MPF Research: Multifamily's Robust 2011 Has 2012 Staying Power
Posted January 5, 2012
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CARROLLTON, Texas - Holding it lead as the best performing commercial sector, the U.S. apartment's overall revenue climbed 5.8 percent in 2011 with effective rents rising 4.7 percent, according to market watchdog, MPF Research Inc.
"While apartment demand has cooled off a bit from 2010's incredibly large volume, it remains very strong," said Greg Willett, vice president of MPF Research, a division of RealPage Inc. Occupancy nationwide rose 1.1 percent to 94.6 percent for the year.
Willett pointed out that most new jobs are going to young adults, who by and large are renters. Given the nature of the debt and credit market, the loss of renters to purchase are running far below the historical norm. As a result, demand exceeds deliveries, a reality further emboldened by development preferences for affordable housing, seniors housing and student properties instead of conventional market-rate apartments.
Willett noted the fourth quarter resulted in regional shifts in momentum, an indicator for what lies ahead this year in select markets. The Pacific Northwest sustained revenue losses that exceeded normal seasonality, he said.
"The backtracking seen during the fourth quarter in parts of the Pacific Northwest likely reflected a correction of pricing that got a little too aggressive earlier in the year," Willett concluded. "We anticipate substantial rent increases in these markets moving ahead, but the Pacific Northwest metros probably won't outperform other parts of the country to the degree that was seen over the past couple of years."
In Texas, revenues jumped 1.6 percent on a quarterly basis in Houston and 0.3 to 0.9 percent in Dallas/Fort Worth, Austin and San Antonio. "While Texas is experiencing an upturn in construction starts, most of that new supply won't begin hitting the market until the last half of 2012 or in early 2013," Willett said. "Right now, demand is topping deliveries by a big margin, and the Texas markets are positioned for apartment revenue growth at record or near-record levels by local standards during the coming year."
On a national perspective, MPF Research is forecasting this year's revenue growth will nearly match the robust results of 2011. Occupancy is predicted to inch up another half of a percentage point and rents should climb 4.5 percent.
With rents down 0.4 percent, Las Vegas was the nation's only major apartment market that lost pricing power in 2011, with rents down 0.4 percent. Total revenues, though, showed a modest uptick, letting the year end with a 1.3 percent rise in occupancy.
Rent Growth Leaders in Calendar 2011
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