Q1 2017 States Review

With the first quarter of 2017 in the books, this remains one of the longest winning streaks for multifamily – at least on a national scale. Over 32,000 units were absorbed in the 36 states that we monitor in the first quarter of 2017. Here’s a look at those states over the last three months.


Alabama had a disappointing first quarter with only about 100 net rented units absorbed. While Mobile saw occupancy rise 1.1% over the last 3 months to 92.6%, Montgomery lost a net 200 units and saw its occupancy drop to an even 90%. Statewide, rents rose 0.4% in the first quarter with Birmingham leading the way with 1.1% growth, while Huntsville saw rents drop 0.5% in the quarter.


Arkansas had a poor quarter with more than 40 net rented units lost statewide in the quarter. Consequently, average occupancy dropped more than 2 percentage points to 89.1%. Effective rents, however, rose a sturdy 1.4% in the quarter and are up 4.4% from a year ago. In the Northwest Arkansas market, they are up significantly with an 8% increase per unit from a year ago.


Arizona still keeps leading the way in the recovery. Phoenix gained over 2700 net rented units in the first quarter while Tucson added 100 more leased units to its market. Furthermore, effective rents are up 1.7% per unit in each of those markets as well. Statewide, effective rents are up 5.3% from a year ago.


The San Francisco Bay area led the way with more than 3000 units absorbed in the last three months while Los Angeles absorbed just over 1800. San Bernardino and the San Joaquin Valley, however, had negative absorption for the first quarter of 2017. Effective rents rose in all six of the California markets with San Bernardino leading the way having a 2.4% increase per unit. Statewide, the markets averaged 1.3% growth in effective rent over the last three months.


Denver continues to roll along, adding another 1100 net rented units in the first 3 months of 2017. That actually outpaced new supply and occupancy rose slightly to 91.5%. Rents continue to rise as well, increasing 1.2% in the first quarter to $1307 per unit.

District of Columbia

The greater Washington DC area posted another solid quarter with more than 2200 units absorbed. New supply, however, slightly outpaced absorption and average occupancy dipped 0.1% to 92.5%. Effective rents ticked up $6 per unit to $1687.


The Florida markets absorbed more than 5,000 units in the quarter with the Miami market accounting for almost 2000 of those absorbed units. Pensacola had negative absorption of 220 units. Tampa had good absorption with almost 1500 units absorbed while Palm Beach and Orlando had solid results with about 900 units absorbed in each of those markets. Statewide, effective rents are up 1.5% per unit with Melbourne leading the way with a 2.9% increase in effective rent per unit. Only Palm Beach and Tallahassee saw rents drop during the quarter with a decline of 0.3% and 0.2% respectively.


The rapid growth in Atlanta has slowed a bit with the market absorbing “only” 600 net rented units in the first quarter. Savannah and Albany posted strong numbers with Savannah absorbing 382 net rented units and Albany adding 140 net rented units to the market. Savannah also saw dramatic rent increases with more than 2% gains in effective rent per unit while statewide the average was a moderate 0.7% to $1040.


While Chicago fared well in the first quarter by absorbing nearly 1200 net rented units, the other markets in the state did not fare well at all. Moline, Peoria and Springfield all lost about 100 net rented units each. Chicago also saw a healthy rent increase of 1.5% per unit to $1451 and Moline increased prices 1% to $725 per unit. However, Peoria and Springfield both saw rents drop at least 1% in the quarter.


Indiana had a disappointing quarter with a negative absorption of more than 750 net rented units. Statewide average occupancy consequently fell 0.5% to 92.2%. Only the South Bend market had positive absorption in the first quarter. Overall effective rent bumped up 0.4% to a statewide average of $790 with Indianapolis the only market showing rent gains.


Wichita saw rents drop a bit in the first quarter from $640 per unit to $637. Occupancy also ticked down 0.1% to 91.9% in the first three months of 2017. On an annual basis, however, occupancy is up 0.9% from this time last year.


Louisville absorbed almost 250 net rented units in the first quarter but new supply outpaced absorption and average occupancy fell 0.9% to 90.7%. Lexington saw average occupancy drop 1.6% to 89.0%. Both the Lexington and Louisville markets had solid rent increases with average rents rising 1% during the first 3 months of the year.


Shreveport had a strong showing in the first quarter, while New Orleans was stagnant and Baton Rouge floundered. Baton Rouge saw average occupancy drop more than 1% in the first quarter while average occupancy ticked up 0.2% in New Orleans and climbed 1.6% to 89.6% in Shreveport. Shreveport also saw significant gains of 1.5% in effective rents while Baton Rouge saw prices drop 0.7% per unit to $912.


While effective rents managed to rise 0.7% to $1250 per unit in Baltimore, the market basically had flat absorption. Occupancy merely stood pat at 92.7% since the first of the year.


Minneapolis absorbed more than 300 net rented units but new supply pushed average occupancy down 0.3% to 94.5%. Overall the market has absorbed over 2200 net rented units in the last year.


Statewide, average occupancy stayed flat in Mississippi in the first quarter at 92%. Effective rents in the central part of the state rose 1.3% to $804 per unit in the first quarter yet remained flat along the coast at $712 per unit.


Statewide average occupancy fell 0.5% to 91.4% as St. Louis gained 534 net rented units – though Kansas City and Springfield both saw occupancy drop in the quarter. Kansas City did have rents jump 1.5% in the quarter to $895 per unit, however.


While Lincoln saw occupancy rise 1.0% in the first quarter, Omaha had the opposite experience, seeing occupancy dropping 0.8%. Lincoln also saw effective rent per unit rise $4 per unit to $844 while Omaha rents dropped $1 per unit to $870.


Las Vegas continues its strong run. Even with all the new supply coming on the market, the Las Vegas area absorbed almost 1250 units and average occupancy rose 0.3% to 92.7%. Reno, though, had negative absorption and average occupancy declined 0.9% to 94.2% over the last three months.

New Mexico

Though Albuquerque saw effective rents drop slightly by $1 per unit to $810, average occupancy rose 0.4% to 94.7% in the first quarter.

North Caolina

Charlotte absorbed almost 700 net rented units but new supply brought down average occupancy by 0.3% to 91.1% in the first quarter. Raleigh-Durham also saw average occupancy drop. Wilmington, though, had average occupancy increase by 1.5% to 91.2% in the first quarter of 2017. Across the state, effective rents rose 1% to $959 with Greensboro/Winston-Salem and Raleigh-Durham leading the way with rent increases of 1.5% and 1.2% respectively.


Toledo saw its average occupancy jump 1.3% in the first quarter while Cincinnati/Dayton experienced the opposite result and occupancy fell more than 1%. Columbus had good absorption of over 500 net rented units but new construction blunted the effect on average occupancy and occupancy rose a mere 0.2% to 93.2%. Effective rents rose just under 1% statewide with Toledo having rent gains of 1.2% to $678 per unit.


Oklahoma is apparently still feeling the effects of the energy sector woes and average occupancy statewide fell again 88.9%, down 0.4% from the end of 2016. While effective rent per unit gained 1.1% in Tulsa, average rent fell 0.6% in Oklahoma City during the first three months of the year.


Portland saw occupancy gain a healthy 0.2% in the first quarter. Effective rents grew slightly in the same period, rising 0.3% to $1276 per unit.


Pittsburgh added almost 250 net rented units in the first quarter, but new supply edged average occupancy downward 0.2% to 89%. Philadelphia absorbed just over 600 net rented units and average occupancy rose 0.2% to 93.9%. Statewide average effective rent rose 0.5% with new units in Pittsburgh spiking rents up 1.5% in the last three months while in Philadelphia rent growth was a more modest 0.4%.

South Carolina

All the South Carolina markets experience negative absorption in the first quarter and statewide average occupancy fell 1.0% to 89.8%. Rents fared better with Columbia notching a 1.0% rent growth in the first quarter and Greenville-Spartanburg seeing a 0.6% increase in effective rents.


Even with an extra 400 units rented in Nashville at the end of the quarter, new supply greatly outpaced absorption and average occupancy fell 1.7% to 88.6%. Memphis fared better with average occupancy notching up 0.2% to 91.5%. Rents continue to grow in Tennessee with both Nashville and Knoxville seeing rent gains of 1.3% while Chattanooga had 0.4% growth in rents. Memphis rents, however, remained flat at $780 per unit.


Statewide, Texas absorbed just over 10,000 units, but new units continue to pour in to the market and average occupancy dipped 0.2% to 89.9%. The Houston market actually led the way with more than 4000 units absorbed over the last three months. The Dallas-Ft. Worth area absorbed just over 3700 units – which was solid, but hardly what was needed to keep up with new supply. Rampant rent growth has finally petered out in Austin with effective rents actually dropping 0.2% to $1192 per unit. Corpus Christi also had negative rent growth for the quarter. Houston rents notched up $1 per unit to $1005 and the DFW market saw rents still climb another 1.5% in the quarter to $1068 per unit. Midland-Odessa finally got some boost in rents in the first quarter and the average unit is up to $980.


New units in Salt Lake City drove down occupancy to 91.3% from 92.1% (-0.8%) even as the market added more than 200 net rented units in the quarter. Effective rents rose $10 to $1020, an increase of 1% over the last three months.


The Virginia markets all performed well in the first quarter. Roanoke saw average occupancy jump 1.2% to 94.2% while Richmond increased occupancy 0.6% to 93.4%. Norfolk kept pace with new construction and added 455 net rented units and still maintained 91.4% average occupancy for the market. The Virginia markets also experienced solid rent growth with each of the markets increasing rents more than 1% in the last three months.


Seattle absorbed more than 1500 net rented units, though occupancy dipped 0.2% to 92.4% with the introduction of more new supply. Occupancy in Spokane jumped 1.0% to 94.7%. The average unit rose to $1575 in Seattle and $904 in Spokane.


Madison and Milwaukee both saw occupancy increase by 0.6% to 98% and 94.2% respectively. With occupancy numbers like these, it’s no surprise rents hiked up as well. Madison saw effective rent climb 1.0% to $1066 per unit while Milwaukee grew at an even faster 1.7% pace to an average of $1021 per unit.

While not a particularly strong leasing season in most markets, the first quarter can nevertheless be a harbinger of performance for the year. The lackluster performance in some markets or the failure to keep pace with past numbers should be a wake-up call to some markets. However, the recovery looks like it still has some legs in several states like Arizona, Pennsylvania, Virginia and Washington.

For additional information about the states discussed in this article, call 800-643-6416 x 3 or email sales@alndata.com. Read more about our services here.