Housing analysts expect gradual improvement in vacancy rates as the year progresses, but cite wide regional and local differences in the strength of demand for multifamily rentals. Demand has tended to be strongest in California and the mid-Atlantic region — including markets where the cost of owning a home tends to be particularly high — and weakest in the Midwest.
Among the nation’s 75 largest metropolitan areas, those with the worst overall vacancy rates for all multifamily units in 2004 included: Columbus, Ohio, 18.8%; Atlanta, 18.5%; Raleigh-Durham-Chapel Hill, N.C., 18.1%; Akron, Ohio, 17.5%; Oklahoma City, 15.8%; Houston, 15.7%; Chicago, 15.4%; Norfolk-Virginia Beach-Newport News, Va., 14.8%; Dayton-Springfield, Ohio, 14.8%; Denver, 14.5%; and San Antonio, 14.5%.
Lowest vacancies were in: Orange County, Calif., 3.6%; Ventura County, Calif., 3.7%; Bergen-Passaic, N.J., 3.8%; Los Angeles-Long Beach, 3.8%; New York, 5.2%; Sacramento, Calif., 5.7%; Middlesex-Somerset-Hunterson, N.J., 5.8%; Honolulu, 5.8%; Riverside-San Bernardino, Calif., 6.0%; Fresno, Calif., 6.0%; and Boston, 6.0%.
Ron Witten, of Witten Advisors in Dallas, is bullish about prospects for the multifamily industry in the year ahead. Demand for rental units has started growing faster than the pace at which they are being produced for the first time in years, he said, and that should push overall increases in rents into the 3%-4% range this year.
The for-sale share of the multifamily market, now 30%, is at an all-time high, he said.
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