U.S. Multifamily Occupancy and Rent Growth Stays Stable in August

The US apartment market has been steady for some time now and showed steady occupancy, rent, and revenues in Q2.

Jordan B. & Han-Gwon Lung
September 06, 2024

Good morning. The U.S. apartment market remained largely unchanged in August, with occupancy and rent growth staying stable. However, with supply easing in key markets, growth could be on the horizon.

🎙️ No Cap Episode 7: Co-hosts Alex Gornik and Jack Stone talk with Vikram Raya, CEO of Viking Capital, on how he went from cardiologist to acquiring $800M+ in multifamily assets.

Market Snapshot

S&P 500

GSPC

5,503.41

Pct Chg:
-0.30%

FTSE NAREIT

FNER

821.07

Pct Chg:
-1.01%

10Y Treasury

TNX

3.699%

Pct Chg:
-0.034

SOFR

1-month

5.34%

Pct Chg:
0.0%

*Data as of 9/05/2024 market close.

Apartment Market

U.S. Multifamily Market Stays Stable in August as Supply Slows and Rent Declines Ease

Data from RealPage and Yardi shows the U.S. apartment market experienced another month of stability in August, with occupancy holding steady.

Occupancy holds: Occupancy remained at 94.1% in August, marking the 10th straight month of nearly flat results, fluctuating by no more than 10 basis points (bps) in either direction. The difference between July’s 94.16% and August’s 94.13% was just 0.03 bps. However, occupancy is still down 40 bps compared to August 2023 due to a minor decline in late 2023.

Rent growth: Year-over-year rent growth stayed modest at 0.4%, continuing a trend of sluggish increases over the past 13 months, where rent growth has not exceeded this level. This is well below the nation’s decade average.

Regional leaders: In August, the Midwest (2.9%) and Northeast (2.7%) were the top performers in rent growth, outpacing the national average. Among the 50 largest apartment markets, Milwaukee, Washington, DC, and Kansas City led rent growth, with increases between 3.4% and 3.6%.

Regional laggards: In contrast, Austin recorded a significant 8% rent drop—the steepest decline nationwide. Other Southern markets also struggled with rent cuts, although Phoenix in the West saw similar losses.

Single-family rentals: Yardi Matrix reported that SFR rents dropped by $7 in August to $2,164, with year-over-year rent growth slipping to 0.7%. Raleigh, Kansas City, and the Twin Cities saw gains, while Pensacola, Phoenix, and Atlanta had the largest declines. Occupancy dropped slightly to 95.3%.

➥ THE TAKEAWAY

Setting the stage: Stability remained the focus of the U.S. apartment market in August, with growth on the horizon. As new supply slows and rent declines stabilize, potential interest rate cuts could spark more transactions and optimism, especially in markets ready for rent growth as supply pressures ease.

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✍️ Editor’s Picks

Credit crunch: Banks have just slashed residential construction lending by over 10%, marking the biggest credit crunch for homebuilders in more than a decade.
Sports venture: 76ers and Devils owners partner with CAA to launch a new firm focused on $100B in sports venue projects.
Shelter inflation snag: Shelter inflation is expected to drop to around 2% by EOY, driven by higher housing supply, but could rise again to 3.3% by mid-2025.
Job openings dip: US job openings hit a 3.5-year low at 7.67M positions in July, prompting even more Federal Reserve rate cut expectations for September.
Meeting in the middle: Kamala Harris proposed a 33% top capital gains rate, a modest increase compared to Biden's 44.6%, aiming to encourage small business investment.

🏘️ MULTIFAMILY

Suburbs surge: Q2 revealed a material uptick in single-family permits and construction, led by suburbs and core urban areas, even as multifamily construction faced a slowdown.
Rent rebound ahead: High-supply multifamily markets are slowly rebounding as high demand finally absorbs pandemic-era oversupply, with positive rent growth expected by mid-2025.
Compromising: RealPage will soon offer customers the option to exclude ‘nonpublic’ competitor data in its solutions in the ongoing public saga of renters vs. rent-setting software.
Revamping suburbs: TruAmerica Multifamily secured $150M to renovate 750+ units in Las Vegas and Atlanta, enhancing amenities at Tesoro Ranch Apartments and Junction at Vinings.

🏭 Industrial

Scrap to office: Prologis (PLD) plans to replace a defunct foundry in East Oakland with a 311 KSF warehouse amidst rising industrial vacancies.
Rolling into Texas: Continental Tire just invested $69M in building a new 752 KSF North Texas facility, which is targeted for completion in 2026.
Building community: The Irvine City Council approved a $97M, 110 KSF industrial building for public recreation, set to be the city’s most expensive single industrial sale.

🏬 RETAIL

Private revival: Led by CEO Erik Nordstrom and encouraged by an international JV, the Nordstrom family has made another privatization bid for the department store chain at $3.8B.
Liquidation lament: LL Flooring Holdings (LLFLQ), formerly Lumber Liquidators, plans to liquidate 400 stores and lay off over 1.9K employees after a failed buyer search.
Strip mall success: Ohio-based REIT Site Centers (SITC) sold the Woodfield Village Green shopping center in Schaumburg for $93.2M, the highest-priced retail sale since Neiman Marcus changed hands.

🏢 OFFICE

Calling it quits: Goldman Sachs (GS) may have no choice but to sell 351 California Street at a significant loss, with an expected asking price in the upper $200M range.
AI invasion: While overall tech talent employment slowed down significantly in 2023, AI job demand surged, with top markets including—you guessed it—the San Francisco Bay Area.
Mixed bag: Charlotte's office vacancy rate rose to 14.8% by June, with 1.8 MSF under development. Despite higher vacancies, office sales grew 15.6% YoY.

🏨 HOSPITALITY

Landmark purchase: Marriott (MAR) purchased Atlanta's Westin Peachtree Plaza hotel, along with a 1.3-acre plot of land, for $50M, terminating a long-standing ground lease.
Seaside splendor: Hyatt (H) Regency Clearwater Beach Resort in Florida just sold for $137M, changing hands from Westmont Hospitality Group to Blackstone (BX).