The 28,530-unit metro Knoxville apartment market weakened in the second quarter, although a local market watcher attributed this to seasonal factors (see Special Real Estate Factors). Net absorption was slightly negative, and the vacancy rate edged up 10 basis points to 5.5%. That was still down 70 from a year earlier. The Class A rate was 5.2%, down 10 basis points for the quarter and 100 from a year earlier, but the Class B/C rate increased 20 basis points during the quarter to 5.7%.
The 218-unit Bridgeway Apartment Homes completed in the Outer Counties area of metro Knoxville, in Maryville in September. Not all the units were absorbed, as First Glace data puts the third quarter vacancy rate up 20 basis points to 5.7%. The 96-unit second phase of The Enclave at Hardin Valley, the only other apartment project under construction, may also complete by year-end, but Reis predicts the vacancy rate will end the year at 4.8%. It is expected to continue falling until it is just over 4.0%.
Apartment markets have been strong throughout the U.S., so the 0.5% second quarter gain in Knoxville’s average asking rent, to $611 per month, was the lowest among the top Reis markets. A 0.8% gain followed in the third quarter, according to preliminary data, with a gain of 3.2% predicted for the year. The average effective rent had increased 0.7% to $594 per month during the second quarter, and has been forecast to record a 4.0% gain for all of 2012. Smaller annual increases of 2.5% to 3.5% are forecast for the 2013 to 2016 period. The Class A and B/C asking averages for the second quarter 2012, meanwhile, were $730 and $546 per month, up 2.4% and 1.7% from a year earlier and 0.3% and 0.6% for the quarter.
According to 2011 American Community Survey data, the rental vacancy rate for all kinds of housing units in the Knoxville-Sevierville-La Follette, TN CSA was 8.7%. The median gross rent was reported by renters at $700.