US apartment rents rise 3.2% in Q1; vacancy rate down

[SEATTLE] US apartment rents rose 3.2 per cent in the first quarter as occupancies climbed and newly constructed projects commanded higher leasing costs, softening the impact of an increasing supply. Effective rents, or what tenants paid after any landlord breaks such as a free month, averaged US$1,089 a month, up from US$1,055 a year earlier, Reis Inc said in a report. The vacancy rate fell to 4 per cent, down from 4.4 per cent and the lowest since the third quarter of 2001, when it was 3.9 per cent.

Rentals remain popular four years into a US apartment recovery fuelled by the foreclosure crisis, tighter mortgage standards and many people's preference for leasing. A wave of new construction in response to the demand sparked concern among landlords that rent gains would slow. Builders completed 131,450 new units in 2013, up 66 per cent from the previous year and more than triple the 42,491 apartments added in 2011, Reis said.

"Demand for apartments is seemingly insatiable," Ryan Severino, senior economist at the New York-based research firm, said. "Still-low vacancy, an improving economy and labour market, and lots of newly completed Class A properties coming online with rents higher than the market average will all conspire to push asking and effective rents up by roughly 3.3 per cent this year."