Welcome!

Cloud Expo Authors: Liz McMillan, Elizabeth White, Pat Romanski, Roger Strukhoff, Dana Gardner

News Feed Item

RealPage® MPF Research Apartment Market Reports Show Slowing in Rent Growth for the U.S. in 2012

Effective rents for new leases in the U.S. apartment sector climbed 3.0 percent during 2012, according to MPF Research, an industry-leading market intelligence division of RealPage, Inc. (NASDAQ: RP). The annual rent growth pace slowed throughout the year, after the rate of increase reached 4.8 percent in 2011. MPF Research analysts highlight the nation’s latest apartment rent growth statistics as well as other key performance indicators that include a big jump in the number of units that will be delivered over the course of the near term in a discussion found at www.realpage.com/MPFQ4-2012-Report.

Rent growth over the past year remained a bit above the long-term norm of 2.5 percent recorded during the past two decades. An increase of 3.0 percent is similar to the average results posted during past periods when occupancy was sustained at strong and generally stable levels, according to MPF Research. Comparable annual price increases registered most recently from 2005 through the middle of 2008, and before that in the middle to late 1990s.

While U.S. apartment rents declined on average by a little more than 4 percent during the recession, they now have been moving upward for three full years. Late 2012 pricing topped the rates recorded in late 2009 by 10.5 percent.

“Property owners and operators generally aren’t pushing rents quite as hard as they were a year or so ago,” said Greg Willett, MPF Research vice president. “Many on the operations side of the apartment industry have focused on sustaining their very tight occupancy levels during a period when job growth and new household formation have been fairly sluggish at the same time that renter movement has begun to inch up from the unusually low levels experienced in the previous few years.”

More renter movement in the apartment sector mainly reflects households opting for one apartment over another, according to the MPF Research analysis. Loss of renters to purchase in the now-improving for-sale housing market is having only a very small impact on apartment sector fundamentals, the firm’s research shows. “While the number of apartment renters opting to buy is rising a little, it remains far below the levels apartment operators were accustomed to prior to the recession,” Willett said. “Families that have been renting single-family homes, rather than apartments, comprise a big portion of the first wave of homebuyers seen in the cycle. By far the biggest component of the apartment resident base, particularly within large urban areas, consists of young singles living alone or young-couple households. Single-family homes just aren’t the right housing option for many of them, regardless of shifts in the pricing relationship.”

Locations experiencing the biggest jumps in the loss of apartment renters to purchase, in fact, tend to be places where the apartment sector’s overall performance is running above the national norm. The MPF Research analysts cite Texas, the Carolinas, Nashville and Denver as key examples. “The most pronounced comebacks in the for-sale housing market are seen in spots where the overall economy is doing the best,” according to Willett. “That means job additions and new household creation volumes are strong enough to quickly replace any apartment renters lost to purchase. The locations where people are buying homes are the same locations where recent college graduates are getting jobs and young adults who have been at home with their parents are now able to move out and live on their own.”

Average occupancy of 94.9 percent registered in U.S. apartments at the end of 2012, up a tiny bit from the reading of 94.7 percent recorded at the end of 2011. End-of-year occupancy backtracked from the third quarter level of 95.4 percent, reflecting normal seasonality in the performance. When the nation’s apartment occupancy rate bottomed during the recession, the late 2009 figure was 92 percent.

Demand for 112,900 apartments was posted across the country’s 100 largest metros in 2012, according to the MPF Research data. That product absorption figure mildly surpassed completions totaling 91,500 units but was a little less than half of 2011’s demand total and just a bit more than a third of 2010’s unusually strong absorption result.

“It’s not a coincidence that demand eased to levels near the delivery numbers in 2012 for the nation as a whole and across most individual metros,” Willett said. “With the existing stock basically full almost everywhere, the only net absorption of units that could occur in many areas was limited to the demand that came from getting still-limited new supply through the initial lease-up process.”

Among large individual metros, the three Bay Area markets of San Francisco, San Jose and Oakland ranked as the country’s rent growth leaders in 2012. Effective prices for new leases jumped an even 8.0 percent in San Francisco, while upturns proved nearly as strong at 7.7 percent in San Jose and 7.1 percent in Oakland.

With pricing up 5.9 percent, the Denver-Boulder area was the nation’s next-best performer, followed by Nashville and New York which each saw rents jump 5.1 percent. Rents climbed 4.8 percent in Houston, 4.6 percent in Charlotte, 4.4 percent in Portland, and 4.3 percent in Seattle-Tacoma.

 

Rent Growth Leaders in 2012

 
                           

Annual

Rent

Rank

Metro

Growth

1 San Francisco 8.0%
2 San Jose 7.7%
3 Oakland 7.1%
4 Denver-Boulder 5.9%
5 (tie) Nashville 5.1%
5 (tie) New York 5.1%
7 Houston 4.8%
8 Charlotte 4.6%
9 Portland 4.4%
10 Seattle-Tacoma 4.3%
 

Markets just missing the cut-off point to rank as top 10 rent growth performers were Detroit, West Palm Beach, Austin and Orange County. Pricing rose 3.7 to 4.1 percent in each of those locales.

Las Vegas was the country’s sole large market that completely missed out on rent growth in 2012, as prices were cut 1.7 percent. Sizable spots with rent change barely in positive territory were Virginia Beach-Norfolk, New Orleans, Riverside-San Bernardino and Atlanta.

While apartment deliveries in 2012 remained fairly limited by past standards, construction starts did accelerate rapidly throughout the course of the year. The number of apartments under construction at the end of 2012 climbed to 224,000 units across the nation’s 100 largest metros. Some 149,800 of those units are in properties where building is scheduled to wrap up in 2013. The number of units under construction now nearly matches the historical norm maintained from the mid-1990s to 2008. However, the distribution of the future supply is far different from the typical pattern, according to the MPF Research analysis.

  • Markets across Florida plus Atlanta, Phoenix, Las Vegas and Riverside-San Bernardino haven’t fully recovered from the downturns experienced during the recession. Thus, building remains appropriately restrained and well below historical norms in those locales. Those markets, which accounted for just over a fourth of all apartment construction that occurred in the nation’s top 100 metros prior to the recession, now represent just 13 percent of ongoing building.
  • It’s largely business-as-usual in the nation’s comparatively fast-growing economies where barriers to construction traditionally have been moderate to minimal. Building activity is very similar to pre-recession norms across most spots in Texas, the Carolinas, Tennessee and Denver.
  • Very early in the cycle, developers pounced on quite a few places traditionally thought of as the nation’s most difficult building environments, so near-term completions now are scheduled to come in at levels well above the historical norms in places such as New York, the Washington, D.C. area, San Francisco, San Jose, Orange County and the urban cores of Seattle, Chicago and Boston.

Looking beyond what’s under construction now, the backlog of projects in the planning stages is very large, according to the MPF Research analysis. “It wouldn’t be surprising to see starts come in at 250,000 or more units in the country’s biggest metros during 2013,” Willett said. “By the end of this year then, ongoing construction, inclusive of the 74,000 or so units now underway that won’t finish until 2014, probably will be getting close to the high-water mark posted during the past couple of decades.” That earlier cyclical peak was 357,000 units under construction across the nation’s 100 largest markets as of late 1999.

Although MPF Research has some concerns about a brief supply-related bump in the road for the apartment market’s performance during 2014 and perhaps 2015, look for 2013’s performance to prove similar to the 2012 results. “Most places are starved for new product right now, so properties that will complete over the coming year appear likely to do incredibly well, generally without hurting the results for the existing stock,” Willett said. Just having product moving through initial lease-up will translate to a tiny slide in overall occupancy, but the market should remain essentially full.

The firm expects rent growth to again register at about 3 percent, with the potential there that the number could prove a bit higher. “Operator attitudes will influence the final number,” Willett said. “Increasing deliveries will stimulate more leasing activity, and an upturn in the number of people coming through the front door can trigger more confidence on the part of property managers, even if overall occupancy rate isn’t moving in a meaningful way. Also, even the moderately stronger job growth volumes that most leading economists are anticipating during the second half of the year could help alleviate the uncertainty about future demand prospects that some apartment operators exhibited when setting prices over the past year.”

About RealPage

Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on-demand (also referred to as “Software-as-a-Service” or “SaaS”) products and services to apartment communities and single family rentals across the United States. Its on-demand product lines include OneSite® property management systems that automate the leasing, renting, management and accounting of conventional, affordable, tax credit, student living, senior living and military housing properties; LeaseStar™ multichannel managed marketing that enables owners to originate, syndicate, manage and capture leads more effectively and at less overall cost; YieldStar® asset optimization systems that enable owners and managers to optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property; Velocity™ billing and utility management services that increase collections and reduce delinquencies; LeasingDesk® risk mitigation systems that are designed to reduce a community’s exposure to risk and liability; OpsTechnology® spend management systems that help owners manage and control operating expenses; and Compliance Depot™ vendor management and qualification services to assist a community in managing its compliance vendor program. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. RealPage’s MyNewPlace® subsidiary is one of the largest lead generation apartment and home rental websites, offering apartment owners and managers qualified, prospective residents through subscription, pay-per-lead and LeaseMatchTM pay-per-lease programs. Through its Propertyware subsidiary, RealPage also provides software and services to single-family rentals and low density, centrally-managed multifamily housing. For more information, call 1-87-REALPAGE or visit www.realpage.com.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Cloud Expo Latest Stories
14th International Cloud Expo, held on June 10–12, 2014 at the Javits Center in New York City, featured three content-packed days with a rich array of sessions about the business and technical value of cloud computing, Internet of Things, Big Data, and DevOps led by exceptional speakers from every sector of the IT ecosystem. The Cloud Expo series is the fastest-growing Enterprise IT event in the past 10 years, devoted to every aspect of delivering massively scalable enterprise IT as a service.
Hardware will never be more valuable than on the day it hits your loading dock. Each day new servers are not deployed to production the business is losing money. While Moore’s Law is typically cited to explain the exponential density growth of chips, a critical consequence of this is rapid depreciation of servers. The hardware for clustered systems (e.g., Hadoop, OpenStack) tends to be significant capital expenses. In his session at 15th Cloud Expo, Mason Katz, CTO and co-founder of StackIQ, to discuss how infrastructure teams should be aware of the capitalization and depreciation model of these expenses to fully understand when and where automation is critical.
Over the last few years the healthcare ecosystem has revolved around innovations in Electronic Health Record (HER) based systems. This evolution has helped us achieve much desired interoperability. Now the focus is shifting to other equally important aspects – scalability and performance. While applying cloud computing environments to the EHR systems, a special consideration needs to be given to the cloud enablement of Veterans Health Information Systems and Technology Architecture (VistA), i.e., the largest single medical system in the United States.
In his session at 15th Cloud Expo, Mark Hinkle, Senior Director, Open Source Solutions at Citrix Systems Inc., will provide overview of the open source software that can be used to deploy and manage a cloud computing environment. He will include information on storage, networking(e.g., OpenDaylight) and compute virtualization (Xen, KVM, LXC) and the orchestration(Apache CloudStack, OpenStack) of the three to build their own cloud services. Speaker Bio: Mark Hinkle is the Senior Director, Open Source Solutions, at Citrix Systems Inc. He joined Citrix as a result of their July 2011 acquisition of Cloud.com where he was their Vice President of Community. He is currently responsible for Citrix open source efforts around the open source cloud computing platform, Apache CloudStack and the Xen Hypervisor. Previously he was the VP of Community at Zenoss Inc., a producer of the open source application, server, and network management software, where he grew the Zenoss Core project to over 10...
Most of today’s hardware manufacturers are building servers with at least one SATA Port, but not every systems engineer utilizes them. This is considered a loss in the game of maximizing potential storage space in a fixed unit. The SATADOM Series was created by Innodisk as a high-performance, small form factor boot drive with low power consumption to be plugged into the unused SATA port on your server board as an alternative to hard drive or USB boot-up. Built for 1U systems, this powerful device is smaller than a one dollar coin, and frees up otherwise dead space on your motherboard. To meet the requirements of tomorrow’s cloud hardware, Innodisk invested internal R&D resources to develop our SATA III series of products. The SATA III SATADOM boasts 500/180MBs R/W Speeds respectively, or double R/W Speed of SATA II products.
As more applications and services move "to the cloud" (public or on-premise) cloud environments are increasingly adopting and building out traditional enterprise features. This in turn is enabling and encouraging cloud adoption from enterprise users. In many ways the definition is blurring as features like continuous operation, geo-distribution or on-demand capacity become the norm. NuoDB is involved in both building enterprise software and using enterprise cloud capabilities. In his session at 15th Cloud Expo, Seth Proctor, CTO at NuoDB, Inc., will discuss the experiences from building, deploying and using enterprise services and suggest some ways to approach moving enterprise applications into a cloud model.
Until recently, many organizations required specialized departments to perform mapping and geospatial analysis, and they used Esri on-premise solutions for that work. In his session at 15th Cloud Expo, Dave Peters, author of the Esri Press book Building a GIS, System Architecture Design Strategies for Managers, will discuss how Esri has successfully included the cloud as a fully integrated SaaS expansion of the ArcGIS mapping platform. Organizations that have incorporated Esri cloud-based applications and content within their business models are reaping huge benefits by directly leveraging cloud-based mapping and analysis capabilities within their existing enterprise investments. The ArcGIS mapping platform includes cloud-based content management and information resources to more widely, efficiently, and affordably deliver real-time actionable information and analysis capabilities to your organization.
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity. In his session at Internet of @ThingsExpo, Mac Devine, Distinguished Engineer at IBM, will discuss bringing these three elements together via Systems of Discover.
Cloud and Big Data present unique dilemmas: embracing the benefits of these new technologies while maintaining the security of your organization’s assets. When an outside party owns, controls and manages your infrastructure and computational resources, how can you be assured that sensitive data remains private and secure? How do you best protect data in mixed use cloud and big data infrastructure sets? Can you still satisfy the full range of reporting, compliance and regulatory requirements? In his session at 15th Cloud Expo, Derek Tumulak, Vice President of Product Management at Vormetric, will discuss how to address data security in cloud and Big Data environments so that your organization isn’t next week’s data breach headline.
The cloud is everywhere and growing, and with it SaaS has become an accepted means for software delivery. SaaS is more than just a technology, it is a thriving business model estimated to be worth around $53 billion dollars by 2015, according to IDC. The question is – how do you build and scale a profitable SaaS business model? In his session at 15th Cloud Expo, Jason Cumberland, Vice President, SaaS Solutions at Dimension Data, will give the audience an understanding of common mistakes businesses make when transitioning to SaaS; how to avoid them; and how to build a profitable and scalable SaaS business.
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridstore delivers vmOptimized™ Storage that self-optimizes to each application or VM across both virtual and physical environments. Leveraging a grid architecture, Gridstore delivers the first end-to-end storage QoS to ensure the most important App or VM performance is never compromised. The storage grid, that uses Gridstore’s performance optimized nodes or capacity optimized nodes, starts with as few a...
SYS-CON Events announced today that Solgenia, the global market leader in Cloud Collaboration and Cloud Infrastructure software solutions, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Solgenia is the global market leader in Cloud Collaboration and Cloud Infrastructure software solutions. Designed to “Bridge the Gap” between personal and professional social, mobile and cloud user experiences, our solutions help large and medium-sized organizations dramatically improve productivity, reduce collaboration costs, and increase the overall enterprise value by bringing collaboration and infrastructure solutions to the cloud.
Cloud computing started a technology revolution; now DevOps is driving that revolution forward. By enabling new approaches to service delivery, cloud and DevOps together are delivering even greater speed, agility, and efficiency. No wonder leading innovators are adopting DevOps and cloud together! In his session at DevOps Summit, Andi Mann, Vice President of Strategic Solutions at CA Technologies, will explore the synergies in these two approaches, with practical tips, techniques, research data, war stories, case studies, and recommendations.
Enterprises require the performance, agility and on-demand access of the public cloud, and the management, security and compatibility of the private cloud. The solution? In his session at 15th Cloud Expo, Simone Brunozzi, VP and Chief Technologist(global role) for VMware, will explore how to unlock the power of the hybrid cloud and the steps to get there. He'll discuss the challenges that conventional approaches to both public and private cloud computing, and outline the tough decisions that must be made to accelerate the journey to the hybrid cloud. As part of the transition, an Infrastructure-as-a-Service model will enable enterprise IT to build services beyond their data center while owning what gets moved, when to move it, and for how long. IT can then move forward on what matters most to the organization that it supports – availability, agility and efficiency.
Every healthy ecosystem is diverse. This is especially true in cloud ecosystems, where portability and interoperability are more important than old enterprise models of proprietary ownership. In his session at 15th Cloud Expo, Mark Baker, Server Product Manager at Canonical/Ubuntu, will discuss how single vendors used to take the lead in creating and delivering technology, but in a cloud economy, where users want tools of their preference, when and where they need them, it makes no sense.