Oklahoma City and Tulsa Both See Drop in Multifamily Rent Performance
admin / May 2023
Most Rent Growth Occurring in Mid-Tier Properties as Renter Demand Wavers for High-End Properties
Weak demand from apartment renters and rising availability from recent deliveries are cooling rent growth across Oklahoma, with performances in Oklahoma City and Tulsa narrowing. Through April, Oklahoma City is registering an average annual rent growth of 2.6% compared to Tulsa, with 2.8% annual rent growth. The trend comes as Tulsa has outpaced its bigger brother in terms of average rent growth since the end of 2019.
Multifamily rent growth across the state is cooling rapidly among the higher-quality (and more expensive) four-and-five-star properties, hovering near 1% to 2% in both markets through the end of the first quarter. Meanwhile, average-rated three-star properties and lower-rated units are helping to keep rent growth afloat, registering annual increases of 4% to 5% in each market. Suburban neighborhoods continue to clock robust rent growth, while Oklahoma City and Tulsa’s downtown both reported flat growth.
Tulsa’s apartment rents accelerated quickly compared to Oklahoma City and, in turn, are seeing rent growth decline more rapidly. Markets with a heavier concentration of mid-to-lower tier properties are seeing more stable rent growth deceleration. Tulsa edges Oklahoma City with a greater share of higher-end properties. A quarter of Tulsa’s multifamily inventory is graded as four-star, above Oklahoma City’s 20%.
Both markets have reported anemic net absorption, the net change in apartment move-ins and move-outs, with move-outs eclipsing move-ins since mid-2022. In turn, the average vacancy rate has increased closer to pre-crisis norms but remains below levels reported in the wake of the energy downturn going back to 2016. Oklahoma City is reporting an average multifamily vacancy of 10.5%, while Tulsa is near 8.2%.
Tulsa’s rent growth out performance over the past two years erased the premium that Oklahoma City previously held. Over the past decade, market rents in Oklahoma City have carried an average of $31 per month premium compared to Tulsa. As the state capital and center of gravity for the state’s economy, Oklahoma City had historically commanded a more significant premium for multifamily housing. Market asking rents in Oklahoma City are trending near $933 a month, essentially equal to Tulsa’s average asking rent of $936 a month.
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