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Market Reporting that Matters

September 2017 REIT Report

Apartment REIT Performance Steady in September

Market performance among publicly traded apartment REIT portfolios mimicked that of the entire U.S. apartment market by holding steady in September. Annual effective rent growth and occupancy were both relatively unchanged from August’s figures, according to apartment rental data from Axiometrics, a RealPage company.

September’s rent growth of 0.9% was the same as August’s rate – and as the September 2016 figure. REIT rent growth has remained within a 52-basis-point (bps) range during the past 13 months.

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The gap between national and REIT rent growth tightened slightly, to 123 bps in September, as nationwide rent growth fell to 2.1% while the REITs remained the same.

REIT portfolios in Houston recorded strengthened performance in the wake of Hurricane Harvey, just as the market as a whole did. Occupancy increased 100-190 bps among the four apartment REITs with a Houston presence. Effective rent growth, though still negative in all four REITs, was up 97-517 bps. Houston rent growth for all apartment properties was 0.2% in September, the rental data showed.  

The Metropolitan Statistical Areas and Metropolitan Divisions among Axiometrics’ Top 50 apartment markets with the highest annual effective rent growth in August were:

  • Sacramento, CA (6.5%)
  • Las Vegas, NV (5.9%)
  • Nassau-Suffolk, NY (4.7%)
  • Richmond, VA (4.5%)
  • Jacksonville, FL (4.2%)
  • Phoenix, AZ (4.0%)
  • Orlando, FL (3.9%)
  • Fort Worth, TX (3.8%)
  • San Diego, CA (3.7%)
  • Seattle, WA (3.6%)

 MSAs underperforming the national average included:

  • Dallas, TX (1.9%)
  • Charlotte, NC (1.8%)
  • Portland, OR (1.8%)
  • Philadelphia, PA (1.6%)
  • Boston, MA (1.6%)
  • San Francisco, CA (1.1%)
  • Washington, DC (0.6%)
  • Nashville, TN (0.5%)
  • Houston, TX (0.2%)
  • New York, NY (-0.4)

Occupancy Remains Above 96%

Occupancy was steady in September, as 96.1% of all apartment REIT units were full in September, the same amount as in August and the same as in September 2016. The rate has remained within a 42-bps range in the past year.

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Meanwhile, year-to-date (YTD) rent growth continued its second-half downward slide, falling 84 bps to 4.2% in September, marking the second lowest September YTD rate of this apartment cycle – 11 bps above the 4.1% of September 2013 and 9 bps below the 4.3% of September 2016, according to the apartment rental data.

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September’s YTD growth dropped it farther behind the post-recession average; it was 164 bps below the September average of 5.9%.


AIV, ESS Virtually Tied for Rent-Growth Lead

Aimco (AIV) had the highest year-over-year (YoY) effective rent growth rate among the apartment REITs in September. But barely.

AIV and Essex Property Trust (ESS) both recorded YoY rent growth of 1.8%, but when extended to two decimal places, AIV came out by 1 basis point (bps), 1.77% to 1.76%, according to apartment rental data.

Camden Property Trust (CPT) was third at 1.5%.

AIV had the highest rent growth on an average trailing 12-month basis (ATTM) by a much wider margin. Aimco’s 2.1% average rent growth was 67 bps ahead of second-place Avalon Bay (AVB), while Equity Residential (EQR) was third at 1.2%.

ESS assumed the occupancy lead, with a rate of 96.7% in September. Last month’s leader, UDR, was second at 96.6%, and EQR was third at 96.5%. The lowest apartment REIT occupancy rate was 95.7%, some 81 bps higher than the overall national rate of 94.9%.

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Accessing the Data Files

The data files can be accessed by logging into the AXIOPortal®. Go to the Publications tab, select “Trend Report” under Category, then search for “REIT” in the “Search Publication Name” box. Select “REIT” in the Type dialogue box.

Student Housing REIT information can be accessed by clicking on the Publications tab, then, under Category, selecting “REIT Report” under the Student Housing section.

Please note that Aimco (AIV) does not allow its properties to disclose occupancy rates. Axiometrics readjusts AIV's occupancy data after each quarterly earnings release. Between releases, we apply the average REIT growth rate in each market to AIV's properties. We apply the submarket's average growth rate if there is no REIT presence in the market.

Remember that rent and occupancy levels in those files are not same-store throughout time, but the growth rates are same-store for each month. You may view how the unit counts change at the bottom of the Effective Rents tab. The file with "Rolling 13 Month" in the name represents annual changes by month.



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