The Triangle apartment market showed strong improvement in the second quarter as demand outstripped all the new units being completed.
The region’s occupancy rate rose to 94.3 percent, up from 93.5 percent during the same period last year, according to MPF Research, which analyzes apartment data in 100 U.S. metro markets.
A total of 2,428 units were leased, which exceeded the 1,450 new units that came on the market during the quarter.
Rents increased both for new renters and those renewing their lease. Rents for tenants who renewed their leases rose an average of 5.2 percent, up from a 4.6 percent increase for those who renewed in the fourth quarter of last year.
Rents for new leases – meaning a unit was vacated and a new tenant moved in – rose 5.9 percent. That was a significant change from just two quarters ago when rents for new tenants actually fell 0.9 percent.
“So what is happening is apartment owners and operators are pushing more on pricing now that they see strengthening demand and, importantly, the beginning of a tail-off in new supply,” Jay Parsons, a market analyst with MPF Research, wrote in an email.
There were 7,377 new apartments completed in the 12-month period ending in June. That’s down from 8,154 during the previous 12-month period. Fewer than 5,000 units are scheduled to be completed in 2015, according to MPF.
(MPF’s 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 second-quarter data will come as good news for developers who have new projects scheduled to open over the next six months.
The Triangle has been among the strongest performing apartment markets in the country in recent years. But some feared that the pace of new construction could lead to a sustained fall in rents and occupancy levels.