Vacancies Keep Rising, Rents Keep Falling

Apartment vacancies hit a 30-year high in the fourth quarter, and rents fell, as landlords struggled to keep existing tenants and attract new ones.

The vacancy rate ended the year at 8 percent, the highest level since 1980, according to Reis Inc., a New York research firm that tracks vacancies and rents in the top 79 U.S. markets.

Of the 79 U.S. markets that Reis follows, Tucson, Arizona experienced the biggest vacancy rise, up 3.1 percentage points in 2009 to 10.5 percent. Meanwhile, vacancies in the small market of Chattanooga, Tennessee fell 2.2 percentage to 6.4 percent.

Jacksonville, Florida ended the year with the highest vacancy rate at 14.4 percent.

In New York City, the largest U.S. apartment market, vacancies fell 0.10 percentage points to 2.9 percent. However, factoring in months of free rent and other perks, effective rent fell 0.7 percent to $2,646 per month.

Higher priced rental properties in Manhattan drove the vacancy decline, while apartment buildings in more middle-class boroughs such as the Bronx, Brooklyn and Queens haven't been able to dodge the bullet.

On average, close to 60 percent of all rental buildings across the New York metropolitan area lowered their rents from the third quarter.

Year-over-year, effective rents in New York fell by 5.6 percent, making 2009 the worst year for landlords by this measure. This was even worse than the 3.8 decline in 2002, when New York reeled from the after-effects of the Sept. 11, 2001 attacks.



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