THE APARTMENT market kept growing in August and September, according to third-quarter rents data, but things did slow from the frenzied increases of earlier this year.
Axiometrics reported that effectiverent growth (rent net of concessions) slowed in August, to a rate of 0.34 percent. That was the lowest rate of growth since December 2010, but overall rent growth is still set to be higher than in 2010. Occupancy reached 94.1 percent, up from 93.9 per cent in July. “We're still showing a very strong apartment market,” says Jay Denton, vice president of research at Axiometrics. “We haven't seen a big hit."
Other industry data providers saw similar trends. RealFacts said rents have finally been restored to where they were in 2008, moving to $994 a month. And Reis saw vacancies fall from 5.9 percent to 5.6 percent, as 36,000 apartments were absorbed. Vacancies are now at 2006 levels, according to the research firm, but “the fact that we saw a little bit of slowdown relative to earlier in the year leads me to believe that some people are cautious about renting,” says Ryan Severino, an economist at Reis.
Still, Severino remains optimistic about 2012 and beyond. “The vacancy rates have gotten so tight, it's become a favorable environment for landlords to push rent increases to tenants,” he says. “Next year, we'll start to break above that and see indications of rent acceleration."
Meanwhile, MPF Research has occupancy at 94.8 percent and says rents grew 4.2 per cent from third quarter 2010 to third quarter 2011. Greg Willett, who heads the research team at MPF, says the fact that rents continued to move was a good sign for the business.
Effective rents for new leases rose 1.6 percent in the quarter.