New supply is booming in the 144,000-unit Baltimore apartment market, but it remains below the level of net absorption. The second quarter of 2012 saw 740 units complete construction in two projects, leaving nearly 4,000 units under construction. But the vacancy rate slipped 10 basis points to just 3.8%, down 80 from one year earlier. The Class A and B/C vacancy rates are each under 4.0%, with the Class A segment accounting for most of the new supply and net absorption.
Reis predicts 2,237 new units will complete construction in all of 2012, the most since 1991, followed by 2,442 in 2013. Net absorption, however, is forecast at 2,815 units in 2012, and more than 2,000 the following two years as well. The vacancy rate, which edged up in July, is forecast to finish 2012 at 3.7%, and then fall as low as 3.4% during the 2013 to 2016 period. The rate had been between 4.0% and 6.0% for most of the period from 1990 to 2011, with a previous drop below 4.0% around 2000.
Rent gains accelerated in the second quarter of 2012. The average asking rent rose 1.3% to $1,046 per month, and the average effective rent increased 1.5% to $1,019 per month. The year-over-year gains were 3.2% asking and 3.9% effective; and increases of 0.4% by both measures followed in July. The respective second quarter Class A and B/C asking averages were $1,252 and $904 per month, up
1.5% and 1.1% during the period. Reis predicts overall gains of 4.1% asking and 5.0% effective for all of 2012, among the largest since the year 2000. Subsequent increases are forecast to be nearly as large, in the vicinity of 4.5% per year.
Baltimore’s “metrowide Stabilized Class A vacancy is down 130 basis points from last year at this time, to 3.2%,” Transwestern said in a second quarter report on Baltimore and Washington. Average effective rents in the metro area increased 5.7% over 12 months to $1,446 per month “supported in large part by growth in the City of Baltimore.”