Jul
10

Reis: Apartments Remain the Darling of CRE

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The strong performance of the apartment sector continued unabated in the second quarter of 2012 as national vacancies fell by another 20 basis points to 4.7%. For two consecutive quarters the national vacancy rate has been marching below the benchmark 5% level used as a heuristic by apartment landlords for rent increases when the market tightens.

Net absorption remained relatively strong, with 25,540 units leasing up. This represents a slowdown from the first quarter’s net absorption of 34,448 units, but the moderation in vacancy compression is not unexpected. When the market tightens and vacancy reaches very low levels, landlords shift their strategy for growing revenue from vacancy decline to accelerating rent increases.

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