Apartment market improves with little employment help

The apartment market has prospered.

A report from Axiometrics showed that the nation's apartment market has improved markedly even with employment figures not increasing at rates typical for recovery.

During May, property management companies witnessed effective rents increase 0.74 percent, while that figure jumped 3.29 percent from January to May, the report noted. In addition, the national occupancy rate rose to 94.25 percent from the previous figure of 94.16. The rise brought the rate to its highest point since 2006.

Increased occupancy rates have helped concession values decline significantly, the report explained. May's rate was -2.28 percent. Typically, a level of -8.33 percent would equal a month of free rent per year.

"This summer will provide the first wave of new supply for many submarkets across the country and while, so far, new property lease up is not significantly impacting Class A assets in their markets, it is a trend we will be watching in the coming quarters," said Ron Johnsey, president of Axiometrics. "Unfortunately for apartment dwellers, at this point we anticipate effective rents remaining on their upward trajectory throughout the rest of the year, though continued weak or even negative job growth may begin to moderate some of these increases.

Class A properties fared the best out of any type during May regarding rent growth and occupancy separately, according to the firm. Class C properties still had the best growth when combining the two and examining total revenue during the month and for the first part of the year.

While Class C properties have struggled to fill space over the past few years, these units have improved significantly, the report said. In 2009, nearly half of the 88 markets examined had less than 90 percent occupancy for these properties. However, in May, this fell to only 18 markets.

The nation's multifamily market as a whole should still be on track for a very impressive year, but this may not be known for sure for another couple of months.

"As we complete our updated forecast for the second half of the year in July, we'll have a clearer view of whether rent increases will match our previous, bullish, full-year forecast of 5.1 percent," Johnsey added.

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