From the very early stages of the coronavirus outbreak, it was clear the pandemic would have serious repercussions for the multifamily industry.
Now, with emerging data to analyze, we are beginning to get some concrete sense of the outbreak’s impact. Data compiled by Radix shows that, in terms of property performance fundamentals, there are some predictable but nevertheless worrying trends.
Nationally, traffic is way down on a Year-over-Year (YoY) basis. For the week ending on April 15, traffic was down 63.3% from the same time last year. On a more positive note, it was up 11.3% when compared with the preceding week. From discussions with our clients, this increase is likely due to the fact that operators are getting creative and doing virtual tours through applications like FaceTime and Google Voice.
Additionally, leases signed are decreasing. The average U.S. apartment community signed 1.7 leases during the seven days ending on April 15. That represents a YoY decrease of 48.5%.
Traffic and leases are leading indicators, and when they are down for sustained periods, we will soon see negative impacts on metrics like occupancy and leased percentage rates, and then followed by rents.
We are seeing the first signs of this cascading effect. For example, the U.S. same-store occupancy rate for the week ending on April 15 was 93.55%, a 0.19%- drop from the preceding week and a 0.58% dip from the same period one year earlier.
The same-store percent leased rate for the week of April 15 was 94.51%. The rate was a 0.35% drop from the preceding week and a 1.12%- dip from the same period in 2019.
At the same time, the average net effective rent in the U.S. was still 2.2% higher on April 15 than it was one year earlier.
The Effect on Individuals MSAs
By the middle of April, 19 out of the 21 MSAs tracked by Radix were experiencing lower occupancy and leased percentage rates when compared with the same time last year.
The biggest week-over-week decline in occupancy was in Riverside, Calif., where the rate dropped by 0.98% when compared with the preceding week (the rate dropped by 1.7% on a year-over-year basis).
The biggest week-over-week decline in leased percentage was in Miami, where the rate dropped by 0.80% when compared with the preceding week (the rate dropped by 1.97% on a year-over-year basis).
It’s sobering to think about, but we may just be in the early stages of the impact from the pandemic. Statistics can give us a clear-eyed insight into how the coronavirus is affecting our industry, and I will regularly share data with you in this space to help us all better understand how this crisis is impacting the multifamily industry.
In the meantime, I hope you, your families, your colleagues and your residents are staying safe in these unprecedented times.