- Stabilized Class A apartment occupancy reached 95.7% in May, the highest level since mid-2022.
- Class B units maintained the highest occupancy at 95.8%, followed closely by Class C at 95.6%.
- Class A saw the strongest year-over-year improvement, up 170 basis points.
- For the first time since the pandemic, all three asset classes now exceed their pre-COVID occupancy averages.
A Clear Upturn for Class A
After several years of lagging behind, Class A occupancy is finally catching up. In May, occupancy in stabilized luxury apartments climbed to 95.7%, according to RealPage Market Analytics. That figure represents the highest A rate recorded since June 2022 and a 170 basis point increase over the same time last year.
While still just below Class B’s 95.8% mark, this gain shows meaningful progress. It also signals a shift in demand toward higher-end apartments, even as affordability remains a concern for many renters.
Historical Norms Reversed
Traditionally, Class C units have led the pack when it comes to occupancy. Between 2015 and 2019, Class C properties averaged a 95.4% occupancy rate, with Class B close behind at 95.3%. Class A trailed both, averaging just 94.7% during that same period.
This hierarchy reflected broader renter behavior. Budget-conscious tenants tended to remain longer in more affordable units, while A renters—more likely to buy homes—showed higher turnover. In addition, new supply often diluted demand in the luxury segment.
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Post-Pandemic Shifts
Since late 2023, occupancy patterns have shifted. Class B properties have consistently held the highest rates, driven by a combination of affordability and location advantages. Class C units remain close behind, supported by strong demand from workforce renters.
Meanwhile, Class A properties have had to contend with increased competition. The steady pipeline of new developments, along with frequent move-outs for home purchases, kept occupancy growth in check—until recently.
Strength Across the Board
Importantly, May’s data shows that occupancy across all asset classes now exceeds pre-pandemic five-year averages. This points to broad-based strength in the rental market, not just a temporary bump in one segment.
A’s strong rebound suggests that high-end renters may be less cautious than in recent years. That could reflect growing economic confidence or a shift in consumer preferences toward flexible, urban lifestyles over homeownership.
Why It Matters
Class A apartments are the most sensitive to new supply. They also lose renters more often due to home purchases. So, a strong recovery in Class A shows renters are returning to premium units. This could reflect growing confidence in the economy—or shifting lifestyle preferences.
What Comes Next
If demand holds steady, A occupancy could keep rising. But with more new units set to open, competition will remain high. Developers and investors will need to watch closely in the coming months.
