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Updated
April 6, 2008

 

The Apartment's Already Taken
Regional Census numbers indicate a good economy but not enough new rental units to meet demand

By CHRIS CHURCHILL, Business writer
First published: Saturday, March 22, 2008, Times Union

The Capital Region had one of the nation's lowest rental vacancy rates in 2007, suggesting both economic vitality and a failure by builders to keep up with demand.

The Census Bureau says the Albany-Troy-Schenectady area had a 2007 rental vacancy rate of 4.9 percent, making it the fifth tightest rental market among the nation's 75 largest metropolitan areas.

The trend is not new: The census bureau says the region has had one of the nation's tightest markets for several years. In 2005, the Capital Region even had the lowest vacancy rate among the largest metropolitan areas, at 3.1 percent.

The numbers are surprising because recent population growth in the Capital Region has been sluggish, and most other areas with low rental vacancy rates are in fast-growing parts of the Sun Belt.

San Jose, Calif., for example, had the lowest rate in 2007, at 3.8 percent.

But the statistics help explain the recent arrival of national apartment builders and investors.

California-based A.G. Spanos Cos., the nation's largest apartment builder, is now building a 300-unit luxury apartment complex on Washington Avenue in Albany. The $45 million project is the company's first in the Northeast.

Abacus Capital Group LLC, a New York City firm that owns rental property nationally, in 2006 bought the Mansions at Delmar apartments for $25.1 million and is interested in acquiring other Capital Region properties.

"The fundamentals here are better than in many other parts of the country," Ben Friedman, president of Abacus, said Friday.

Two observers of the area's rental market -- John Fenimore, president of the Capital District Association of Rental Property Owners, and Jesse Holland, president of Sunrise Management & Consulting -- didn't find the census data surprising.

Both linked the tight market to a lack of new apartment construction.

"The municipalities don't want the density and they don't want the impact on schools, so they make the process very onerous," said Holland, whose company issues a twice-yearly report on the rental market.

Although the rental market remains affordable by Boston or New York City standards, prices are rising.

Sunrise Management, in its most recent report, found that the average monthly rent charged by the area's largest apartment complexes had risen to $873 last fall from $852 six months earlier.

"Rents continue to climb, and part of that is supply," Holland said.

Nationally, the average 2007 vacancy rate in the 75 largest metropolitan areas was 9.8 percent -- about double the Albany-Schenectady-Troy metropolitan area rate.

Cities with tough economies typically had higher vacancy levels. The beleaguered Detroit metro area, for example, had the highest 2007 rate, 19.4 percent.

The famously expensive and frustrating New York City metropolitan area rental market had a 2007 vacancy rate of 5.7 percent, the Census Bureau said.

Chris Churchill can be reached at 454-5442 or by e-mail at cchurchill@timesunion.com.

All Times Union materials copyright 1996-2008, Capital Newspapers Division of The Hearst Corporation, Albany, N.Y.

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