LEXINGTON OVERVIEW

1| Prior to the pandemic, Lexington-Fayette’s real gross metropolitan product grew at an average annual rate of 1.6% from 2015 to 2019. During that same five-year period, job growth averaged 1.2% annually, with roughly 3,100 jobs added on average each year. In 2020, COVID-19 mitigation measures and limited business activity caused the local economy to contract as much as 7.8% year-over-year in 2nd quarter. 2| In 2022, the metros inflation-adjusted economic output contracted 0.3%. At the same time, the metro recorded a net gain of 6,200 jobs, expanding the employment base 2.2%.

3| Lexington-Fayette’s unemployment rate in November 2022 rose 0.1-point year-over-year to 3.1%, below the national average of 3.4%. 4| During the past year, job gains in Lexington-Fayette were most pronounced in the Leisure/Hospitality Services sector followed by Government. 5| Despite job losses stemming from the pandemic, Lexington-Fayette’s current employment base now sits roughly 5,800 jobs or about 2% above the pre-pandemic level in February 2020.

Q1 2022 Market Snapshot

1| In 4th quarter 2022, effective asking rents for new leases were up 9.6% year-over-year. That annual rent performance was above the market’s fiveyear average of 5.6%. 2| In the 4th quarter 2022, annual effective rent change registered at 9.7% in Class A units, 9.4% in Class B units and 9.7% in Class C units. 3| Among submarkets, the strongest annual rent change performance over the past year was in Downtown Lexington/University (14.5%). 4| The weakest performance was in South Lexington (7.2%). Over the past five years, rent growth was strongest in Downtown Lexington/University and South Lexington. In the coming year, same-store effective asking rent change in Lexington-Fayette is expected to slow from the current level. As of 4th quarter 2022, effective asking rental rates in Lexington-Fayette averaged $1,140 per month, or $1.239 per square foot.

Occupancy

1| Occupancy in the Lexington-Fayette apartment market has ranged from 92.9% to 97.6% over the past five years, averaging 95.4% during that period.

2| Over the past year, occupancy lost 2.4 points, with the 4th quarter 2022 rate landing at 95.2%. 3| Looking at product classes in Lexington-Fayette, 4th quarter 2022 occupancy registered at 94.9% in Class A units, 95.5% in Class B units and 95.1% in Class C units. 4| Among submarkets, 4th quarter 2022 occupancy was strongest in North Lexington (96.7%). The weakest reading was seen in Downtown Lexington/University (93.9%).