The vacancy rate for the country’s most expensive apartments is more than double the rate for lower-priced pads, as builders have flooded the high-end of the market while supply remains tight for more modest product.
The most expensive 10% of U.S. rentals had a vacancy rate of more than 13 percent during the first quarter of the year, according to a CoStar Group study cited by Bloomberg News.
For the rest, the rate was around 6 percent. CoStar’s study excluded subsidized rentals and focused on the 54 largest metropolitan areas in the country.
The reason vacancy rates are so disparate across the different sectors is because developers have focused on building high-priced apartments.
There are now 537,000 apartments und construction – the most going back at least to 2000, according to the study. But those units are disproportionately located in expensive submarkets.
“Capital around the world is enamored with U.S. multifamily, and a lot of that is manifesting itself in high-amenity, high-asking-rent” apartments, said CoStar’s Michael Cohen. “The market is missing some other opportunities.”
Here in New York City, a glut of high-end rentals has pushed concessions higher and higher. Concessions in Brooklyn and Queens hit record highs in April, according to Douglas Elliman. And in Manhattan, 44.3 percent of new leases in April included concessions.
That glut has given rise to brokers who specialize in bringing wealthy foreign nationals to rent these pricey pads. The Real Deal recently profiled one such broker, Sunanne Zhu. [Bloomberg] – Rich Bockmann