The 16,200-unit New Haven apartment market continued to have the fourth lowest vacancy rate among the top Reis markets in the second quarter of 2012, and that rate is changing little. The 2.5% rate was down 30 basis points from the quarter before but the same as in the three quarters before that. Reis’ First Glance data show a rate of 2.4% for the third quarter. With little to choose from, the second quarter vacancy rate was particularly low in the Class B/C segment at 2.2%, down 80 basis points from a year earlier. Class A vacancy was actually up 80 basis points from a year earlier (but down 50 for the second quarter) at 2.8%.
Despite low vacancy there is little apartment development, with no new units added in 2011, none expected in 2012, and none under construction. The under construction list includes two subsidized/low income projects and two condominium projects led by the 366-unit Regency at Prospect in Prospect, which is due to complete construction in early 2013. Two apartment projects in the New Haven Harborside area are expected to break ground next spring—the 136-unit Chapel West Apartments and the 200-unit Tract A at Science Park. But Reis predicts suppressed demand to manifest itself in the presence of new supply, keeping the vacancy rate below 2.5% through 2016.
Rent gains are accelerating. In the second quarter of 2012 the average asking rent increased 0.5% to $1,139 per month and the average effective rent rose 1.0% to $1,116 per month, bringing the year-over-year gains to 1.7% and 2.4%, respectively. Preliminary second quarter data show a 0.8% increase in the asking average; the effective average had already added 0.6% by August. Respective gains of 2.6% asking and 3.4% effective are forecast for all of 2012 with subsequent annual gains expected to be similar. The respective Class A and B/C asking averages for the second quarter, meanwhile, were $1,370 per month, down 0.4% for the period, and $919 per month, up 1.8%.