Apartment Vacancies Rise, Rents Fall in Q1

New York, NY, April 9, 2009--U.S. apartment rents fell in the first quarter and the vacancy rate rose to a five-year high, said real estate market analysis firm Reis Inc.

Vacancies rose to 7.2 percent from 6 percent a year earlier and 6.6 percent in the fourth quarter, the same level as the first quarter of 2004, matching the highest since Reis began conducting its survey in 1999.

Job losses and falling wages are shrinking the pool of potential renters, bucking expectations that apartments would benefit from slumping home sales.

“We are arguably only at the beginning of the current downturn,” said Victor Calanog, research director of Reis.

Rents paid by tenants fell 1.1 percent from the previous quarter to $984 on average. They were up 0.1 percent from a year earlier, Reis said.

Occupied space fell by a net 31,878 square feet, the largest one-quarter drop since the first three months of 2002, excluding apartments lost to condominium conversions, Reis said.

Reis expects more than 90,000 new units to come to market this year, comparable to the annual average from 2006 to 2008, when the economy was stronger. This suggests rents could fall further as landlords offer price breaks, said Reis.