Apartment Vacancy Across The Twin Cities Hits Five-Year Low
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Written by Antonia S. Perdomo
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Tuesday, 20 December 2011 |
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Apartment vacancy across the Twin Cities has fallen to 3.1 percent, a five-year low, according to Minneapolis-based Marquette Advisors. A year ago, local apartment vacancy stood at 6.1 percent.
According to the latest data, 1,180 more local apartments were occupied at the end of March than were sitting empty at the beginning of the year.
Marquette Advisors reported absorption of 6,433 units during 2010, driving down vacancy. In the apartment market, absorption measures the change in the total number of occupied units from one reporting period to another.
"The trend is positive, most definitely," said Brent Wittenberg, vice president with Marquette Advisors, which compiles a quarterly report titled "Apartment Trends."
The new report tracks statistics for the first quarter of 2011.
Factors contributing to the trend are job growth and former homeowners who have been pushed into the rental market by foreclosure or other economic circumstances. But Wittenberg said some people who could afford to buy homes are still choosing to rent for various reasons.
"The renter-by-choice market is also increasing," Wittenberg said.
Marquette Advisors projects that 700 new market-rate apartments will open in the Minneapolis-St. Paul area this year. The study does not track affordable, senior or student housing units. But rentals are still outpacing development.
Wittenberg does not have a forecast for the number of units that could be added in 2012 but expects that it will be more than this year's.
Numerous plans are on local drawing boards for new apartment projects, but Wittenberg noted, "Some of these are deals that are looking for financing."
In Minneapolis, vacancy is even lower than the market at large, at 2.9 percent. In St. Paul, the vacancy rate is 3.2 percent. But zeroing in on downtown St. Paul, the vacancy rate is 1.5 percent.
The lowest vacancy rate is in Chaska, at 0.9 percent; the highest vacancy rate is in Shoreview/Aden Hills, where Marquette Advisors reports a vacancy rate of 6.6 percent.
As vacancy continues to fall, rents have started to climb. The average apartment rent is now $916, up from $901 a year ago.
The current Marquette Advisors report tracks 113,791 metro area apartments in 54 geographic submarkets. The report shows 3,515 vacant units at the end of March.
Wittenberg noted that the apartment market is strong across the metro area. Twenty-two of the local submarkets are reporting vacancy rates below 3 percent.
A vacancy rate of 5 percent is generally considered an equilibrium point between tenants and landlords.
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Last Updated ( Tuesday, 20 December 2011 )
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