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There Are Too Many Expensive Apartments in U.S. Cities, and That Should Sound the Alarm

August 19, 2016

 

 


There Are Too Many Expensive Apartments in U.S. Cities, and That Should Sound the Alarm

AUGUST 16, 2016, 4:41 PM EDT | by  | Fortune

It’s a risky imbalance.

It might seem as if there’s an apartment shortage in cities, judging by the ever soaring cost of rent.

But a growing fraction of U.S. apartments—especially luxury—have been left unoccupied for longer stretches of time, real estate research firm CoStar revealed in a report Monday, as developers continue to build housing in the cities instead of the suburbs—injecting more risk into the economy.

The vacancy rate for downtown and adjacent districts in the U.S. has grown mildly—from 3.4% four years earlier, to 5.5%, but it’s luxury real estate that is the concern. While new apartment complexes in cities opened with a 52% vacancy rate in the first quarter of 2013 that fell to 11% within 18 months, vacancy rates clocked in at 72% in the first quarter of 2015, falling to just 18% over the year-and-a-half period.

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Ramón A. Rivera-Ramos
Blue Vault Nontraded REIT and Nontraded BDC Reviews
September 1, 2016

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