The tightness of the Oakland apartment market continues to ratchet up quarter by quarter. In the second quarter of 2012 the vacancy rate fell 20 basis points to 3.3% on 342 units of net absorption and no new supply. It is down 100 basis points from a year earlier. The Class A vacancy rate was 3.6%, down 40 basis points for the period and 90 year-over-year. The Class B/C rate is just 3.1%, down 20 and 110 basis points, respectively. The overall vacancy rate remained at 3.3% in July. It had been as low as 1.2% in 2000, but was above 4.0% for most of the years since.
Fewer than 1,100 new units were added in 2010 and 2011 combined, and just 228 are expected to complete construction this year. Net absorption, meanwhile, has been strong at an average of around 2,000 units per year for 2010 and 2011, with 1,718 forecast for 2012. The vacancy rate is forecast to fall to 2.8% at the end of the year. With nearly 2,300 units under construction, however, supply and demand are forecast to be in balance thereafter as the vacancy rate stays close to 3.0%.
Rents are strong but not spiking. During the second quarter the average asking rent rose 0.9% to $1,404 per month, while the average effective rent increased 1.2% to $1,343 per month. The year-over-year gains were 3.3% and 4.1%, respectively. By segment, the Class A asking average for the second quarter was $1,698 per month, up 4.0% from a year earlier, while the Class B/C asking average was $1,272, up 2.8%. Both the overall asking and effective averages increased 0.2% in July. Reis predicts solid gains of 4.1% asking and 5.3% effective for all of 2012, with similar gains each year from 2013 to 2016.
Cassidy Turley reports a vacancy rate of 2.8% and an average rental rate of $1,268 per month for East Bay complexes with 99 units are fewer, and 3.8% and $1,550 for complexes with 100 units or more. This source expects high rents in the West Bay to increasingly drive people to the East Bay.