Click here to download the entire newsletter amn201101
From the Newsletter:
Revenue is the Key
We all look at Occupancy Rates and Rental Rates for a sign of how a market is doing. But how is that market doing if the Occupancy Rate comes down a little and the Rental Rates go up a bit? By combining the Occupancy Rate and the Rental Rate into what we call “Revenue Performance” we can see how those two statistics work together.
First, we need to take out all admitted concessions from the Rental Rates. This is known as the ‘Effective Rental Rate’. When you multiply the Effective Rental Rate by the Occupancy Rate, you get the average Revenue Performance. The change, year over year, will give you a better idea of a market‘s performance than looking at any other single number. It is entirely possible for the revenue to increase when occupancy falls; conversely, it is possible for revenue to fall when rents increase. It is also important to understand that not all units in the market were leased at this higher rate, so this number shows us what was put into place over the course of the yearâ€”bottom lines lag behind but will follow this pattern as natural turnover progresses.
2009 was a particularly brutal year for most of the industry. 16 of the 23 markets that ALN tracks saw a decline in Revenue per Unit (RPU). Las Vegas got hit with a decline of 8.5% while Atlanta suffered through a drop of nearly 7.5%. In fact, six markets saw a decline in revenue of more than 5% for the year.
Only Amarillo was able to salvage much from 2009. Their Revenue was up 3.8% that year and followed with a 3.7% growth in 2010. The only other markets which were able to show positive revenue growth in 2009 were all in Florida, which had seen their drop occur well before most of the rest of the country. Tallahassee,Ft. Myers/Naples, Pensacola and Melbourne posted a small gain in Revenue for 2009. Each of these Florida markets were able to grow even more in 2010.
ALN Apartment Data was founded in 1991 to provide Apartment Locator Handbooks and computer software for virtually every Apartment Locator throughout the DFW Metroplex. Since that time, ALN has built a database of highly detailed apartment information which is updated monthly. With the expansion of the internet, ALN created the first ever web-based Apartment Locator Program and soon moved all the Locator traffic to this site. Starting in 1997, ALN expanded our services into Austin, San Antonio and Houston.
In early 1993, ALN introduced a program (which eventually became what is now called ALN OnLine) for brokers, appraisers, management companies and others to allow fast access to Market Data and Statistical Analysis of any apartment in our database. Detailed listings of current rents, specials, occupancy rates and more on any property, as well as statistical informaiton of other properties in any area are also available in a quick, easy to use package.
In late 2003, ALN started its expansion outside the Texas markets. Florida and Arizona were natural areas for us to target since so many of our OnLine clients also service those markets. Atlanta and Las Vegas were added in 2004 and we are now collecting the initial data for many other markets throughout the country.
We now have both the ALN OnLine Program (market data) and the ALN Locator Program available in every market we service. For more information, please contact an ALN Consultant at 800/643-6416 extension 1.