Apartment vacancies nationwide fell to a decade-low 5.2 percent in the fourth quarter of 2011, according to a Reis report cited by Bloomberg News. That’s a 7.1 percent drop from the previous quarter’s rate of 5.6, and a 21.2 percent drop year-over-year. The U.S. vacancy rate has decreased for seven straight quarters from a 30-year high of 8 percent at the end of 2009 .
The increased occupancy applied upward pressure to effective rents, which gained 2.3 percent in the last year to settle at $1,009 on average.
The report said that rental apartments – which have outperformed all other commercial real estate sectors for the last two years – will remain strong as long as the housing market continues to suffer. But because the attractiveness of the rental market has finally brought new construction the sector’s growth may stagnate.
“The sector is benefiting from some of the lowest figures for new construction on record,” said Victor Calanog, head of research and economics for Reis. Just 37,678 new units were built in the U.S. in 2011, the lowest figure in 31 years of Reis data, shattering the previous low of 49,303 set in 1993. “By 2013, the influx of new units may begin eroding any benefit the sector derives from tight supply conditions.” [Bloomberg]