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APARTMENT MARKET UPDATE NMHC HUMAN RESOURCES FORUM

APARTMENT MARKET UPDATE NMHC HUMAN RESOURCES FORUM. AXIOM ETRICS I NC . Jay Denton 14901 Quorum Dr. Suite 600 Vice President Research Dallas, TX 75254 T: 214-953-2242 www.axiometrics.com May 15, 2013. ABOUT AXIOMETRICS. Tracking the Apartment Market Since 1995

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APARTMENT MARKET UPDATE NMHC HUMAN RESOURCES FORUM

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  1. APARTMENT MARKET UPDATENMHC HUMAN RESOURCES FORUM AXIOMETRICS INC. Jay Denton 14901 Quorum Dr. Suite 600 Vice President Research Dallas, TX 75254 T: 214-953-2242 www.axiometrics.com May 15, 2013

  2. ABOUT AXIOMETRICS • Tracking the Apartment Market Since 1995 • Tracks Properties Across 400+ MSAs Every Month • Collects Asking Rents, Concessions, and Effective Rents for All Floor Plans; Occupancy at Property Level • Reports at Property, Comp Set, Submarket, MSA, and Portfolio Levels • Properties Tracked From Planning through Stabilization • Also Tracks Student Housing

  3. CURRENT MARKET TRENDS • National Effective Rent Growth is Good, No Longer Great; Occupancy Rates are Very Strong • Key Economic Drivers – Job Growth Steady, New Deliveries Increasing • NorCal, TX, and CO are Among Top Performing MSAs; DC is Weakest of Major MSAs • Class A Rent Growth is Slowing • Revenue Management Software Continues to Penetrate the Apartment Sector; Results are Compelling • The Threat of Oversupply is the Hottest Topic Source: Axiometrics Inc.

  4. TOOTH FAIRY PAYOUTS:GREAT: $10 FOR TOOTH NUMBER ONEGOOD: $3 EACH FOR TEETH TWO THROUGH FIVE

  5. ONLY 55 TEETH TO GO…

  6. NATIONAL MONTHLY TRENDSTHE NATIONAL OCCUPANCY RATE CONTINUES TO IMPROVE, BUT EFFECTIVE RENT GROWTH HAS BEEN MODERATING SINCE JULY 2011 Source: Axiometrics Inc.

  7. ANNUAL EFFECTIVE RENT GROWTHWASHINGTON, DC WAS ONE OF THE STRONGEST MSAS EARLY IN THE CYCLE, BUT ITS GROWTH IS NOW ONE OF THE WEAKEST IN THE U.S. Source: Axiometrics Inc.

  8. COMPARISON OF HISTORICAL NATIONAL RENT GROWTH AND JOB GROWTH TRENDS Job Growth Rent Growth Sources: Axiometrics Inc., BLS

  9. COMPARISON OF HISTORICAL RENT GROWTH AND JOB GROWTH TRENDS BY MSA Rent Growth Job Growth Rent Growth Job Growth Rent Growth Job Growth Rent Growth Job Growth Sources: Axiometrics Inc., BLS

  10. TOP 10 MSAS FOR NUMBER OF JOBS ADDED OVER THE PAST YEAR; TEXAS HAS TWO OF THE TOP THREE AND FOUR OF THE TOP 15 (AUSTIN, FT WORTH) Job growth in thousands. National data is based on April of each year, but MSA data is only available through March. Source: BLS

  11. MULTIFAMILY PERMITTING HAS BEEN STEADILY INCREASING SINCE THE BEGINNING OF 2010MORE ON APARTMENT CONSTRUCTION LATER Units Permitted Permitting numbers represent the trailing 12-month total. Sources: BLS, Census

  12. RESIDENTIAL PERMITTING BREAKDOWN BY MSA Units Permitted Units Permitted Units Permitted Units Permitted Permitting numbers represent the trailing 12-month total. Source: Census

  13. Strongest msas for rent growth in April 2013 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  14. Weakest msas for rent growth in April 2013 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  15. Annual Effective Rent Growth by MSA for April 2013 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  16. MSAS WITH OCCUPANCY RATES ABOVE 95% FOR APRIL 2013 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  17. MSAS WITH OCCUPANCY RATES BELOW 92% FOR APRIL 2013 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  18. Annual National Occupancy Rate by MSA 1Q13 Results are only displayed for MSAs where Axiometrics tracks 10 or more properties. Source: Axiometrics, Inc.

  19. THE TOP 11 MSAS FOR EFFECTIVE RENT GROWTH ARE ALL IN CA, CO, FL, AND TX Rank is based on April 2013 annual effective rent growth compared to the top 88 MSAs. Source: Axiometrics, Inc.

  20. NEW YORK, LOS ANGELES, BOSTON, AND WASHINGTON, DC ARE AMONG MAJOR MSAS WITH RENT GROWTH LESS THAN 3.0% Rank is based on April 2013 annual effective rent growth compared to the top 88 MSAs. Source: Axiometrics, Inc.

  21. ANNUAL EFFECTIVE RENT GROWTH BY ASSET CLASSCLASS A PROPERTIES WERE LEADERS EARLY IN THE RECOVERY, BUT CLASS C PROPERTIES CURRENTLY HAVE THE BEST GROWTH Source: Axiometrics Inc.

  22. OCCUPANCY RATE BY ASSET CLASSCLASS B PROPERTIES ARE JUST AS WELL OCCUPIED AS CLASS A PROPERTIES; CLASS C CONTINUES TO IMPROVE Source: Axiometrics Inc.

  23. ANNUAL OCCUPANCY RATE GROWTH BY ASSET CLASSCLASS A PROPERTIES HAVE HAD FLAT OR NEGATIVE GROWTH SINCE APRIL 2012; CLASS C SHOWS STRONG OCCUPANCY GROWTH, BUT IT STARTED AT A MUCH LOWER BASE Basis Points Source: Axiometrics Inc.

  24. CONCESSION VALUE BY ASSET CLASSIN DECEMBER 2009, CONCESSIONS AVERAGED APPROXIMATELY 28 DAYS FREE; TODAY THEY AVERAGE LESS THAN 6 DAYS FREE Days of Free Rent On a 12-Mo Lease Source: Axiometrics Inc.

  25. ANNUAL EFFECTIVE RENT GROWTH BY ASSET CLASS Source: Axiometrics Inc.

  26. ANNUAL EFFECTIVE RENT GROWTH BY ASSET CLASS Source: Axiometrics Inc.

  27. ANNUAL EFFECTIVE RENT GROWTH BY ASSET CLASS Source: Axiometrics Inc.

  28. REVENUE MANAGEMENT OVERVIEW • What is it? • Software properties use for tasks such as setting effective rents and managing lease expiration schedules • It is commonly referred to as “airline-pricing” • Why use it? • The programs claim to maximize revenue and “not leave any money on the table” • It creates a more streamlined way to set rents across an organization • Who uses it? • REITs and other large organizations were early adopters, but usage is now widespread • Users tend to be Class A and B+ properties, but more properties in the lower asset class tiers are beginning to use it • What are the Results? Source: Axiometrics Inc.

  29. COMPARISON OF EFFECTIVE RENT AND OCCUPANCY TRENDS FOR PROPERTIES USING REVENUE MANAGEMENT SOFTWARE AND TRADITIONAL PRICING SOLUTIONS Source: Axiometrics Inc.

  30. COMPARISON OF EFFECTIVE RENT AND OCCUPANCY TRENDS FOR PROPERTIES USING REVENUE MANAGEMENT SOFTWARE AND TRADITIONAL PRICING SOLUTIONS Source: Axiometrics Inc.

  31. Lease-Up and Under Construction Units Shading represents % Lease-Up and Under Construction units when compared to existing stock by state Not all units under construction have begun to deliver. The chart is based on data as of May 2013. Sources: Axiometrics Inc., US Census

  32. Planned Units Shading represents % of Planned units when compared to existing stock by State. Not all planned properties will reach the construction stage. The chart is based on data as of May 2013. Sources: Axiometrics Inc., US Census

  33. PIPELINE BY MSA ATLANTA, GA AUSTIN, TX CHARLOTTE, NC DALLAS, TX Source: Axiometrics Inc.

  34. PIPELINE BY MSA DENVER, CO HOUSTON, TX RALEIGH, NC LOS ANGELES, CA Source: Axiometrics Inc.

  35. U.S. NEW SUPPLY AND INVENTORY GROWTHEXPECT SUPPLY TO PEAK DURING 2014 IN THIS CYCLE Sources: Axiometrics Inc., Census

  36. MAP OF PROPERTIES BY YEAR BUILT AUSTIN, TX BOSTON, MA DALLAS, TX DENVER, CO Source: Axiometrics Inc.

  37. MAP OF PROPERTIES BY YEAR BUILT HOUSTON, TX RALEIGH, NC WASHINGTON, DC SEATTLE, WA Source: Axiometrics Inc.

  38. APARTMENT UNITS STARTED NATIONALLY The pace of new starts increased rapidly in 2011 and early 2012, but it began to level-off in the summer of 2012. These statistics are based on conventional apartment units tracked in Axiometrics’ pipeline database. Source: Axiometrics Inc.

  39. TOP 10 MSAS FOR APARTMENT CONSTRUCTIONMORE THAN ONE-FOURTH OF THE NATION’S DELIVERIES WILL BE IN DC, DALLAS, NY, SEATTLE, AUSTIN, AND HOUSTON *Delivery schedule is only based on properties that have started construction. The 2014 total will be higher as planned properties begin construction. **Not all planned properties will reach the construction stage. Note: The delivery schedule is dynamic and changes as construction timelines change on individual properties. The chart is based on data as of May 2013. Source: Axiometrics Inc.

  40. TOP 10 SUBMARKETS FOR DELIVERIES IN 2013 *Delivery schedule is only based on properties that have started construction. The 2014 total will be higher as planned properties begin construction. **Not all planned properties will reach the construction stage. Note: The delivery schedule is dynamic and changes as construction timelines change on individual properties. The chart is based on data as of May 2013. Source: Axiometrics Inc.

  41. CURRENT LEASE-UP PERFORMANCE TOP 10 SUBMARKETS FOR 2013 DELIVERIES *Average absorption per property YTD, which includes a seasonally slow period. Source: Axiometrics Inc.

  42. EFFECTIVE RENT GROWTH IS FORECASTED TO MODERATE THROUGH 2015 Source: Axiometrics Inc.

  43. Disclaimer Notice

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