Gateway cities continue to struggle though
After suffering subdued demand earlier this year, the U.S. apartment market has bounced back with strong leasing in the third quarter, according to RealPage Inc.
The real estate technology and analytics firm reported that occupied apartment count climbed by 146,517 units on net from July through September. That number represents a pace that is more than four times the minimal demand for about 34,000 units recorded during the second quarter. Furthermore, 3Q20 demand increased 8% year-over-year.
“While the U.S. economy has a long way to go before it’s fully healed, there’s enough job production to allow new household formation to return in some areas, so apartment demand is back,” said Greg Willett, RealPage’s chief economist. “Leasing activity is still spotty by metro and by individual neighborhood, but the overall story is a good one.”
The country’s apartment occupancy rate now stands at 95.6%, up from 95.3% in the second quarter. Occupancy is a little below the year-ago level of 96.3%, which was close to an all-time high, according to RealPage. Looking back to a little more than a decade ago, U.S. apartment occupancy got down to a low of 92% in late 2009.
Apartment demand was particularly strong in three Sun Belt metro areas – Dallas/Fort Worth, Atlanta, and Houston. Those three areas absorbed roughly 7,700 to 9,000 apartments each and combined to account for 17% of the nation’s apartment absorption in the third quarter, according to RealPage. Leasing activity also was solid during the quarter in Phoenix, Denver, and Charlotte.
Meanwhile, apartment demand remained weak in some of the country’s most expensive areas, particularly those in the northeast and along the West Coast, according to RealPage’s data. New York, for example, suffered net move-outs from another 11,705 units during the third quarter, and the occupied apartment count dropped by 3,637 units in San Francisco.
Seattle, Chicago and Washington, D.C. registered “essentially no demand for apartments” during 3Q20, while the increase in occupied apartments was mild in Los Angeles and Boston.
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