As national apartment vacancies fall to their lowest levels in over a decade, some are concerned that heightened development could begin to erode the conditions that have made the sector profitable in the coming years.
Vacancies continued falling in the first quarter to reach 4.9 percent, National Real Estate Investor notes, the lowest point reached since 2001 and only the third time in more than 30 years that data and analytics firm Reis has reported a multifamily vacancy rate below 5 percent. This tends to accelerate rent growth and decreasing concessions by landlords and rental property management firms, the news source notes.
Relatively few units came online in the first quarter, but the news source notes that some signs suggest as many as 200,000 new apartments may be completed between now and the end of 2013, a rate of inventory growth which more than triples that seen in 2011. Even with additional renter households being formed or abandoning a prior preference for homeownership, some investors and analysts are concerned that too many units too close together may harm the market.
Analysts know that completion dates are often pushed back for practical reasons as construction continues, the news source notes. Overbuilding risks are higher in some areas than others, as well, so it may be that some metros will lose momentum while others continue as they currently are.