Apartment Advisor Recap: Measuring Rental Performance

Apartment Advisor Recap - News from Dupre + Scott (www.duprescott.com)We always love it when a new Apartment Advisor comes out–the monthly digest from Dupre + Scott is chock-full of all the stats and data we rely on in the apartment industry. This month’s edition is all about measuring the performance of local properties. Since Dupre + Scott size up the rental market on a regular basis, you can utilize their data to see how your own property is doing against comparable rentals nearby. Here are some of the main factors to consider. Note that all data mentioned below is for buildings completed in or before 1999.

Operating Expenses

  • These vary due to many factors, including property tax rates and rent amounts.
  • If you’re looking for low operating expenses, head over to Pierce County–they’re averaging just over $4,600 per unit. Compare that with Eastside just over $5,700 on the Eastside!
  • Over the past 12 years, operating expenses for units built before 2000 have jumped over 40%. While actual costs vary, the increase remains fairly constant–compare Seattle at nearly 50% with Snohomish County at just 40%.

Investment Trends

  • Let’s talk sales. Currently, apartment sale prices are highest in Seattle, where the average is $160,000 per unit so far this year. Meanwhile, Pierce County units are selling at just $66,000.
  • Think Pierce County is a bargain? Keep price jumps in mind–the prices on these units climbed 83% over the past 12 years. Compare that with just a 74% climb in Seattle.

Rents: Trends, Inflation & Cap Rates

  • You might think Seattle is king when it comes to rents, but they’re actually highest on the Eastside right now–they’re averaging $1,250, compared with $1,090 in Seattle and $785 in Pierce County. Again, although rents in Pierce County look low, keep the climbing in mind. They went up 34% over the past 12 years, which makes the county second only to Seattle, where rents climbed 36%.
  • When comparing rents over time, don’t forget to factor inflation into the picture! Raw data, for instance, would have us thinking rents have shot up 800% since 1969, when in reality, they haven’t climbed much at all.
  • Finally, remember the important role cap rates play. As cap rates have fallen in recent years, buyers have been able to pay more for a set amount of income.

Development

  • Last but not least, we’ve got development trends. In Seattle, apartment stock has climbed 40% in the past 12 years; meanwhile, Snohomish and South King counties actually didn’t add any net stock.
  • For  numbers on how development is affecting your building, check out the report–it’s got info on all of the new units in King, Pierce, and Snohomish counties.

 

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