Apartment market growth slows, still posts positive figures

The apartment market experienced slow growth in the third quarter.

Many commercial property managers experienced positive rent growth during the third quarter, but according to a report from Axiometrics, the figure has slowed.

Overall rent growth for the third quarter was 3.7 percent, a slight decline from the previous quarter's growth level of 4 percent. The report noted that rent growth has trended down since the second quarter of last year, when it was higher than 5 percent. For the whole year, there should be total rent growth of 3.6 percent. Despite this, growth should increase through next year.

"Although effective rent growth has slowed, it is still strong by historical standards," said Jay Denton, vice president of research for Axiometrics. "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."

Occupancy rates improve during Q3
Overall occupancy rates rose to 94.5 percent during the third quarter, which was slightly higher than the second quarter's figure of 94.3 percent, according to the report. Additionally, the figure was an improvement from the same three months in 2011, when it was 94.1 percent.

Effective rents also experienced improvements, but not to the level seen during the same quarter in 2011. The report noted that this figure rose 1.3 percent during the period from the second to third quarters, which was lower than the 1.7 percent one year earlier. Effective rents rose 0.33 percent in August, which wasn't significantly changed from the previous August.

Both San Jose and San Francisco led the way for rent growth when measured annually, the report said. San Francisco rose 11 percent, which was down from the market peak of 15 percent that occurred during the final quarter of last year. San Jose had a growth rate of 14 percent during the third quarter of last year, which trended down to 8.8 percent. However, these figures were significantly higher than the rest of the country. Denver and Houston finished third and fourth, with 7.1 and 6.7 percent gains, respectively.

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