(NEW YORK) — Across the country, rental prices have begun to spike as vacancy rates reach a low not seen in a decade, according to Reis, which tracks commercial real estate performance.
Nationwide, vacancy rates have fallen below 5 percent to 4.7 percent in the second quarter of 2012 — a low that hasn’t been seen since 2001.
“For most markets, once vacancies tighten below 5 percent, effective rents tend to spike as landlords perceive that tight market conditions afford them greater pricing power over tenants. With overall vacancy below this level, it appears that rents are beginning to accelerate,” according to Reis senior economist Ryan Severino.
In the U.S., the average price for effective rent rose by 1.3 percent to $1,041. New York City had the highest increase in the second quarter after average rents rose 1.7 percent to $2,935.
After New York, apartment renters in Fort Lauderdale, Fla., Seattle, San Francisco and Nashville, Tenn., saw the highest effective rent growth.
New York’s second quarter vacancy rate of 2.2 percent makes it one of the tightest markets for finding a rental apartment. A few other areas experiencing low vacancies include Portland, Ore.; Minneapolis; New Haven, Conn.; and San Jose, Calif., which round out the top five.
According to Severino, “Vacancy has not been this low since the wake of the dot com boom more than a decade ago and there is a paucity of available units.”
He continued, “As the market tightens and vacancy reaches very low levels, landlords shift their strategy for growing revenue vacancy decline to accelerating rent increases,” which is what is currently happening.
The reasons for higher rents include an exodus of people from houses and condos that were foreclosed during the real estate meltdown and tighter lending standards that have locked more buyers out of the market.
Copyright 2012 ABC News Radio
Aaron Smith, CNN Newswire
Jethro Mullen Ivana Kottasova and Patrick Gillespie, CNN
Sarah Anderson, Deseret News
Sara Weber, Deseret News