U.S. apartment vacancies posted a 22 year-high in the second quarter, putting even more pressure on rents, New York-based real estate research firm Reis Inc. said Wednesday.
Vacancies climbed to 7.5 percent from 6.1 percent a year earlier…Reis Inc said….The last time landlords had so much empty space was in 1987, when vacancies reached 7.6 percent as the Standard & Poor’s 500 Index plummeted 23 percent in the last three months of that year.
“Vacancies continued to rise despite what has traditionally been a strong leasing period for apartment properties,” said Victor Calanog, director of research at Reis.
Asking rents for apartments fell 0.6 percent in the second quarter from the first…That matched the rate of change in the first quarter, the biggest drop since Reis began reporting such data in 1999.
Asking rents dropped 0.7 percent from a year earlier to an average $1,040 a month…Rents paid by tenants, also known as effective rents, fell 0.9 percent from the previous quarter to $975, said Reis.
Reis expects more than 100,000 units to become available this year.
“New buildings coming online over 2009 and 2010 will face higher initial vacancy levels, and will work to increase the pressure on leasing managers,” Calanog said.
The economic downturn is the major factor affecting apartment vacancies. In the late 1980s landlords had to lure tenants by adopting concessions ranging from free rent to free microwave ovens. Although such incentives generally haven’t been the norm since then, if the pace of deterioration in apartment vacancies keeps persisting, they may make a comeback.