MARKET UPDATE
Recent Rent Performance by Floorplan Type
by Jordan Brooks
Market Analyst | ALN Apartment Data, Inc.
2020 is now more than half over, and it has
been a bumpy ride to say the least. In times
of disruption and elevated uncertainty, it becomes
even more important to keep a finger
on the pulse of what is going on below the surface
of market-level numbers. With that in mind, using
conventional properties of at least 50 units, let’s
take a look at how rents have performed for different
unit types from April through July.
Efficiency Units
For efficiency units, average effective rent rose by
a little more than 7%. That number would appear
to be a glowing result given the environment but
bear in mind multifamily is an especially seasonal
industry, and an April through July timeframe eliminates
the traditionally rougher first and fourth quarters
where some gains are likely to be given back.
During the same period last year, average effective
rent growth for efficiency units was around
13%. So, despite impressive growth for the period
this year, efficiency units have seen their effective
rent growth decline more than 40% compared to
last year. One other caveat is that much of this
growth was from lease-up properties. Considering
only efficiency units in properties that were stabilized
coming into April takes effective rent growth
from about 7% to just under 4% for these units.
One-Bedroom and Two-bedroom Units
One-bedroom units have added 2.8% to average
effective rent since the start of April, a two-thirds
reduction compared to the same period last year.
Even so, 2.8% growth at the average was second
only to efficiency units. As with efficiency units, a
note related to new construction is relevant here.
Due to their large share of the new construction unit
mix, one-bedroom units get a little bit of a boost in
their rent growth number as well. For one-bedroom
units in already stabilized properties to enter the
period , average effective rent growth was 1.6%.
Two-bedroom units followed up a 7% gain from
April through July last year with a 1.6% gain in that
time frame this year, a decrease of 78%. A little less
than 30% of units added during that time this year
were two-bedroom units. That is down slightly from
about one-third of units in 2019 and in 2018. For
two-bedroom units in stabilized properties, average
effective rent growth was 0.5%. Interestingly, a
separate group of units, two-bedroom with a den,
were the only subset to lost ground on the rent front
after a decline of 0.9%.
Three or More Bedrooms
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SEPTEMBER 2020 SPECIAL EDITION | www.saaaonline.org