Apartment vacancies decline; rents rise

Bloomberg:

Apartment vacancies in the U.S. dropped in the second quarter from the previous three months, the first quarterly improvement in two years, as private-sector job growth boosted demand for rental housing, Reis Inc. said.

The vacancy rate for apartment properties was 7.8 percent, down from a 30-year high of 8 percent in the first quarter and up from 7.7 percent a year earlier, according to a report today by the real estate research firm. First-quarter vacancies were the highest since 1980, when Reis began tracking the data.

“The apartment sector is on the path towards recovery,” Victor Calanog, director of research at New York-based Reis, said in today’s report…

Landlords’ asking rents rose 0.4 percent from the first quarter and were down 0.7 percent from a year earlier. Effective rents, or what tenants actually paid, climbed 0.7 percent from the prior quarter and were unchanged from a year earlier.

This won’t come as a surprise to those of you who have been watching residential REIT stocks during the past year or so.

Manhattan rental market heats up

Reuters reports that Manhattan landlords are faring much better than last year:

The Manhattan apartment rental market strengthened in the second quarter as landlords drew confidence from a more robust sale market, but it is still softer than it had been in the past decade.

The average rent per square foot in the second quarter was $49.60, according to a report from brokerage Prudential Douglas Elliman. That is 12.3 percent higher than last year but 7.6 percent lower than the 10-year inflation-adjusted average of $53.67, Elliman said.

Likewise, the number of listings on the market fell 31.8 percent to 4,972. But the average for the 10 years through 2008, when investment bank Lehman Brothers collapsed and sent Manhattan’s real estate market into a tailspin, was nearly 16 percent lower at 4,193.

“What you have is a noticeable improvement from the landlord’s perspective in the second quarter,” said Jonathan Miller of appraisal firm Miller Samuel, who writes the Elliman report. “The perception is that things are not as dire as they were a year ago. That’s causing them to be more firm in their asking rents.”

Also, the article quotes an analyst saying that “Owner-paid concessions are becoming a thing of the past.”

Related: “In Manhattan, most apartments aren’t sitting empty for long: A flurry of lease signings pushed the quarterly vacancy rate below 1% for the first time in nearly three years, leaving few choices for apartment seekers during the prime leasing season.”