5.35%

Pct Chg:
0.0%

*Data as of 8/8/2024 market close.

Multifamily Midyear Pulse

US Apartment Market Shows Signs of Stabilization in July

RealPage data reveals the U.S. apartment market continued to stabilize in July.

Stabler occupancy: The U.S. apartment market continued its stabilization trend in July, with occupancy rates holding firm at 94.2% for the third consecutive month, aligning with historical patterns for this time of year.

Modest rent growth: Effective asking rents saw a modest 0.3% increase in July, slightly underperforming typical pre-2020 levels but surpassing last year’s pace. Year-to-date rent growth for 2024 mirrored that of 2023, with a 2.2% rise. Concession usage stabilized, with about 14% of units offering discounts, though the average concession period ticked up to 28 days.

In the West: Apartment occupancy is nearing a plateau, declining only 10 basis points year-over-year to 94.6%—still over 100 basis points below the 10-year norm. Coastal markets like Orange County, the Bay Area, and San Diego maintained stronger occupancy rates above 95%, while non-coastal markets such as Phoenix, Salt Lake City, Las Vegas, and Denver remained below 94%.

In the South: Apartments are s feeling the effects of high supply, with 18 of its 65 key markets, including 10 in Florida, experiencing both monthly and annual rent declines in July. Texas markets like Austin and San Antonio continue to see rents drop sharply, while Charlotte and Raleigh/Durham bucked the trend with consecutive months of rent increases. Atlanta, however, saw rents fall by 0.5% in July, marking a nearly 5% year-over-year decline.

➥ THE TAKEAWAY

Looking ahead: As we move into Q4, apartment owners and operators can expect occupancy rates to remain stable, with coastal markets in the West continuing to outperform their non-coastal counterparts. The South will likely continue facing challenges from high supply levels, though the surge in new construction that peaked at a 40-year high last year will begin to taper off.

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✍️ Editor’s Picks

Now Available On-Demand: Join Travis Watts, Director of Investor Development at Ashcroft Capital, as he delves into their “Mark-to-Market Value-Add Approach” and how this approach redefines value-add strategies in Class A multifamily properties.
Sunshine living: According to a survey by Clever Real Estate, Tampa Bay leads the nation as the top place to live in 2024, due mainly to its affordability compared to other major FL metros.
Shaking things up: Zillow’s long-time CEO Rich Barton stepped down for COO Jeremy Wacksman after the company’s sixth consecutive quarterly loss of $17M in Q2.
Carlyle’s CRE haul: Storied manager Carlyle raised a record $3.4B for real estate investments, marking a 17x increase from the firm’s Q1 earnings.
Master AI in real estate: Join this 3-day, 1-hour-per-day bootcamp to learn how to leverage AI. Ideal for capital raisers yet valuable for everyone in real estate. (sponsored)
Earnings report: Marcus & Millichap posted a $5.5 million loss in Q2 due to slowed property sales but remains optimistic about future recovery with a potential interest rate cut.

🏘️ MULTIFAMILY

Renters downsize: Manhattan renters are embracing downsizing, with the average new lease size down 9.5% to 945 SF (or $85.03 PSF), with average rents hovering around $4.3K.
Columbus reigns: Columbus, OH, is now the most-searched city online for home buyers across the country, with views per property at 2.4 times the national average.
Senior shortage: In Massachusetts, senior housing is facing down severe shortages with long waitlists, and many older residents have been left out to dry.
Multifamily boom: AvalonBay paid $95M for a 306-unit complex in Englewood, part of Denver’s multifamily resurgence after a temporary investor freeze.

🏭 Industrial

Trio of deals: Tempus Realty Partners purchased several industrial properties in Maryland, Alabama, and Wisconsin totaling 424.66 KSF on 36.84 acres for $29M.
Changing hands: Longpoint Realty Partners just purchased the seven-building Montville Industrial Park in NJ for $81.8M, as reported by CoStar.

🏬 RETAIL

Retail REITs thrive: Retail REITs collectively raised their 2024 outlook on strong leasing as well as high occupancy and rent growth, outperforming the broader stock market.
Grocery-anchored growth: DLC and Meadow Partners acquired the 91.5%-leased Penn Mar Shopping Center in Washington, DC, with major national tenants.
Retail Olympics: French retail, particularly in Paris, saw a post-Olympics decline with Procos reporting a 2.5% drop in store activity.

🏢 OFFICE

River revival: Chicago Development Partners aims to acquire a River North property for residential conversion, offering 145 apartments in a $17M deal.
Price plunge: Ellis Partners and Flynn Properties bought a 108.8 KSF office in San Francisco for $35.6M (or $327 PSF), or $26M less than its last sales price in 2014.

🏨 HOSPITALITY

Pipeline prosperity: Hilton (HLT) reported a record pipeline in Q2, with 508K rooms, $422M in net income, $917M EBITDA, and 3.5% RevPAR growth globally.

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📈 CHART OF THE DAY

According to CoStar, Southwest Florida’s multifamily market may soon experience a decade-high vacancy rate due to an ongoing supply and demand imbalance that has yet to be addressed.