The 163,000-unit Austin apartment market continued its surge in the second quarter of 2012. Although the 396-unit The Settlement completed construction in Kyle in May, most of the new supply for 2012 is due later in the year. With 673 units of net absorption, the vacancy rate fell 20 basis points to 4.3%, which was 170 lower than a year earlier. The same rate was recorded in July. The respective second quarter Class A and B/C rates were 4.4%, down 160 basis points year-over-year, and 4.2%, down 180. Demand is strong for both segments.
New supply had slowed since more than 10,000 units completed in 2009, but more than 9,600 were under construction at mid-year. Planning also remains extensive. Reis predicts net absorption at just under 3,400 for all of 2012, more than the 2,400 or so expected to complete construction, bringing the vacancy rate to 4.2% at year-end. But added completions are expected to allow the rate to edge back over 5.0% by 2014, despite continued strong demand.
Rents gains accelerated in the second quarter, as the asking rent increased 1.2% to $928 per month and the average effective rent rose 1.5% to $849 per month, bringing the year-over-year gains to 3.5% and 4.3%, respectively. July brought an additional gain of 0.2% by both measures, and increases of 3.5% and 4.8% are forecast for all of 2012. Increases in the vicinity of 5.0% are forecast for each subsequent year. The second quarter 2012 Class A and B/C asking averages, meanwhile, were $1072 per month, up 1.3% for the quarter and 3.2% year-over-year, and $754 per month, up 1.2% and 3.7%, respectively.
ALN Systems reports an August 2012 vacancy rate of 5.3% in Austin, up 140 basis points from a year earlier. The asking rent is given as $949 per month, up 4.6% year-over-year.