The Dayton apartment market saw some improvements in the second quarter, as occupancy ticked upward and rents gained ground. Reis reports a second quarter vacancy rate of 5.1%, down 30 basis points from the prior quarter and down 130 year-over-year. First Glance data from Reis give a third quarter vacancy rate of 4.9%. Class A vacancy is reported at 4.4%, down 10 basis points from the prior quarter, and Class B/C vacancy is 5.5%, down 40 basis points over the quarter. This market has been helped by low construction. From 2002 to 2011, only 1,759 units were added, averaging less than 200 per year. Even though the market consists of only 33,430 units, that is still a small amount. Net absorption has been similarly restrained, totaling 888 units over that time span. Thus vacancy, after reaching a peak in the economic downturn in 2009, has been slowly tracking downward ever since. There were no multifamily completions in 2010 or 2011. Thus far in 2012, the Caldwell and Brown apartments, with 107 units, completed in August, and none are on tap for the rest of the year. The Hawk apartments in the city of Troy in Miami County, with 80 units, are expected to complete in October of 2013. With new construction not expected to total 1,000 units by 2016, and net absorption well over that, vacancy is forecast to continue its gradual descent, reaching 3.6% by the end of Reis’ forecast period.
With such favorable occupancy, rents perform well, although this is not a high-rent market. Reis reports second quarter average asking and effective rents of $650 per month and $624 per month, up 0.9% and 1.1% for the quarter and up 2.4% and 3.0% year-over-year, respectively. First Glance data from Reis gives a third quarter asking rent of $652 per month. Class A asking rents are reported at $807 per month and Class B/C rents at $570 per month, up 1.1% and 0.2%, respectively, over the quarter.
After posting substantial asking and effective rent gains of 3.2% and 4.5% in 2012, continued annual high increases in these ranges are estimated for the rest of the Reis forecast period.