Written by Amanda Jones Hoyle | TRIANGLE BUSINESS JOURNAL
The average rental rate for an apartment in the Raleigh-Cary region has increased 2.1 percent in the past year, according to the third quarter survey report by research firm Axiometrics, enough to rank the area at number 13th in the nation among the 50 largest population markets.
Occupancy rates also increased to 95.2 percent, compared to the 94.9 percent in the third quarter of 2013, and was the third highest rate since the third quarter of 2007. Axiometrics considers a property or market to be full at 95 percent occupancy.
The Raleigh market had been off to a slow first half of 2014, says Jay Denton, Axiometrics' senior vice president of research and analytics, but recent job growth in the region has been the driving factor behind the improvements.
"The Raleigh market was hurt by the amount of new supply being delivered in the last half of 2013 and the first half of 2014,” Denton says. "But, job growth continues to be strong, and new household formation is resulting in increased absorption of the new units, which gave landlords the leeway to increase rents during the third quarter.”
The average effective rent among apartment communities that have been open a year or more was $920 per month in the third quarter, compared with $899 during the same period in 2013, the report shows. The report did not include data from the Durham MSA.
About 6,800 new apartment units were delivered during 2013 and the first three quarters of 2014, Axiometrics reports, and more is on the way. It forecasts another peak in new supply around 2018 and 2019 after a bit of a construction lull in 2016 and early 2017.
“After the huge supply surge of 2013 and 2014, Axiometrics is expecting another very significant climb in deliveries four to five years in the future,” Denton says. “While such a peak is expected in most markets throughout the country, we forecast that Raleigh’s will be higher than most.”
Job growth in the Raleigh-Cary MSA was 3.1 percent in 2012 and 3 percent in 2013. Total job growth for 2014 is expected to be around 3.8 percent, a gain of 20,500 jobs, it reports.
“Raleigh’s apartment market is beginning to emerge again, now that demand has caught up to, and is starting to exceed, supply,” Denton said. “It is a very promising market.”