Southeast Virginia multifamily market update
RICHMOND Employment gains and students at local universities contribute to steady demand for apartments in Virginia’s capital. Last year, the apartment market was bolstered by job gains that reached a three-year high of 9,700 positions. The government and financial activities sectors accounted for more than half the jobs. The hiring dropped the unemployment rate below 3%, the lowest level since 2000. The higher rate of employment is prompting an increased demand for housing as more people can afford to move out on their own and many are choosing to rent. As a result, vacancy tightened an annual 30 basis points to 4.1% at the end the first quarter and the rate has dropped 270 basis points over the past five years. During this time, the average effective rent jumped 23% to $1,073 per month in March. This includes a 5.4% gain in the most recent four quarters. The tightening vacancy rate and improving rent growth are encouraging apartment construction. During the past 12 months, 1,900 units were delivered, slightly above the five-year average. This year, deliveries will reach a 13-year annual high as almost 2,300 rentals are due for completion, which will likely bump vacancy up and could expand concessions in select areas when multiple buildings begin leasing efforts.