New Research Shows Apartment Expenses Down, Rents Up

Multifamily fundamentals saw an uptick last year, according to the 2011 edition of Income/Expense Analysis: Conventional Apartments, a report from the Institute of Real Estate Management that analyzes the previous year’s operating income and cost figures for 3,059 apartment properties in the U.S. and Canada. Total expenses for garden, low-rise, 25-plus unit/elevator properties dropped between 1.0 and 1.7 percent year over year, and gross rents increased 0.5 percent and 2.6 percent, respectively, for low-rise and elevator buildings.

The report notes that total expenses for garden apartments dropped 1.7 percent to $5.13 per square foot; expenses for elevator buildings declined 1.3 percent to $7.32 psf; and expenses for low-rise properties with 25-plus units decreased only 1.0 percent to $4.92 psf. Low-rise buildings with 12 to 24 units saw a 1.3 percent expense increase to $5.51 psf.

Elevator buildings saw the largest increase in gross possible rents, according to the study, jumping from $14.76 psf to $15.15 psf YOY. Low-rise buildings with 12 to 24 units also experienced an uptick in rents, with a 0.5 percent increase to $11.82 psf from $11.76 psf in 2009. Garden building rents declined from $10.65 psf to $10.43 psf YOY, while rents for low-rise buildings with 25 or more units saw a 0.2 percent dip to $9.98 psf.

Low-rise buildings with 25 or more units in the Southeast region saw $7.66 psf median rents in 2010, the lowest of all regions tracked, according to the report. Elevator buildings in the West Coast region topped the list with an $18.31 psf gross possible rent rate.