For much of the economy, Victor Calanog, vice president of research and economics at New York-based Reis, said the first quarter of 2011 was a disappointment. Gross domestic product (GDP) dropped from 3.1 percent to 1.8 percent. The contribution of personal consumption expenditures and residential investment to GDP also fell. And until March and April, job growth was disappointing in 2011.

Though Calanog expects the economy to ultimately add 2 million jobs this year, inflation concerns have started to creep up. In his first quarter conference call, he said that malaise has spread to most sectors of the commercial real estate market. But there was one exception. “Overall, economic growth may have slowed in the first quarter, but that news didn’t make it to the multifamily sector,” Calanog says.

The numbers tell the story of a strong industry. More than 44,000 apartment units were absorbed in the quarter, according to Reis. Effective rents jumped 0.5 percent and asking rents jumped 0.4 percent. In the first quarter of last year, those numbers were 0.1 percent and 0.3 percent, respectively. Vacancy rates dropped to 6.2 percent after coming in at 6.6 percent in the fourth quarter of 2010 and 8 percent in the first quarter of 2010.

Calanog said there are a number of factors for this growth in the rental sector, but mentioned the declining homeownership rate as the primary one. Nationwide, homeownership fell from 70 percent in 2004 to 66.4 percent in the end of the first quarter.

Every single metro enjoyed growth in the multifamily sector in the first quarter. Buffalo and Los Angeles were at the bottom of the growth list, but nevertheless saw revenue per unit increases of 1.9 percent. The other cities in the bottom five were Las Vegas (2.1 percent), Ventura County (2.1 percent), and Central New Jersey (2.4 percent).

At the other end of the spectrum were Greenville, S.C., and Charleston, S.C., which saw revenue per unit increases of 8.8 percent and 7.2 respectively. Portland (6.9 percent), Austin, Texas (6.8 percent), and Denver (6.7) rounded out the top five.

Vacancies fell across the board and Calanog expects that to continue. After falling to 5.2 percent in 2012, and 5.1 percent in 2013, he expects vacancies nationally to fall to 5 percent in 2014 and 2015.

This optimism has showed up in apartment cap rates. Mean cap rates were at 6.7 percent at the end of the quarter after clocking in at 7.1 percent in the firer quarter of 2010. The 12-month rolling cap rate fell to below six percent, after coming in at above 7.4 percent last year.

Calanog doesn’t really expect anything to temper this growth until late 2012, at the earliest. Then, in certain markets, he expects new development to eventually become a factor. “After speaking with lenders across the nation, we expect to developers to start breaking out the shovels,” Calanog says.