U.S. Apartment Rents Rose 3.2% as Occupancies Climbed
By Hui-yong Yu Apr 2, 2014 12:01 AM ET
U.S. apartment rents rose 3.2% in the first quarter as occupancies climbed and newly constructed projects commanded higher leasing costs, softening the impact of an increasing supply.
Effective rents, or what tenants paid after any landlord breaks such as a free month, averaged $1,089 a month, up from $1,055 a year earlier, Reis Inc. said in a report. The vacancy rate fell to 4 percent, down from 4.4 percent and the lowest since the third quarter of 2001, when it was 3.9 percent.
Rentals remain popular four years into a U.S. apartment recovery fueled by the foreclosure crisis, tighter mortgage standards and many people’s preference for leasing. A wave of new construction in response to the demand sparked concern among landlords that rent gains would slow. Builders completed 131,450 new units in 2013, up 66 percent from the previous year and more than triple the 42,491 apartments added in 2011, Reis said.
“Demand for apartments is seemingly insatiable,” Ryan Severino, senior economist at the New York-based research firm, said in the report. “Still-low vacancy, an improving economy and labor market, and lots of newly completed Class A properties coming online with rents higher than the market average will all conspire to push asking and effective rents up by roughly 3.3 percent this year.”
Seventy-one of the 79 largest U.S. markets had effective-rent growth in the quarter, “indicating the pervasiveness of the recovery in the apartment market,” in contrast to other major property types such as offices, where the rebound has been “far more limited,” Severino said.
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http://www.bloomberg.com/news/2014-04-02/u-s-apartment-rents-rose-3-2-as-occupancies-climbed.html
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