Apartment House Occupancy Rates Rise While New Construction Soars

Occupancy rates in U.S. apartment houses are slowly rising while rents remain high. According to analysts at Reis, for the first quarter of 2016, the vacancy rate at U.S. apartments rose to 4.5%, up from 4.4% in the fourth quarter of 2015 and 4.3% in the first quarter of 2015. Historically, the vacancy rate peaked in late 2009 at 8.0% and bottomed out at 4.2% in 2014 and early 2015. Rents reached record high levels in 2015. For the 12 months ending March 31, 2015, rates rose an average of 3.5% nationwide, to an average monthly rate of $1,131.72. By the first quarter of 2016, rents were still rising but at a softened pace, up 0.5% in the first quarter as new apartments opened. The year 2014 saw the completion of 161,518 new apartments nationwide and another 188,306 units were completed in 2015 (the highest since 2009’s 188,870) according to Reis. Construction continues, with 2016 completions expected to exceed the number in 2015. Watch for rents to fall as these new units hit the market.

A new niche in the apartment industry is opening, as tech startups enter the market to offer tools to prospective tenants to find apartments and connect them directly with landlords, bypassing brokers and agents. Padspin (www.padspin.com ), RadPad (www.onradpad.com ) and Zumper (www.zumper.com ) are examples. RadPad, based in Los Angeles, California, had approximately 1.2 million listings throughout the U.S. in early 2016, which are presorted to allow renters to find the best listings easily. Listings are given scores based on the quality of listing photos, landlord responsiveness and listing address accuracy.

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