In the Greater San Francisco area, where it owns just over 3,000 units, BRE posted weighted average rent growth of 8.2%, to $1,656 per month from $1,530 per month. Concurrently, its average occupancy in the market jumped 230 basis points to 95.7% and its annual turnover rose only slightly to 57% in 2007 from 56% in 2006.
In Seattle, where the company owns more than 3,200 units, the weighted average annual rent growth was 8.9%, taking the average rent to $1,284 per month from $1,179. Average occupancy also increased, rising to 93.6% from 92.2%, while annual turnover increased to 61% from 58%.
In Los Angeles, the weighted average annual rent growth for BRE's 1,759 units there was 7.6%, taking the average rent to $1,824 per month. Average occupancy increased 80 basis points to 94.6% and turnover fell to 61% in 2007 from 65% in 2006.
By contrast, BRE saw only nominal rent growth in Sacramento and the Inland Empire, where it owns 1,796 units and 2,521 units, respectively. BRE says both markets have been impacted by an oversupply of single-family homes that are competing with apartment communities. Rent growth in its other California markets, San Diego and Orange County, was 2.4% and 2.8%, respectively.
The company currently has three new communities in lease-up, two in Southern California and one in Northern California. The Northern California property, located in Emeryville, is Avenue 64, a 224-unit development for which 158 units have been delivered. Approximately 80% of the delivered units have been leased.
Renaissance at Uptown Orange in Orange, CA, is designed as a 460-unit community. Thus far, of the 332 units that have been delivered, 236 have been leased. The Stuart will have 188 units, of which 118 have been delivered and 84 leased.
"There are two distinct operational dynamics going on," BRE chief operating officer Ed Lange told analysts in a conference call Wednesday. "Two-thirds of our operations--San Francisco, Seattle, Los Angeles, San Diego--are operating at a very high level. It's a little early in the year to start talking about rent growth but in these markets we have pricing power and we are not being very shy about exercising it where we can.
"Then there's another slice of the operations--Sacramento, Inland Empire and Phoenix--where the single-family housing recession is playing out in full, as we expected. Operations are struggling [in those markets] and we expect the struggle to continue throughout the year. We seem to be able to maintain 92% to 93% occupancy but rents are flat year-over-year and we certainly are not expecting rent growth this year."
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