The Triangle apartment market is beginning to feel the effects of the wave of new units coming on the market.
The region’s occupancy rate was 94.4 percent in the fourth quarter, down 0.9 percentage point from the third quarter and down 0.4 percentage point from the same period in 2012, according MPF Research, which analyzes apartment data in 100 U.S. metro markets.
Rents dropped 1.8 percent in the fourth quarter compared with the third quarter and are up 1.8 percent compared with the same period in 2012 – that’s the smallest year-over-year increase in 13 quarters.
“What happened in fourth quarter was that the Triangle got the first big wave of new apartments – and that pulled down on occupancy and led to the rent cut,” wrote Jay Parsons, a market analyst with MPF, in an email. “Apartment demand has actually been pretty solid, but just not enough to keep pace with the rising tide of supply.”
According to MPF, the Triangle is scheduled to add 8,388 units this year, which would be the largest annual increase in the two decades MPF has been tracking the market here. (MPF’s under-construction figures include off-campus student housing projects and low-income tax credit projects, which will not compete with the other apartment complexes being built.)
The increase would expand the number of units in the Triangle by 6.6 percent, which would be second only to Austin, Texas, which is expected to expand by 6.7 percent this year.
MPF is forecasting rent growth of just 0.8 percent in the Triangle this year.
“Rent growth should accelerate again once completions start moderating, which should occur to some degree in 2015,” Parsons said.
MPF breaks the Triangle into 11 regions, and all are scheduled to get new units this year.
Staff writer David Bracken