High Rent & Weak Growth for Northeast Apartments

In advance of the May 1st release of Q1 data from ReisReports, we’re pleased to provide a first glance at Q1’s five biggest winners and losers in terms of Apartment market rent increase from the previous quarter.

National apartment rents concluded the first quarter with effective rents increasing at its fastest pace since end-2007. National asking rents grew by 5% from the previous quarter with a current average rent of $1,070 per month, a 2.2% increase from Q1 2011. 

The Northeast displayed weak signs of rent growth during the first quarter with three of the biggest losing metros due to the still fragile state of New York City. The city’s vacancies continue to tighten in the first quarter to 2.0%, a level last seen in the fourth quarter of 2007.  Effective rents have increased by 0.3%; far lower than one would expect in a market with 2.0% vacancy. Additionally, effective rents actually fell by 0.3% in March. The struggling labor market still dealing with layoffs and restructuring slowed the pace of apartment leasing for the last three months. With the employment picture not as robust as it could be, and some of the highest effective rent levels in the nation, New York and the surrounding Northern New Jersey and Fairfield County apartments in general found it difficult to raise rents appreciably this quarter.   

By contrast, a smaller markets like Tulsa posted quarterly change of 1.1% this quarter and still has room to raise rents with one of the lowest average effective rent levels in the nation at $563 per month, less than a fifth of New York City’s rent levels. A strengthening local economy and new construction completed with demand at full throttle, has resulted with vacancies plummeting and an increase in rents for metros like Charleston, and Tulsa.

Check back May 1st for more analysis when Q1 data is published.