The 126,022-unit metro Columbus apartment market ended the second quarter with a 6.1% vacancy rate, down 30 basis points from the prior quarter and down 190 from the second quarter of 2011. The Class A vacancy rate was 3.8%, down 20 basis points over the quarter, the Class B/C rate was 7.3%, down 50 basis points. Vacancy in July was 6.0%, down 10 basis points. Construction has been active here, adding 10,865 units in the nine years ending in 2010. Net absorption, at 4,661 units in that time span, was enough to keep vacancy within reasonable bounds; the rate highest in the current cycle was the recession-induced rate of 9.2% seen in 2009. There have been no conversions in recent years. Only 882 units completed in 2011, according to Reis’ latest construction data, but 678 units in three projects have completed thus far in 2012. The largest of these, the 314-unit Hilliard Grand Apartments, completed in Hilliard in July. Reis’ latest data indicate 1,373 market-rate apartment units under construction, of which 323 bear 2012 completion dates. Condominium development is also active in Columbus. Reis reports 270 units in two projects have completed thus far in 2012. Reis reports 2,919 condominium units under construction, with 467 set for completion between now and year-end 2012. For regular multifamily construction, Reis forecasts new construction from 2012 to 2016 at more than 6,000 units, but net absorption, totaling 8,524 units will more than keep pace as vacancy falls toward 5.0%.
Rents are picking up here. Reis reports second quarter average asking and effective rents of $714 and $674 per month, up 1.0% and 1.2%, respectively, over the quarter and 2.6% and 3.4% over 12 months. Both measures increased 0.5% in July. Class A asking rents finished the second quarter at $855 per month, and Class B/C rents finished at $634. Reis forecasts gains of 3.1% and 4.0%, asking and effective, in 2012.
In their third quarter report on Columbus apartments, Marcus & Millichap note that “increased employment and population growth have strengthened apartment operations and signaled developers to start building.”