December Market Update

Stabilized Properties Weathered the 2020 Storm 

In a Dimensions article from the summer, earlier on in the pandemic, we evaluated how properties that entered the year already stabilized had fared versus the Greater Fort Worth market as a whole from March through May. Now that some additional months have passed, and before annual numbers are in to evaluate 2020 multifamily performance in the big picture, the present time affords a good opportunity to revisit the topic.   

Using conventional properties of at least 50 units, let’s take a closer look at how stabilized properties have performed through November of 2020. 

Average Occupancy and Net Absorption 

Average occupancy for stabilized properties increased 1.1% from the start of the year to 94%. This compares favorably to average occupancy for the Greater Fort Worth market overall which remained unchanged at 90%. Likewise, through the same portion of 2019 there was no change in average occupancy for stabilized properties. 

On the demand front, stabilized net absorption totaled around 1,900 units. This may not appear to be an overly impressive figure. However, within the context of a net loss of more than 600 rented units in the same period of 2019, it looks somewhat better. The majority of demand was in the C and D price classes while Class A was the most tepid. This generally aligns with other markets around the country where increased resident price sensitivity was apparent. Net absorption in Greater Fort Worth overall topped 7,600 units, well above last year’s mark of 4,200 net units through November.  

Average Effective Rent and Concessions 

While occupancy and absorption numbers look relatively robust given the challenges of this year, the performance came somewhat at the expense of rent growth. After a 2.2% gain last year through November, stabilized properties have managed a 1.7% gain this year. Even so, growth approaching 2% is nothing to sneeze at in 2020. Greater Fort Worth as a whole, with the benefit of new properties entering the market, realized a 2.8% gain. 

The lower rate of growth for rent can be attributed more to less aggressive asking rents than to a substantial move toward increased lease concessions. Around 22% of conventional properties of at least 50 units were offering a lease discount to open the year. A small increase brought that 25% by the end of November. Similarly, although the average discount value increased as well, the increase was a marginal one. The average concession package was 2.4 weeks off a 12-month lease for stabilized properties to start the year, and the average finished November at 2.6 weeks off a 12-month lease. On the whole, 28% of all Greater Fort Worth properties ended November offering a concession at an average value of 3.4 weeks off a 12-month lease. 

Takeaways 

Overall, properties that entered 2020 already stabilized have had a relatively solid year. Average occupancy rose a full percent, demand was up significantly compared to last year and rent growth was only 0.5% lower than last year through November. Within the larger context of the COVID-19 disruption this year, this is a welcome sight. 

Jordan Brooks
Market Analyst – ALN Apartment Data, Inc
Jordan@alndata.com
www.alndata.com  

Jordan Brooks is a Market Analyst at ALN Apartment Data.  In addition to speaking at affiliates around the country, Jordan writes ALN’s monthly newsletter analyzing various aspects of industry performance and contributes monthly to multiple multifamily publications. He earned a master’s degree from the University of Texas at Dallas in Business Analytics.