The majority of U.S. apartment markets appear to have moderated from their peak effective rent growth levels recorded last summer, according to new data from Dallas-based Axiometrics Inc.
Axiometrics reports that the national sequential effective rent growth from May to June was 0.52%, as compared to 0.76% in the same period of 2011. San Francisco led the country with annual effective rent growth rates approaching 19% for Class A properties.Â
However, the company stresses that this year could be the third consecutive year that the national apartment market posts effective rent growth of 4% or more. One encouraging sign, according to Axiometrics, involves real estate investment trust properties, which comprise approximately 12% of the Axiometrics database – this sector showed stronger year-to-date effective rent growth than other properties, with a current average rate of 6.08% versus 5.68% over the same period in 2011.
‘We will soon know if this is just a one-month blip or if it looks like there will be further softening in the second half of the year, though by historical standards we are still in a strong effective rent growth market,’ says Jay Denton, vice president of research for Axiometrics. ‘Multiple scenarios could play out over the coming months, leading to end-of-year growth rates anywhere from just under 4 percent to as high as 4.7 percent. Much depends on job growth, as well as on new unit deliveries, which are really starting to ramp up.’