CBRE’s OKC Apartment Overview, Forecast
By: J. David Chapman/February 27, 2020
CBRE’s 2019 OKC Apartment Overview and 2020 Forecast has been released. This report is an annual report compiled by experienced multifamily brokers William Forrest and Eva Wills. Focusing on rent pricing, occupancy, and demand, this report has become a go-to document for those of us watching the multifamily product in our market.
Whether you are a college student or a retiree, there are many advantages to renting a home rather than purchasing one, and in recent years, the U.S. rental market has seen an increase in demand for apartment and house rentals. According to Pew Research, about 36.6% of Americans rented in 2017. Although renting is seen as an affordable alternative to purchasing a home, renting in major cities has become increasingly expensive, and finding a suitable rental has become a major challenge for many people living and working in major cities.
Following and actually beating this national trend, the average monthly rent for two-bedroom apartments built before 1990 rose 6.9% to $724 in 2019, compared with $677 in 2018. The national two-bedroom rents increased 1.7%, from $1,779 in 2018 to $1,808 in 2019. As you can see by the numbers, even though we are increasing significantly more than the national average, our two-bedroom apartment rental rates are still affordable by comparison.
In those same apartment complexes in Oklahoma City, one-bedroom apartments beat the national increase of 3% and increased 7.8% to $610 in 2019, compared with $556 in 2018. The national increase of 3% makes one-bedrooms national apartment rent $1,586 in 2019, up from $1,541 in 2018. Again, although rates are increasing, the OKC metropolitan area apartment prices are relatively affordable compared to national rates.
According to CBRE, occupancy ended at 91%. The OKC metropolitan area has recorded a remarkably steady occupancy rate of approximately 90% over the years. Norman showed a drop in occupancy last year to 89%, but Edmond more than made up for that with an increase to 93%. CBRE predicts that this occupancy will continue to improve because construction of multifamily is appearing to slow and the economy is holding steady.
With homeownership percentages still declining, the average income of those renting increasing, renter-by-preference tenants increasing, rental product amenities and locations improving, it appears that multifamily rental housing will remain the darling of the real estate investment industry.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).