Vacancy remains low in the Suburban Maryland apartment market, reaching 4.1% in the second quarter of 2012. That rate is down 30 basis points since year-end 2011 and 80 basis points since second quarter 2011. Since 5.0% vacancy is generally considered close to full occupancy, the Suburban Maryland apartment market is very tight by most standards. July data show an increase to 4.2%. Class A vacancy was 4.3%, down 20 basis points for the quarter and 120 year-over-year. Class B/C vacancy was 4.0%, unchanged over the quarter. Remarkably, Reis forecasts vacancy to decline further, finishing 2012 at 3.7% and 2013 at 3.6% before tracking slightly upward again.
Net absorption has been light this quarter, perhaps because there is very little to absorb. First and second quarter net absorption totals were 427 and 172 units, respectively. Two projects have completed thus far in 2012: the Galaxy Apartments, at 113 market rate units, which completed in January, and the Solaire Metro Apartments, at 295 units, which completed in June. This market averaged 1,381 units completed per year from 2000 to 2011, so current construction is on the light side. It should be noted that two other projects, the Gables Upper Rock and the Residences at Hidden Creek, with 275 and 300 units, respectively, are on tap for completion in 2012 as well. Reis reports average asking and effective rents at $1,348 and $1,296 per month, up 2.3% and 3.1% over 12 months, up 0.7% and 1.0% for the second quarter. These rents were both up 0.2% in July, so rental gains continue. Looking forward, Reis projects a 3.4% gain for asking and a 4.4% gain in effective rents in 2012. Class A and B/C asking rents, meanwhile, were up 0.7% and 0.8% in the second quarter, to $1,570 month and $1,202 per month, respectively.
In their Washington, D.C. third quarter 2012 multifamily analysis, Marcus & Millichap report planned in Maryland increased by 4,200 in three months. Leasing incentives waned in Maryland, where a 0.8% rise in effective rents during the second quarter exceeded an increase in asking rents of 0.7%.