The Wichita apartment market continues to tighten, and new supply is only starting to respond. The second quarter 2012 vacancy rate was 5.0%, after 17 units of negative net absorption pushed it up 10 basis points. That rate was down 80 basis points from a year earlier, however, and according to First Glance data the rate had already fallen to 4.5%, the same as predicted for year-end 2012. The second quarter Class A vacancy rate was just 2.9%, down 20 basis points for the second quarter and 170 from a year earlier, while the Class B/C rate was 5.6%, up 10 basis points for the period but down 60 year-over-year. The Class A segment accounts for just 6,500 of the metro Wichita inventory of 26,800 units.
Plans for new apartments are moving forward. The 40-unit Player Piano Building apartments broke ground in April, and the 208-unit Chisholm Lake apartments broke ground in September (see Special Real Estate Factors). The 63-unit The Lux is predicted to break ground in December. Senior housing development is also active, with the 40-unit Homestead Senior Residences completing construction in April and two projects with 310 units expected to break ground in March 2013. Following an absence of new supply in 2011 and 2013, Reis predicts these projects and others will approximately match net absorption and keep the vacancy rate between 4.5% and 4.7%.
The strong rent gains of 2007 and 2008, at 4.0% to 5.0% per year roundly speaking; have returned after three weak years. In the second quarter of 2012 the average asking rent rose 1.1% to $536 per month and the average effective rent increased 1.3% to $510 per month. Low rents are a longstanding condition here, not the result of a recent weak market. Preliminary second quarter data show a further 0.6% gain in the overall asking average; the effective average had added another 0.7% by August. Reis predicts gains of 3.3% asking and 4.6% effective for 2012. Subsequent annual increases are forecast at 3.0% to 4.0%, roundly speaking. The respective Class A and B/C asking averages for the second quarter, meanwhile, were $720 and $477 per month.