U.S. Apartment Rents Rise at Fastest Pace Since Recession

U.S. apartment rents have climbed this year at the fastest pace since the recession as rising tenant demand allows landlords to increase their rates, property-research firm Axiometrics Inc. said.

Effective rents, or what tenants paid after any price breaks such as a free month, climbed to a monthly average of $1,136.88 in April, up 3.4 percent from a year earlier, according to the Dallas-based company. The rent increase for January through April was the highest for that period since the recession ended in 2009.

More Americans became renters after home prices collapsed starting in 2006, and developers have stepped up construction of rental units from a 50-year low in 2009 to meet rising demand. Apartment occupancies stood at 94.8 percent last month, according to Axiometrics.

From January to April, effective rents rose more than 2.6 percent, Axiometrics said. In the first four months of last year, rents were up 2.1 percent, following gains of almost 2.6 percent in 2012, 2.5 percent in 2011 and 2.1 percent in 2010.

“It’s not necessarily head and shoulders above the rest, but it is the best,” Jay Denton, vice president of research at Axiometrics, said in an e-mail. “This is great news, considering there is much more supply hitting the market today relative to what was delivered in the prior years.”

Builders completed 25,135 new apartment units in the first quarter, up 43 percent from a year earlier, according to Reis Inc., a New York-based real estate research firm. Completions totaled 131,450 units last year, a 66 percent increase from 2012, Reis said.

Rising Supply

The rising supply of new apartments and competition from the for-sale market could damp rent gains by the end of this year, Denton said.

Odessa, Texas, had the biggest increase in effective rents among the 121 largest U.S. metropolitan areas for the second straight month. Rents rose 11.6 percent in the city in April, buoyed by demand from workers tied to the drilling industry in the Eagle Ford Shale, Axiometrics said.

Naples, Florida, was second, with a 10.2 percent increase, followed by Oakland and San Jose in California, both at more than 9 percent; Denver and San Francisco, at about 8 percent each; and Atlanta, at 6.9 percent, according to Axiometrics.

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