While the public health outcomes of COVID-19 remain the top priority, March was the month in the first quarter where the economic impact of the US response really began to be felt throughout all markets. While all multifamily performance differences between the first two months of the year and March cannot be laid at the feet of COVID-19 or the response to it, certainly it was a major factor.

With that in mind, let’s take a look at some markets where the difference in metrics like average occupancy and average effective rent was most stark. All numbers will refer to conventional properties of at least 50 units, and comparisons will be made between overall Q1 2020 results and where markets stood at the end of February.

Top 5 Markets – Average Occupancy

Some early reporting seems to indicate a general reduction in resident movement over the last few weeks, whether measured by prospective leasing appointments or by move-out notifications. However, the situation certainly varies across markets. The top five markets for average occupancy decline in the month of March are listed below. All were smaller markets, with none larger than Miami with about 86,000 conventional units.

1. Springfield, IL (-2.43%)
2. Albany, NY (-1.67%)
3. SE Washington (-1.64%)
4. Miami, FL (-1.58%)
5. Midland – Odessa, TX (-1.57%)

Of those markets, only Springfield saw an out-sized portion of new supply delivered in March that would provide an explanation driven more by typical market forces. For the remaining four markets, none delivered more than 33% of their quarterly new supply in the month of March. Midland – Odessa provides another example of a market clearly being impacted by issues other than COVID-19. It’s a market heavily skewed toward oil, which has cratered more than 50% in the last two months. It’s also an area that had very little new supply in the last handful of years which kept occupancy artificially high.

Top 5 Markets – Average Effective Rent

The top five markets in average effective rent loss for March are also all smaller markets.

1. Midland – Odessa, TX (-2%)
2. Lake Charles, LA (-0.98%)
3. Tallahassee, FL (-0.65%)
4. Rio Grande Valley, TX (-0.63%)
5. Beaumont, TX (-0.35%)

As previously mentioned, the loss in Midland – Odessa undoubtedly has a lot to do with being an area especially affected on the employment front as well as finally getting some new supply. For much of the last few years, the area had the highest average effective rents in Texas. Beaumont would be another market heavily skewed toward natural resources economically.

Next Up

For a variety of reasons, small markets are likely to be over-represented at the top of such rankings. A few properties with sharp declines in occupancy or rent can have a larger impact on overall market averages compared to areas with 100,000 units or more. Smaller markets also tend to be less diverse in terms of major employers and industry sectors and so are more sensitive to specific disruptions.

There also are more small markets that have a smaller percentage of households making up what could be called lifestyle or by-choice renters, leaving those areas more prone to immediate consequences of economic disruptions. With that in mind, check back for a look at the large multifamily markets that suffered performance retractions in March.

For more detailed information on specific markets, check out reported changes in occupancy, rent, concessions and more in our free Market Reviews.