Apartment occupancy has remained below what was once considered normal times, despite firming occupancy amid strong demand nationwide.
According to a RealPage analysis, occupancy was 95% during the first quarter, compared with the pre-COVID five-year average from 2015 to 2019 of 95.2%. Twenty-nine of the nation’s 50 largest apartment markets posted Q1 occupancy below pre-pandemic levels.
In general, markets with lower new supply have seen a recent firming of occupancy, while higher supply markets, particularly in the Sun Belt, have posted weaker occupancy versus their pre-pandemic norms. Markets that fell substantially below their pre-pandemic occupancy averages during the quarter included Fort Worth, with occupancy down 200 basis points; Austin, down 170 bps; and Charlotte, Orlando and Nashville, each down 150 bps.
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Most major markets in the West also posted occupancy below pre-COVID norms, including Salt Lake City and Phoenix, which both are more than 100 bps below their pre-pandemic norms. The only major West markets that posted above-average occupancy for the quarter were San Francisco, up 80 bps; Anaheim/Orange County and Las Vegas, both up 30 bps; and San Jose, up 20 bps.
Occupancy is stronger in Midwest markets with more moderate new supply. About 60% of major Midwest markets performed above-average in Q1, led by Indianapolis, which was 140 bps ahead of the 2015-2019 average. Chicago and St. Louis are 100 bps above their pre-COVID norms. Meanwhile, Minneapolis is 190 bps below pre-pandemic norms, but the report noted supply has fallen off notably in recent quarters, which could spark an increase in occupancy rates.
Northeast markets posted the most stable occupancy compared with the pre-pandemic period. Almost all major markets in the region posted Q1 rates above 2015-2019 levels. Boston was an exception, with occupancy of 95.7% falling a slight 10 bps below its pre-pandemic average.
RealPage predicts that the category will continue at its current rate for the remainder of the year across the country.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
