Spokane-area apartment occupancy rate ranks high nationally
Job, population growth said contributing factorDecember 1st, 2016
The Spokane area ranked in the top three small markets nationally for high apartment occupancy rates on a list released last month by RealPage Inc., which provides property management software for the housing industry.
The list ranks Syracuse, N.Y., in the top spot, with a 98.7 percent occupancy, just ahead of Spokane and Springfield, Mass. Each with a 98.6 percent occupancy rate. Other cities included on the list with vacancy running at no more than 2 percent included Reno, Nev.; Fresno, Calif.; Lansing, Mich.; Grand Rapids, Mich., Albany, N.Y.; and Rochester, N.Y.
The list put the national average occupancy rate at 96.5 percent. Occupancy rates for Portland and the Seattle-Tacoma area were listed just above that, at 97.1 percent, with Boise coming in nearly as high as Spokane, at 98.5 percent.
Greg Willett, chief economist for Richardson, Texas-based, RealPage Inc., says, “Spokane’s 98.6 occupancy rate is the strongest we’ve seen in recent years. Previously, it has been up to 96 percent or so, but recently, it has edged further to a new high. The same pattern can be seen in rental (rate) growth, which had been at 4 percent and is now at 5.6.”
He says the data reflect that the local economic expansion pace has picked up recently, with job formation running at a much stronger clip. “That growth rate is creating demand for housing,” he adds.
Willett says that although construction activity has started to pick up in the Spokane area, many of those developments aren’t completed yet, which also is contributing to the high occupancy rate.
“Looking ahead, we’re expecting occupancy rates will stay pretty high, but not as high as they are now,” he says. “This is kind of the peak, but as construction activity picks up things will quiet down a bit again.”
He expects the area’s occupancy rate will drop closer to 90 percent in the next year, and annual growth in rental rates will again drop closer to 4 percent.
Patrick Jones, executive director of Eastern Washington University’s Institute for Public Policy and Economic Analysis, says data collected as part of its Community Indicators of Spokane Initiative jibes with RealPage’s findings.
“The data we list comes from the University of Washington’s Runstad Center’s seasonal survey results,” he says. “Their fall 2016 survey puts Spokane County vacancy rates at 1.6 percent, which is down quite a bit from a 2010 high of nearly 8 percent.”
While Jones also agrees that area job growth plays a part in higher occupancy of rental apartments, he says population growth is a bigger factor.
“While it does appear that the number of housing units is growing, it seems to be happening at a slower rate than our population growth,” he says. “We’ve had some job growth, yes, but not a terrific amount. And whether you’re working or not, you still need a place to live.”
Jones says choice in type of housing also may be factoring into low vacancy rates, with the demand for apartment living having risen in recent years.
“It’s supply and demand,” he says. “The low supply of rental units, combined with increased demand for them is leading to the low vacancy rate we’re seeing now.”
RealPage provides software products to owners and managers of rental properties, including conventional, affordable, military, student, single-family, senior, and vacation housing.
Willett says the apartment occupancy list was compiled using data collected by RealPage software through the third quarter.
“RealPage provides software products that serve about 11 million rental units across the nation, some of which provide us with daily data,” he says. “From that we can produce some numbers summarizing what’s happening in various marketplaces either monthly, or quarterly. Most of the data we use concentrates on the 100 largest markets nationwide.”