CRED iQ examined revenue trends for over 10,000 multifamily properties across the Agency and CMBS securitization universe covering over $800 billion of securitized debt. Data was derived from full-year property-level financial statements for 2021. Partial-year financial statements from 2022 were also considered when available and appropriate. However, annualized financial statements from partial-year periods may have included abnormalities from the timing of revenue recognition in certain cases and were subsequently excluded. Property-level financial statements for securitized mortgages are generally reported on a lag basis and can take several months to be reported after borrowers\u2019 initial reporting and subsequent servicer adjustments.<\/p>\n\n\n\n
In our observations, revenue per occupied unit included gross earnings for a multifamily property. Total revenue per unit comprised base rents as well as ancillary income, which included supplemental tenant services such as parking, laundry, and common area amenities.<\/p>\n\n\n\n
CRED iQ aggregated year-end 2021 financial data by MSA for the 100 largest primary and secondary multifamily markets. Revenue figures were then analyzed on a per unit basis and adjusted for property-level occupancy performance to determine the highest grossing multifamily markets in the country. As a baseline, average revenue per occupied unit across all primary and secondary markets was approximately $1,568. Isolating the Top 20 markets, the average revenue per occupied unit was $1,918 \u2013 approximately 22% higher than the average for all markets. MSAs located in the state of California accounted for seven (35%) of the Top 20 markets with the highest revenue per occupied unit. Among the top MSAs in California were San Jose<\/strong> and San Francisco<\/strong>, which both ranking in the five highest grossing multifamily markets.<\/p>\n\n\n\n The Bridgeport-Stamford-Norwalk, CT MSA<\/strong> had the highest average revenue per occupied unit in 2021 with $2,648. Operating leverage averaged about 45% with average operating expenses per unit of $1,203. The Bridgeport market barely edged out the New York-Northern New Jersey-Long Island MSA<\/strong>, which had average revenue per occupied unit of $2,644 \u2013 less than 1% lower than Bridgeport. The average operating leverage for the New York MSA was approximately 44%, which was in line with the Bridgeport MSA. New York and Bridgeport were two of six submarkets with average revenue per occupied unit that was greater than $2,000.<\/p>\n\n\n\n Accounting for operating expenses on a per unit basis, the Top 20 highest grossing markets had an average operating expense ratio of 44%. The Denver-Aurora, CO MSA<\/strong> has the highest margins with an average operating expense ratio of 37% while multifamily properties in the Buffalo-Niagara Falls, NY MSA<\/strong> performed with the highest operating leverage, equal to 50%. When accounting for lower operating leverage, markets can be viewed more favorably based on Net Operating Income (NOI) potential. Comparable expense per unit figures can vary widely across markets in a number of categories, including real estate taxes, insurance premiums, or utility costs.<\/p>\n\n\n\n Shifting focus to the opposite side of the scale, some notable high-inventory markets with relatively lower revenue per occupied unit metrics included Kansas City<\/strong> ($995), Detroit <\/strong>($1,081), San Antonio<\/strong> ($1,143), Houston<\/strong> ($1,146), and Columbus, OH<\/strong> ($1,161).<\/p>\n\n\n\n