Apartment Market Shows Early Signs of Overbuilding

Rents for high end apartments showed signs of topping off in February.

A sharp drop in the growth of rents suggests the imbalance between supply and demand is vanishing as developers bring new project to market both in Portland and nationwide.

Dallas-based Axiometrics Inc. reports rent growth for Class A properties slowed in February while landlords of second- and third-tier properties were able to keep pushing rent hikes.

Axiometrics speculates Class A owners may have reached the limit of what the market will tolerate.

“Rents had been pushed so much at the upper end of the market it was inevitable we would begin to see a slowdown in growth for Class A properties, but we may also be seeing some impact from new properties coming online in certain markets. As new deliveries increase later this year and next, the trend could become even more pronounced,” said Ron Johnsey, president.

Overall apartment rents rose 3.53 percent in February while occupancy remained at 94.13 percent.

For Portland, owners charged three percent more in February than the year prior, down sharply from the 4.42 percent boost posted in January. The Portland market is one of the tightest in the nation with a 95.2 percent occupancy rate.

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