Q2 2012 Columbia, South Carolina Apartment Market Trends

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Q2 2012 Columbia, South Carolina Apartment Market Trends

Vacancy continues to plunge in the 32,800-unit Columbia apartment market. After reaching a year-end peak of 13.8% in 2008 despite consistently positive net absorption, the vacancy rate had reached just 7.7% in the second quarter of 2012. The decrease was 40 basis points from the prior quarter and 160 from a year earlier. The Class A vacancy rate for the second quarter was 6.7%, compared with 8.9% for Class B/C.

New supply at nearly 2,500 units in 2008 and nearly 1,000 in 2009 had pushed up vacancy, but development then shut down. It has recently resumed, as the 54-unit The Palms on Main in south Columbia and the 60-unit Village at Rivers Edge in north Columbia completed construction during the third quarter, leaving nearly 2,000 units under construction. Reis put the vacancy rate at 7.8% in August, but it is forecast to end 2012 at just 6.6% as no new units are added. The rate is forecast to level off at around 5.5% after 2013, Reis predicts.

Rents gains are solid. In the second quarter the average asking rent increased 1.1% to $737 per month and the average effective rent rose 1.4% to $710 per month. An increase of 0.7% by both measures followed in July and August combined, and Reis predicts increases of 3.2% asking and 4.2% effective for all of 2012. There had been, moreover, just one negative year for rents during the recession, as the effective average slipped 0.9% in 2009 before rising again. Subsequent increases are forecast at 3.0% to 4.0% per year, roundly speaking. The Class A and B/C asking averages for the second quarter of 2012, meanwhile, were $832 and $631 per month, up 2.0% and 2.1%, respectively from a year earlier.

“Overall apartment occupancy has increased by 3.0% since January 2012, with average occupancy currently slightly greater than 91.0%,” according to Southeast Real Estate Business. “Market rents, however, have increased only slightly during the past six months (0.03%), with an average monthly rent of $762,” about the same as in 2009.