Apartment Leasing Rebounds
Apartment leasing proved strong in the third quarter, bouncing back from the limited demand seen earlier this year, reported RealPage, Richardson, Texas.
“While the U.S. economy has a long way to go before it’s fully healed, there’s enough job production to allow new household formation to return in some areas, so apartment demand is back,” said RealPage Chief Economist Greg Willett.
Willett noted apartment leasing activity is still “spotty” by metro and by individual neighborhood, “but the overall story is a good one,” he said.
The report found strong demand for apartments in three Sun Belt metros, Dallas/Fort Worth, Atlanta and Houston. Each area absorbed between 7,500 and 9,000 apartments during the quarter. Leasing activity also was solid in Phoenix, Denver and Charlotte, N.C.
But apartment demand remained weak in some of the country’s most expensive areas, especially those in the Northeast and along the West Coast, RealPage said.
For example, New York suffered 11,705 net move-outs during the quarter. Last week Bloomberg reported that appraiser Miller Samuel and brokerage Douglas Elliman Real Estate said Manhattan apartment listings tripled from a year earlier to 15,923, the largest monthly inventory in records dating to 2006.
The occupied apartment count also dropped noticeably in San Francisco, RealPage said. “Essentially no demand for apartments registered during the quarter across Seattle, Chicago and Washington, D.C., while the increase in occupied apartments was mild in Los Angeles and Boston,” the report said.
The national apartment occupancy rate stands at 95.6 percent currently, a little below the year-ago level of 96.3 percent, which was close to a record high.
The occupied apartment count climbed by more than 146,000 units on net between July and September, Willett said. That absorption pace is more than four times the “minimal” demand for about 34,000 apartments recorded in the second quarter, which normally is the seasonal peak in leasing activity, he said.
Third-quarter demand quarter topped the net leasing volume from the same period a year ago by 8 percent, RealPage reported.
“Apartment owners are pushing to get occupancy as high as possible before leasing activity suffers the seasonal slowdown that occurs during the cold weather months,” Willett said. “In some cases, they are cutting rents in an attempt to capture bigger shares of total demand.”