In the third and fourth quarters of 2015, overall unit delivery volume will peak with roughly 62,000 units brought to market in each quarter. Of the markets with the largest wave of second half 2015 deliveries, Atlanta, Austin, D.C., Houston and San Antonio should have the hardest time absorbing new product.
All of these markets enter the second half of the year with overall occupancies at or below 94 percent. Austin and D.C.’s current vacancy rates stand at 7.5 percent and 7.6 percent, respectively, according to recent data from the National Association of Realtors.
Atlanta, Houston and San Antonio feature vacancies of 6 percent, 6.9 percent and 6.8 percent, respectively.
These markets are likely to be the metros where the largest concessions exist. Move-in specials should exceed one month free in these locales, and developers will begin preleasing projects up to four or five months out from completion.
A region where a significant wave of units will be delivered in the next 12 to 15 months, the Carolinas should also have a difficult time absorbing product. Charlotte has a current vacancy rate of 6.8 percent, as does Charleston, South Carolina. Winston-Salem and Raleigh-Durham, North Carolina, sport rates of 6.3 percent and 7.6 percent, respectively.
Of the markets with the largest wave of deliveries in late 2015/2016, those with the lowest current vacancy rates are Los Angeles, Oakland/East Bay, California, San Francisco, San Jose, Orange County, California, and Chicago. All these locales feature occupancies above 96 percent, with Oakland/East Bay leading the way at 2.8 percent.
According to NAR’s data, the markets with the lowest vacancy rates entering the third quarter are Sacramento, San Diego, Inland Empire, California, Cleveland, Detroit and Providence, Rhode Island. All these markets sport vacancy rates between 2.5 and 2.9 percent.