Examining Top Apartment Markets & Submarkets with Revenue Management

Axiometrics’ Jay Denton and Gables’ Donna Summers discuss the data during the Top 10 Submarkets panel at the 2013 Apartment Revenue Management ConferenceThere 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:

  • More than 450,000 new construction units are slated to come online in the top 10 submarkets (Houston, Seattle, San Jose, Atlanta, Denver, Dallas, New York, Washington and Minneapolis). 
  • Top performing rent growth markets include Cape Coral, FL, Oakland, CA, Naples, FL, Boulder, CO, San Francicso, CA, Corpus Christi, TX, Denver, CO, North Port, FL, Seattle, WA and Portland, OR. 
  • Oakland, Denver and Cape Coral are currently the top performing submarkets with 30 to 40 percent effective rent growth over the cumulative. 

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.

Event Highlights

Take Your Creativity to the Bank: Five Minutes of Creativity Could Win You $5,000 in Cash

Do You Have What It Takes To Swim With Sharks?  

Do you have what it takes to swim with the sharks? If you do, you could win $5,000 and be a star at the 2014 NAA Education Conference & Exposition in Denver. Learn more and enter.