June experiences slowed apartment market levels

The apartment market improved in June.

A report from Axiometrics explained that while the apartment market is still considered to be strong, property management companies experienced a measure of slowed growth during June.

Rent growth was at 0.52 percent during June when compared to May, according to the report. In addition, growth for the year ending in June totaled 3.87 percent. Despite this, much of the impressive growth is concentrated in a handful of cities, such as Houston, Raleigh, Nashville and San Francisco.

"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," said 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."

The overall national occupancy rate rose to 94.34 percent in June, slightly higher than the previous month's figure of 94.28 percent, according to the firm. A large reason for a lack of significant improvement in the figures is due, in part, to most major metropolitan statistical areas already having an occupancy of more than 95 percent for top-level commercial properties. However, much of what is left in these markets would be classified as Class C properties, so there is some ability for improvement.

The report explained that slow rent growth may have a lasting effect on the apartment industry. In 2010, sales climbed during the third and fourth quarters, which may occur again this year. However, with a one-to-one comparison, rent growth would have a year-to-date height of 5.7 percent, which would give it a yearly total of 5 percent at the end of December.

With this in mind, the firm felt that this year should finish much like last year did, with growth expected to be muted, the report added. this will bring the rent effective growth rate to approximately 4 percent by the end of this year, after a growth peak of slightly less than 5 percent.

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