- January 28, 2016
- January 28, 2016
- January 20, 2016
There is no doubt the multifamily industry is in an upswing right now, evident with sharply increased new construction numbers and continued growth to average rents. So when Axiometrics vice president of research Jay Denton sat down with Gables Residential REIT Vice President Donna Summers to discuss the Top 10 Submarkets at the 2013 Apartment Revenue Management Conference, it was no surprise the impact that new construction, desirability and rent growth were having on markets and submarkets. What was surprising was the impact optimized pricing practices (or lack thereof) have had on markets across the country.
“Dallas, Atlanta and Houston boast 50 to 70 percent of assets using revenue management,” said Denton. “When evaluating the performance comparison of markets and their submarkets, there is a significant correlation between revenue management adoption and the ability to push rents, maintain occupancy and minimize concessions, even in a downturn.”
More specifically, when comparing revenue management to traditional pricing performance in the Atlanta/Fulton submarket, Denton found price optimization practices solidly in the lead. When looking at effective rents from January 2010 to July 2013, Axiometrics’ data showed revenue managed pricing not only started out at a higher rate but also doubled traditional pricing increases and added an additional $300 more per month to effective rents. Furthermore, occupancy at traditionally priced communities saw significant fluctuations between 91 and 95 percent while revenue managed communities held steady at roughly 95 percent.
Denton also detailed how REITs are outperforming the nation on effective rent growth. “They are doing it right,” said Denton. “They are operating in the right MSAs, in the right submarkets and using revenue management.” On average, REITs are outperforming the nation and trending between 1-2% higher in effective rent growth.
Additional Axiometric findings included:
For your own closer look at the data, download the Top 10 Submarkets presentation.
This information was presented at the 2013 Apartment Revenue Management Conference.
Learn about the perks and benefits of working in residential property management and some of the reasons the industry provides career growth, stability and endless opportunities.