The vacancy rate in the 32,200-unit Fairfield County apartment market has remained tight in the second quarter of 2012, but 165 units of new supply pushed it up 10 basis points to 4.9%. The Class A rate of 4.2% was up 40 basis points for the quarter, while the Class B/C rate of 5.4% was down 20 basis points. Compared with a year earlier, however, the Class A rate is down 180 basis points, while the Class B/C rate was up 100. The LockWorks at Yale and Towne Building 2 in Stamford was responsible for the second quarter’s new supply, and it was followed by the completion of the 76 unit (30 market rate) Palmers Square in July. Even so the vacancy rate fell back to 4.8% that month. Net absorption totaled 309 in 2012 through that month, following 881 in 2011.
Reis predicts a surge of net absorption toward the end of the year, bringing the 2012 total to 1,039; the most Reis has ever recorded in this market in a database going back to 1980. Although another 130 units are projected to complete construction by the end of the year, the vacancy rate is forecast to fall to 3.1% at year-end 2012. Ongoing solid demand is expected to keep the rate even lower during the 2013 to 2016 period. There are currently 365 units under construction for completion in 2013 or later, along with 501 units in two planned projects that now have projected completion dates in the next two years.
For now rent increases are moderate. In the second quarter the average asking rent increased 1.0% to $1,854 per month, while the average effective rent rose 1.1% to $1,805 per month. The year-over-year gains were 2.3% and 2.7%, respectively. The second quarter Class A and B/C asking averages of $2,253 and $1,531 per month were up 1.0% and 0.6% for the period and 1.6% and 2.2% from a year earlier. Overall rents edged up 0.1% by both measures in July, and gains of 2.8% asking and 3.5% effective are forecast for all of 2012. Subsequent annual gains are forecast to be larger, peaking at 6.3% and 7.2%, respectively in 2015.