A new report from real estate research firm Reis Inc. shows the average cost of renting an apartment in the U.S. jumped in 2014 for the fifth consecutive year as strong demand and short supply left vacancies near historically low levels.
As The Wall Street Journal reports, the Reis data shows apartment rents rose an average of 3.6% last year to $1,124.38—which is the highest average rent since the company started tracking the market in 1980. The vacancy rate last year was 4.2%, the lowest since 2000.
Here in Baton Rouge, Craig Davenport is currently crunching the 2014 numbers on apartments in preparation of the annual TRENDS seminar that’s scheduled for April 16. Davenport says he doesn’t have the final numbers for all area apartment complexes just yet, but that he is seeing higher rents at most of the complexes he’s reviewed so far.
“We are seeing increases, but they are moderate increases,” says Davenport, an appraiser with Cook, Moore & Associates. “We aren’t seeing big increases being reported.”
According to TRENDS data presented last spring—which included information from 126 complexes—the average rent on a two-bedroom apartment in the Baton Rouge area rose by 1.25% in 2013 to $889 a month. That hike followed a 1.3% increase in 2012.
For a one-bedroom apartment, the increases in recent years have been more significant on a percentage basis. The average rent rose 2.9% in 2013 to $744, following a 2.1% increase in 2012. The apartment vacancy rate in Baton Rouge was 5.6% in 2013, which was up from 5.4% in 2012, but down from 6.7% in 2011.
Davenport expects the average rental rates in Baton Rouge to show an increase when the 2014 numbers are finalized, but he doesn’t want to venture a guess at how much they rose. He also expects the vacancy rate to show a decline.
“We have a lot of big projects that have been announced or are under development, but we really haven’t had too much of that supply hit the market yet,” Davenport says. “It will be very interesting to see what happens to the market, especially the student market, in the fall of this year when several big projects that are coming out of the ground are expected to open.”
In December, separate applications for five new apartment complexes that could bring more than 550 additional units to the Baton Rouge market were submitted for consideration at the Jan. 20 Planning Commission meeting, with 380 of those proposed for the LSU area. More than 2,700 new apartment units already are scheduled to come onto the market by the end of 2015.
Nonetheless, Davenport says he’s still receiving a lot of calls from developers on local tracts of land they’re eyeing for more apartment construction.
“Yeah, we get calls all the time,” he says. “They’re still showing a lot of interest in Baton Rouge.”
—Steve Sanoski
