Some of the country’s small apartment markets currently post super-tight occupancy rates. Leading the pack as of 3rd quarter 2016, Syracuse registers 98.7% occupancy, just ahead of the 98.6% readings in Springfield and Spokane.
Other modestly sized markets where vacancy is running at no more than 2% are Fresno, Lansing, Reno, Grand Rapids, Albany and Rochester. Plus, Colorado Springs misses the 2% vacancy mark by just 10 basis points.
Limited Construction Helps the Performance in Some Cases
New supply moving through initial lease-up accounts for a big block of today’s available product in quite a few markets across the country. Thus, occupancy tends to run a little higher in the locations with more limited construction. Modest inventory expansion registers in most of the small market occupancy leaders. Looking at the number of units under construction right now, near-term inventory growth will register far below the national average in Springfield, Fresno, Lansing, Syracuse and Rochester. Additions mildly below typical for the country as a whole are on the way in Rochester, Colorado Springs, Grand Rapids and Reno. However, both Spokane and Albany are on track for near-term inventory growth that tops 4%, exceeding the average expansion pace nationally.
They Aren’t Economic Dynamos (Except Where They Are)
Restrained building is appropriate in most of the small markets now posting especially strong occupancy, as economic growth generally isn’t strong enough to support lots of new housing. In the most extreme cases, the three Upstate New York metros on the list actually don’t register any net job production at all. Employment growth rates more similar to the national norm are seen in Colorado Springs, Springfield, Grand Rapids, Lansing and Fresno. And then there are the couple of outliers. Reno’s economy is booming, with annual employment growth, as of September, at 4.6%, while the year-over-year job expansion pace is also stellar in Spokane, coming in at 3.7%.