U.S. apartment vacancies declined to an 11-year low in the fourth quarter as construction of multifamily complexes spurred by rising rents failed to keep up with increasing demand, Reis Inc. said.
The national vacancy rate dropped to 4.5 percent from 4.7 percent in the third quarter and 5.2 percent a year earlier, the New York-based real estate research firm said today. It was the lowest since the third quarter of 2001, when the rate was 3.9 percent, according to Reis. New York was the tightest market, with a 2.1 percent vacancy rate, unchanged from a year earlier.
The number of occupied apartments in the U.S. has been rising since the second quarter of 2009 as millions of people forced out of their houses by foreclosure switched to renting, and stricter mortgage requirements made it harder for potential homebuyers to obtain loans.
“The dominant force is foreclosure,” Doug Poutasse, head of strategy and research at Bentall Kennedy, a Toronto-based property-investment firm that oversees $29.4 billion of assets across North America, said in a telephone interview. “Demand growth remains above supply growth in almost every market.”
Landlords had their biggest net leasing gains of the year, at 45,162 units, up from 24,951 units in the third quarter, Reis said.
Apartment construction rose for a third straight quarter as strong demand and rising rents encouraged building, Reis said. A total of 24,614 units were completed in the fourth quarter, up from 17,378 units in the previous three months and 10,145 units a year earlier. The last time there were more completions was the second quarter of 2010, the firm said.
The average U.S. asking rent rose to $1,097 a month from $1,064 a year earlier, and effective rents -- the average rate after such concessions as a free month -- rose to $1,048 from $1,010.