Apartment owners have a few months to enjoy tight supply growth before a large number of new multifamily properties come online, according to Reis, a provider of commercial real estate information and analysis.
Reis projects nearly 150,000 units will enter the market in 2013, with most opening their doors in the second half of the year. For the 10 years preceding the most recent housing downturn, the sector’s annual completions averaged 120,000 units.
The national apartment vacancy rate fell 20 basis points in the first quarter, dipping to 4.3 percent. Over the past four quarters, apartment vacancies have declined much faster than any other sector. Reis said it has not observed apartment vacancy rates this low since late 2001.
Reis expects multifamily vacancies to continue descending, but at a more moderate rate, especially compared to the “torrid” pace of the last three years. The firm forecasts a slight rise in multifamily vacancies starting next year if strong inventory growth materializes.
Most of the major apartment markets improved in the first quarter. Sixty-nine of 82 markets that Reis tracks showed improving occupancy, while 79 markets enjoyed positive net absorption.
Asking and effective rents both grew by 50 basis points during the quarter, but this represents the slowest rate of growth for both measures since 2011.