Do apartment properties face a cliff, given near-term supply growth? Q2012 Trends Report
National vacancies dipped by 20 basis points in the fourth quarter, hitting 4.5 percent. This is the lowest level since late 2001. Occupancy are well above the usual rule of thumb “rate” of about 95 percent, and most landlords have switched their strategy from pushing down vacancies to increasing rents.
While Reis is projecting rising vacancies from 2014 onward that does not mean the sky is about to fall on apartment properties. Supply is expected to spike slightly in late 2013 and through 2014, but that just brings us back to our 10-year average of about 130,000 units of delivery per year in Reis' 79 primary metros. That does mean vacancies will bottom sometime this year, and begin a modest rise through 2017, ending the period at 4.7 percent.
So although we’re projecting a rise in vacancies it’s really more of a normalization of conditions versus the persistent declines that we've experienced over the last three years, coming off of historic highs.