At the start of 2023, the U.S. national apartment occupancy average was just over 94% with an average monthly rental rate of about $1,750. The apartment market today is in a good position for continued growth and stability for the year ahead.
In 2021, the apartment market had record-breaking leasing activity that was supported by increasing employee pay and a competitive homeownership market, which made renting more attractive. In 2022, the apartment market saw some softening in leasing activity for less desirable markets in lower-income areas. In 2022, our portfolio had steady leasing activity and increasing rental rates as our markets are very desirable places for people to live who have higher household incomes. Apartment renting on average will continue to be a desirable and more affordable option for many Americans. Even with increasing rental rates over the year ahead, we will still see strong occupancy and demand for quality apartments. The national effective rent is forecast to increase by about five percent across the country over the year ahead.
Market Spotlight: Savannah, GA
Savannah is known for being America’s first planned city. James Edward Oglethorpe (1696 – 1785) was the visionary for the planned city with the idea of wide streets set on a formal grid pattern and large public squares to provide shade for public meeting spaces. Today, the Savannah metropolitan area is home to about 350,000 people and is expected to increase by about one and a half percent per year. The increasing population is also paired with a growing economy.
One of the main economic drivers in any area is the ports. Savannah has two (Garden City Terminal and Ocean Terminal). The ports of Savannah and Brunswick (approximately 80 miles south of Savannah) are among the fastest growing in America. The growth of Savannah’s ports has been largely supported over the recent decades by the massive growth and economic drivers of Atlanta (about 250 miles away). The enormous increase in container volume to the ports has been needed to support the goods & services demands of the Southeast U.S. The port and container growth has also increased warehouse and other construction needs for the area.
Another main economic driver to support future growth is the recent announcement of Hyundai electric vehicle and battery plants, which are expected to employ over 8,000 people. Hyundai expects to invest about $5.5 billion in the market and have its production line operating by 2025, with a goal of producing about 500,000 vehicles per year. Savannah’s geographic location and infrastructure make it a great location to get goods north or south on I-95. I-95 runs the entire eastern seaboard of the U.S., from Maine to Florida. I-16 starts in Savannah and runs west to Atlanta. From there, goods can go everywhere in the U.S. and globally.
The Savannah market will continue to grow and evolve over the years to come. It’s an exciting market to be invested in, and I look forward to the long-term growth that we get to be a part of.