National Vacancy Rate Rises to 5-Year High

While the apartment industry continues to perform quite well, there continue to be signs that it’s cooled off lately. According to a story in the Wall Street Journal the national vacancy rate has climbed from 4.1% in 3Q16 to 4.5% in 3Q17. From the story:

In all, apartment vacancy rates increased in 50 of 79 metropolitan areas, with many major cities experiencing high levels of construction that outstripped demand, according to data released this week by apartment-tracker Reis Inc.

“I think that’s a sign of what’s to come for the rest of the year,” said Barbara Byrne Denham, a senior economist at Reis. 

Charleston, S.C., suffered the biggest increase in the share of empty units, with a 2.6 percentage point jump in the vacancy rate from a year earlier.

The New York, Salt Lake City and Nashville metropolitan areas all experienced large increases as well.

That’s the bad news. The good news is that rents remain relatively strong:

Rent growth remained relatively robust considering the increase in vacancy, suggesting landlords are choosing to hold the line on price and let apartments sit empty if necessary. Average rents increased 3.3% in the U.S. in the third quarter compared with a year earlier.