Survey Reveals Apartment Sector Growth Continues

Market conditions continued to improve for the apartment industry in the United States in the first quarter of 2012, indicating a growing demand for rental housing, according to data report from the National Multi Housing Council (NMHC).

The organization's quarterly market survey suggested that the apartment sector is witnessing lower vacancy rates, higher rents and more favorable financing terms.

"Market conditions improved across the board, even from the rather strong level of three months ago," said Mark Obrinsky, NMHC's chief economist.

Obrinsky said he expects that the demand for apartment residences and properties will continue to grow.

"We anticipate this increasing further in the coming years, due in part to the large number of younger households moving into the housing market and a greater preference shown for renting," he said.

Nearly half of the survey's respondents, 49 percent, reported tighter rental markets, reflecting lower vacancy rates and higher rents. One percent of respondents indicated that markets loosened, indicating some combination of higher vacancies and declining rents. In the previous quarter, 34 percent of those surveyed said the market had tightened in the prior three months, while and 14 percent said it had loosened.

However, while the apartment market enjoyed its fifth consecutive quarter of growth, Obrinsky said the data illustrate that the market lacks widespread access to capital.

"The strength of the sector's recovery has attracted capital to the industry," Obrinsky said. "But our latest survey finds that capital is largely targeted at top-tier properties in core markets and not widely available throughout the U.S."

More than a third of the survey's respondents reported the supply of capital is being constrained for all deals not involving top-tier properties, including those that are located in primary geographic markets. In contrast, close to 20 percent reported capital as being available for all tiers of apartment assets in all markets.

Respondents did indicate a general sense of are optimism regarding improvement in borrowing conditions. Four percent of those polled said conditions had worsened from the last quarter, while 34 percent reported that they had improved.

Additionally, equity financing conditions have improved as the report noted that one-third of the respondents said quarter-to-quarter equity financing is more available.