The Raleigh-Durham apartment market finished the second quarter of 2012 with a 4.7% vacancy rate, down 110 basis points over the year and 20 over the quarter. The Class A vacancy rate is 5.2%, down 30 basis points from the first quarter, the Class B/C rate is quite low at 4.0% down 10 basis points for the quarter. These rates are down 60 and 40 basis points year-over-year, respectively. The overall vacancy rate for July is unchanged at 4.7%. Vacancy has varied greatly here, from the current low rates to well over 8.0% during 2006. Interestingly, net absorption averaged 2,690 units per year from 2002 to 2011, while new construction averaged 2,538. Conversion activity, formerly active, has halted here, so perhaps occupancy changes can be more attributed to general state of the local economy.
As of Reis’ latest construction data, zero units have completed thus far in 2012 but 862 are under construction and scheduled to complete in the remainder of the year. Another 2,047 market-rate apartments are forecast to complete in 2013. After a solid 3,167 units were absorbed in 2011, 2012 is forecast to see a more moderate 1,700 units, after which new construction and demand should be in rough tandem through 2016. Reis, therefore, expects vacancy to finish 2012 at 4.4% and remain close to that level through the forecast period. On the rent front, average asking and effective rents, at $846 and $771 per month, are up 1.0% and 1.3%, respectively, over the quarter. July data show gains of 0.3% and 0.4%. Reis reports asking and effective rents are up 3.0% and 3.8% year-over-year, which are solid annual increases. For 2012, Reis forecasts gains of 3.4% and 4.5%, asking and effective, with even stronger yearly gains to follow.
According to Apartment Index (Apt.Index.com) “occupancy rates rose to 94%, their highest levels since 1994. Developers have responded with nearly 14,000 units either under-construction or planned.” Reporting in August 2012, this source gives an average asking rent of $864 per month.