The vacancy rate in the 85,350-unit Pittsburgh apartment market is at the lowest level since 1998 according to Reis. At 3.0% in the second quarter, it was down 20 basis points for the period and 90 from a year earlier. There was no change in July. The rate had been near or above 5.0% from 2002 to 2009 but it had been lower earlier. The market has tightened once again because new supply has been limited since the end of 2004. The second quarter Class A vacancy rate was 3.2%, up 20 basis points for the period and 40 from a year earlier, while the Class B/C rate was 2.9%, down 30 basis points over three months and 140 over twelve.
Low vacancy has revived new supply. The 65-unit Fifth Avenue High School Redevelopment completed construction in August in the city of Pittsburgh, leaving 372 units under construction for completion later in 2012 and 1,028 under construction for later delivery. Reis, however, predicts the vacancy rate will slip to just 2.9% at year-end 2012 before new supply finally catches up with demand.
Rent gains slowed in the second quarter, as the 0.6% increase in the average asking rent was the fourth lowest among the top Reis markets for the period. The quarter end rate of $870 per month was up 2.7% from a year earlier. The average effective rent, meanwhile, increased 0.8% for the quarter and 3.4% year-over-year to $825 per month. Rents rose 0.3% by both measures in July, and Reis predicts gains of 3.1% asking and 4.1% effective for all of 2012. Subsequent annual gains are generally expected to be in the 4.0% to 5.0% range, denting Pittsburgh’s vaunted affordability. The respective Class A and B/C asking averages for the second quarter of 2012, meanwhile, were $1,101 and $764 per month, up 0.5% and 0.7% for the period.
“The vacancy rate for Pittsburgh’s multifamily market chalks in at a sparkling 3.2%, the second best in the country after San Jose, Calif., according to the National Association of Realtors,” as cited by Inman News.