Markets & EconomyRentals

Unit absorption becomes increasingly difficult in certain metros

As unit delivery peaks, some areas will see shortages

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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 ...