SAAA Residence Magazine January 2023 JANUARY2023_DIGITAL_Magazine (1)-SG | Page 24

The majority of new properties enter the market in Class A , but some enter as Class B . These are typically properties in more outlying submarkets . So far this year the Class B segment has seen about 900 new units delivered , a little less than in recent years . As with Class A , new supply picked up after summer . Two-thirds of the new units have been delivered in just the last three months .

As with the rest of the price tiers , it was net absorption that differed most from prior periods . Class B properties saw a net loss of more than 650 leased units through November , making 2022 the only year of the last decade in which net absorption was negative at this point in the calendar . It should be noted that conditions deteriorated for this subset primarily since August . The uptick in new supply in recent months was met with a simultaneous slump in net absorption that led to a 2.5 % decline in average occupancy from September through November – more than half of the year-to-date loss .

As was the case for each of the four price classes , rent growth for new residents remained well above the typical range but also fell markedly from last year ’ s dizzying heights . A 7.5 % gain through November for Class B was well beyond anything recent from pre-2021 but represented a considerable slowdown from last year ’ s 18.5 % for the same period . In the last three months , average effective rent has fallen by about 40 basis points .

Class C

Without the same pressure from the new construction pipeline , but with even lower net absorption , an almost 4 % average occupancy decline measured for the Class C group brought the average to just under 92 % to close November . Because last year ’ s roughly 3 % gain was not nearly as large as at the top of the market , this year ’ s loss returned Class C occupancy to where it was in the early months of 2020 immediately preceding the onset of the COVID-19 pandemic . performance has been the worst of the last ten years for this group . The only other year in that period in which net absorption was negative through November was 2013 , but in that year the net loss was less than 100 leased units .

As with the previous two price tiers , this year ’ s 6 % average effective rent gain in the period was much higher than in the years before 2021 but was also significantly lower than last year ’ s mark of almost 16 % in the period .

Class D

After shedding a little more than 1,000 net leased units through November , Class D average occupancy declined by about 3 % to finish November about equal with Class C at a hair under 92 %. Here too , average occupancy has essentially returned to its pre-pandemic level after this year ’ s decrease . Unlike the three other price tiers , Class D properties have managed to add to average occupancy in the last three months – though only to the tune of 20 basis points . Additionally , Class D joined Class A as the only two groups to avoid negative net absorption from September through November , though , by a slim margin of less than 100 units .

Average effective rent growth , while the lowest of the price classes at about 5.5 %, also fell the least from its 2021 gain of 8 %. As with apartment demand , only Class A and Class D have seen any positive rent change since August . Class D properties have added 0.4 % to average effective rent for new residents in that time .