The first paragraph of this article says it all:

The apartment market looks to the end of the year on an uptick after annual effective rent growth improved from 3.60% in October to 3.72% in November.

This appears to mirror the Portland market, as occupancy is strong and rents are increasing at the end of 2012. If you would like a rent survey for your property, let me know.

Happy holidays,

Bernard Gehret

This article is an excerpt from the November 2012 National Monthly Trends Report by Axiometrics, Inc. and reposted on Joseph Bernard Investment Real Estate”s website:

The apartment market looks to the end of the year on an uptick after annual effective rent growth improved from 3.60% in October to 3.72% in November. Annual occupancy growth also grew by 48 basis points (bps) making November the sixth consecutive month with an increase.

The combined change results in forward-looking revenue growth of 4.26%. Annual revenue growth had fallen to 3.97% in August prior to three consecutive months of improvement in a season when growth rates typically slow.
Effective Rent

After slowing each month from April to October, the national annual effective rent growth increased from 3.60% in October to 3.72% in November. The reason for the increase was that effective rents were not lowered as much between October and November this year as compared to a year ago. Effective rents only declined 0.33% this November compared to a 0.48% decline last year. Although the annual growth rate declined throughout much of the year, the changes were gradual between months. National annual effective rent growth began the year at 4.05% in January, peaked at 4.14% in April, and then steadily slowed to 3.60% in October before improving to 3.72% in November.

Effective Rent Growth by Asset Class

Breaking the national rent growth down by class shows the improvement in the annual growth rate can be attributed primarily to Class B and C properties. Class B properties improved from 3.6% annual effective rent growth in October to 3.8% in November. Class C properties performed even better, improving from 4.0% in October to 4.2% in November. Class A annual effective rent growth continued to slip in November, with 3.6% growth, and has declined each month since reaching a 4.8% rate in May.

Asking Rents and Concessions
Nationally, asking rents decreased 0.18% between October and November. Annual asking rent growth ticked up slightly from 2.40% in October to 2.42% in November. Annual asking rent growth peaked in May at 2.61%.

Concession values lowered the asking rent 2.08% at the national level, which is the equivalent of 7.6 days free on a 12-month lease. For comparison, the

concession value lowered asking rents 3.35% last year and 5.01% two years ago.

While Class C properties still offer the most relative concession value, they continued to reduce the usage of concessions throughout 2012. Class C properties were discounting asking rents 5.34% last November, but only 3.57% this November. Over the same period, Class A properties lowered concession values from 1.98% to 1.40%, and Class B properties lowered concession values from 3.16% to 1.94%. The following chart shows the concession value in terms of days free on a 12-month lease. As of November, the average was 5.1 days for Class A, 7.1 days for Class B, and

13.0 days for Class C.

Occupancy Rate

The national occupancy rate decreased 17 bps, from 94.43% in October to 94.26% in November. On a sequential basis, the occupancy rate decline 19 bps in November 2011 and 14 bps in November 2010. In other words, the market is performing very similarly to the last two years.

The sequential growth in occupancy the past few months outperformed the comparable months from 2011. This has led to an improvement in the year-over-year changes. The annual occupancy growth rate peaked two years ago in November 2010 at 163 bps and continued to drop over the next year. Annual occupancy growth slowed to 28 bps by November 2011 and held close to that pace for most of this year. Because of the outperformance in the sequential growth numbers, annual occupancy rate growth steadily improved from 20 bps in May to 48 bps in November despite more than 45,000 new apartment units being delivered during that period.

Of course, those new units primarily compete with

Class A properties which are already 95.2% occupied and showed a decline of 9 bps compared to a year ago. The improvement in the annual occupancy rate for stabilized product was due to the 115 bps increase for Class C properties, which were 92.5% occupied in November. Class B properties were 94.7% occupied in November, an increase of 39 bps from a year ago. Unless Class A and B properties improve to 96.0% or better, it will be difficult for the national apartment market to get back to the 100 bps annual pace.

Excerpt from the November 2012 National Monthly Trends Report by Axiometrics, Inc.
Click here to view the original report, including supporting data, in its entirety.