DALLAS, TX--(Marketwired - April 25, 2014) - Axiometrics Inc. apartment market statistics for the first quarter of 2014 show that the increase in urban submarket supply in 2013 steadily eroded occupancy -- and in some cases, effective rent growth -- during the quarter. With more units anticipated to deliver in many of these submarkets (as well as nationally), Axiometrics' analysts are forecasting continued occupancy erosion for the remainder of the year.
Among urban core submarkets analyzed by Axiometrics, the Gold Coast/River North submarket in the Chicago-Naperville-Joliet, IL MSA showed the largest drop in occupancy, reporting a 320-basis-point fall year over year, following the addition of 1,905 units in 2013. Right behind were the Washington, DC MSA's Capitol Hill/Southwest (-2.4% fall in occupancy year over year) and Chicago's Loop at -1.4%. Both of these submarkets, incidentally, will have more new supply in 2014.
While Occupancy Falls, Supply Increases
In fact, not many of these urban submarkets are cutting back on supply, even with falling occupancy rates.
According to Axiometrics numbers, some locations, such as Houston's Montrose/River Oaks submarket, are boosting supply because of continued strong annual effective rent growth -- Montrose/River Oaks' was 3.42% in 1Q.
| MSA | Submarket | Occupancy | Identified Supply | |||||||||
| 1Q13 | 1Q14 | Occ Change |
2013 | 2014 | ||||||||
| Austin, TX | Central | 95.5% | 94.8% | -0.7% | 348 | 1,724 | ||||||
| Boston, MA | Central City/Back Bay/Beacon Hill | 95.7% | 95.4% | -0.3% | 0 | 1,091 | ||||||
| Charlotte, NC | Downtown | 95.4% | 95.8% | 0.3% | 0 | 632 | ||||||
| Chicago, IL | Gold Coast/River North | 95.3% | 92.1% | -3.2% | 1,905 | 868 | ||||||
| Chicago, IL | The Loop | 94.5% | 93.2% | -1.4% | 0 | 953 | ||||||
| Dallas, TX | Oaklawn | 96.0% | 95.4% | -0.6% | 1,102 | 3,271 | ||||||
| Houston, TX | Montrose/River Oaks | 93.3% | 92.0% | -1.3% | 2,971 | 7,288 | ||||||
| Washington, DC | Capitol Hill/Southwest | 96.8% | 94.5% | -2.4% | 629 | 657 | ||||||
| Washington, DC | Downtown/Logan Circle | 95.5% | 94.5% | -1.0% | 150 | 2,123 | ||||||
There are a few exceptions to urban core occupancy declines. Atlanta's Fulton and Nashville's downtown submarkets showed positive year-over-year occupancy change of 0.7% and 1.0% respectively, even with new deliveries coming to the market. Furthermore, both of these submarkets demonstrated annual effective rent growth of 5.67% (Atlanta/Fulton) and 5.61% (Nashville's Downtown/West End/Green Hills) during the first quarter of 2014. Both submarkets will also increase their supply in 2014.
Meanwhile, the Seattle-Bellevue-Everett, WA MSA's downtown submarket, with an annual effective rent growth of 5.75%, added 2,395 new units in 2013 and is forecast to bring an additional 3,743 units on line during the remainder of 2014. This is occurring, despite only a very a slight uptick in occupancy year over year.
But according to Jay Denton, Axiometrics' vice president of research, these submarkets are more the exception than the rule.
"The occupancy decrease within these urban cores isn't surprising, especially given the amount of new supply coming to the market," Denton said. "These submarkets will likely continue to see occupancy drop throughout 2014 in the face of increasing supply."
Slight Uptick in National Effective Rent Growth
The annual effective rent growth was 2.9%, slightly higher than the 2.8% reported in the fourth quarter of 2013, but down from the 3.4% reported in the first quarter of 2013.
Occupancy year over year was flat, mirroring the 94.4% reported in the first three months of last year. Identified supply delivered in 2013 was 155,124 units -- in 2014, the identified units coming online will total 258,011.
Top 20 MSAs as measured by Annual Effective Rent Growth
(Among the top 88 MSAs surveyed)
| MSA | Annual Effective Rent Growth |
|
| Naples-Marco Island, FL | 12.6% | |
| San Jose-Sunnyvale-Santa Clara, CA | 8.5% | |
| Oakland-Fremont-Hayward, CA | 8.5% | |
| Portland-Vancouver-Beaverton, OR-WA | 7.9% | |
| Miami-Miami Beach-Kendall, FL | 7.6% | |
| Corpus Christi, TX | 7.6% | |
| North Port-Bradenton-Sarasota, FL | 7.2% | |
| San Francisco-San Mateo-Redwood City, CA | 7.2% | |
| Denver-Aurora, CO | 7.0% | |
| Cape Coral-Fort Myers, FL | 6.3% | |
| Seattle-Bellevue-Everett, WA | 6.0% | |
| Atlanta-Sandy Springs-Marietta, GA | 5.6% | |
| Reno-Sparks, NV | 5.6% | |
| Oxnard-Thousand Oaks-Ventura, CA | 5.5% | |
| Houston-Baytown-Sugar Land, TX | 5.2% | |
| Nashville-Davidson--Murfreesboro, TN | 5.2% | |
| Austin-Round Rock, TX | 5.0% | |
| Riverside-San Bernardino-Ontario, CA | 4.8% | |
| Sacramento--Arden-Arcade--Roseville, CA | 4.7% | |
| West Palm Beach-Boca Raton-Boynton Beach, FL | 4.4% | |
| National | 2.9% | |
Top 20 MSAs as Measured by Occupancy
(Of the top 88 MSAs surveyed)
MSA |
Occupancy |
| Naples-Marco Island, FL | 97.7% |
| Lansing-East Lansing, MI | 96.6% |
| Miami-Miami Beach-Kendall, FL | 96.5% |
| North Port-Bradenton-Sarasota, FL | 96.5% |
| Oakland-Fremont-Hayward, CA | 96.4% |
| Nassau-Suffolk, NY | 96.4% |
| New York-Wayne-White Plains, NY-NJ | 96.3% |
| Providence-New Bedford-Fall River, RI-MA | 96.2% |
| Oxnard-Thousand Oaks-Ventura, CA | 96.1% |
| San Jose-Sunnyvale-Santa Clara, CA | 96.0% |
| Minneapolis-Saint Paul-Bloomington, MN-WI | 95.9% |
| Nashville-Davidson--Murfreesboro, TN | 95.9% |
| Portland-Vancouver-Beaverton, OR-WA | 95.9% |
| Reno-Sparks, NV | 95.8% |
| West Palm Beach-Boca Raton-Boynton Beach, FL | 95.8% |
| Hartford-West Hartford-East Hartford, CT | 95.8% |
| San Diego-Carlsbad-San Marcos, CA | 95.7% |
| Los Angeles-Long Beach-Glendale, CA | 95.7% |
| Sacramento--Arden-Arcade--Roseville, CA | 95.7% |
| San Francisco-San Mateo-Redwood City, CA | 95.7% |
| National | 94.4% |
About Axiometrics
Axiometrics improves property and portfolio performance for apartment investments. Confident investment decisions begin with reliable, timely information. No one has more accurate, detailed, and up-to-date research on the apartment and student housing markets. Learn more at www.axiometrics.com or by calling 214-953-2242.
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