Annual effective rent growth on the U.S. apartments market in the third quarter achieved a national growth rate of 3.7%, which was down from 4% in the second quarter, according to new data from Axiometrics Inc.
Axiometrics reports that the apartment occupancy measured 94.5% in the third quarter, up slightly from 94.3% in the second quarter. Class C properties took the top spot for annual effective rent growth during August, while the pace of rent growth for Class A properties slowed from a year ago.
Real estate investment trust properties, which comprise approximately 12% of the Axiometrics database, have increased rents 6.73% year to date as compared to 6.29% over the same period of 2011.
San Francisco and San Jose remained the top markets for annual effective rent growth in the third quarter, albeit with some moderation from earlier peaks: San Francisco's annual growth rate of 11% is down from its peak growth rate of 15% in the fourth quarter of 2011, while San Jose's third quarter growth rate of 8.8% was well below its 14% peak in the third quarter of 2011.
‘Although effective rent growth has slowed, it is still strong by historical standards,’ said Jay Denton, vice president of research for Axiometrics. ‘For the month of August, 35 metropolitan statistical areas still posted annual rent growth of at least four percent and 18 of them had growth above five percent. The slowdown we are reporting for the full third quarter bears watching as we move forward, especially as new supply continues to come online. However, in light of the extremely strong rent growth seen over the past few years, it is not surprising to see some moderation, especially with job growth remaining rather anemic.’