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A report released last week from Fitch Ratings says the risk of Class A overbuilding is rising in some submarkets.

Overall, the ratings agency says the concentration of high-end construction in 12 metro areas is intensifying and new supply in the student housing sector continues to break records. Despite this, Fitch doesn't expect the stress in multifamily asset performance to have an overall impact on ratings.

In these 12 markets, Fitch says the Class A segment is dominating. The organization cites Reis data showing that asking rents increased by 4.6% in 2015 but are forecast to increase by 3.4% in 2016. If the pace of rent increases continues to fall, this concentration could compound downward rent pressure on rents in those areas, Fitch says. Currently, however, the impact of new supply is relatively muted, as asking-rent gains remain strong and vacancy rates are still low (although increasing). But there are exceptions, notably in markets with high energy exposure, such as Houston.

Student housing has also seen record levels of building in recent years. While individual properties have begun to exhibit performance deterioration due to occupancy declines, Fitch expects overall student housing vacancies will hover around 2% for 2017.

As for the performance decline of certain individual student developments, Fitch cites two potential explanations: "We believe some of these pressures may be related to superior and newer properties that have entered their submarkets during the rise in construction, as well as declining enrollment at certain institutions."