With the apartment vacancy rate down more than 2 percentage points from its 2009 peak to 8.8 percent in the first quarter, industry experts say the sector's momentum should carry it forward strongly for the immediate future.
The number of occupied apartments surged 8 percent higher during the beginning of this year, according to Calvin Schnure, vice president of research and industry information with the National Association of Real Estate Investment Trusts. That represents the largest spike in rental apartment demand since 1993, Schnure indicated, an increase driven partly by Americans striking out on their own after sharing housing during recent years.
"A lot of the growth we saw in rental occupancy in the first quarter was some of these people who may have benefitted from the improving job market and were coming out signing leases," Schnure said recently. The demand from these Americans may be sufficient to account for any current excess supply, according to him.
While some say the sector's momentum may be waning, Schnure indicated that the recent strong performance of apartment REITs should last. He also noted that the current pace of construction, while up from activity levels during the economic downturn, remains slow compared to pre-recession years. Given the level of demand, rental property management companies and investors should perform strongly until conditions change, he predicted.