South Region Sees Most Pandemic-Era Revenue Growth

Apartment markets in the South region saw revenues increase the most since the start of the COVID-19 pandemic.

It goes without saying that the pandemic has had a tremendous impact on the nation’s multifamily market. One way to look at performance is to study the changes in revenue per occupied square foot, one of the metrics available in RealPage’s lease transaction data set which is comprised of more than 11 million individual apartment leases. This particular metric focuses on rent roll but does not include amenities or concessions, so it provides a nice apples-to-apples comparison of revenue performance across regions and markets.

When looking at revenue change by region since the beginning of the pandemic, the South saw revenues increase the most, surpassing the Northeast at the beginning of 2022.

Still, the Northeast led in revenue growth up until that point, coming out of the gates hot during 2020 and surpassing the three other national regions by a wide margin. The slow-and-steady Midwest performed quite closely to the South during the early months of the pandemic, with revenue growth even surpassing the South region from mid-2020 to mid-2021. The West was the only region to see a significant decline in revenue, which lasted from the start of the pandemic until around mid-2021.

Turning to look at yearly revenue change by region, the Northeast again really outperformed throughout 2020, while none of the other regions achieved any meaningful gains. In fact, in the West region, there was a slight decline of about three cents per occupied square foot during the year. 

Revenue grew across each of the four regions during 2021, with the West regaining ground and seeing significant acceleration, especially during the second half of the year. Both the West and the South saw revenue increases of about ten cents per square foot during 2021, while growth in the Northeast tapered and performed more closely to the Midwest during the calendar year with each of those two regions achieving revenue growth of about five cents per square foot.

The first half of 2022 is really when the South started seeing a notable uptick in revenue growth relative to the pricier Northeast and West region counterparts. Revenues per square foot in the South increased almost ten cents per square foot ($0.09) during the first six months of 2022, nearly on par with both the Northeast ($0.11) and the West ($0.12). By comparison, the increase in the Midwest landed at about half that amount ($0.06).

The South region has seen nearly a 14% increase in revenue per occupied square foot since the onset of the pandemic, well outperforming both the Northeast (12%) and the West (10%).

Since the South region took the lead in COVID-era revenue growth this year, it’s important to examine the performance in some of the larger investment markets in the region. Looking at total accumulated revenue gain by year, Miami really shines as the clear winner, with nearly 35 cents of additional revenue per occupied square foot added since the pandemic. Despite being a laggard relative to some of the other markets throughout 2020, Miami caught up in 2021 then saw revenue performance skyrocket in the first half of 2022, adding about 21 cents per square foot during those six months alone.

Atlanta followed a similar trajectory to Miami through 2021 but saw revenue growth begin to slow in 2022, landing at a cumulative revenue gain of about 25 cents per occupied square foot.

Charlotte saw more rapid revenue increases than its peers right out of the gates in 2020, then landed at a similar level to Miami and Atlanta by the end of 2021. Revenue growth in Charlotte also slowed through the first half of 2022 with cumulative change over the period landing behind Atlanta at 21 cents per square foot.

Despite milder performance in 2020, revenue growth in Dallas saw very similar performance to Charlotte during 2021 and into 2022, with total revenue change landing closely behind the Queen City at about 20 cents per occupied square foot. 

Circling back to Florida, Orlando registered impressive cumulative revenue growth of about 19 cents per square foot despite taking a massive pandemic-induced hit to its tourism sector throughout much of 2020. Interestingly, both Miami and Orlando saw larger revenue gains during the first half of 2022 alone than they did during the entirety of 2021, likely pointing to the ongoing popularity of these Florida markets. 

In a similar vein, Houston saw a slight increase in revenue during the first six months of the year compared to 2021 as the region’s volatile energy sector has experienced strong gains in recent months.  Still, with no revenue gains over the period until 3rd quarter of 2021, cumulative rent growth in Houston trails at just over ten cents per square foot.

Stay tuned for a closer look at market-level revenue growth performance across the other U.S. regions.