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Real Estate - Residential

Fewer Apartments Under Construction; Vacancy Still Low, Report Shows

By Cece Nunn, posted Sep 1, 2017
Correction: This version of the story corrects the headline to reflect the fact that apartment vacancy rates in the Wilmington area are still low.

A recent report says apartment construction in the Wilmington area is lower this year compared to previous years, but the area continues to demonstrate "a remarkable ability to absorb new apartment units" and "vacancy is actually lower today than in 2013."

Nearly 5,000 apartments have been completed since the beginning of 2013 to the second quarter of this year, according to an analysis compiled by Richard Cotton, managing director of Multifamily Realty Advisors and a commercial broker who specializes in the sale of apartment communities and apartment development sites. The second quarter report says the occupancy rate is 93 percent, according to Real Data Apartment Index, down from 95.4 percent a year ago.

The report also says there are currently six apartment communities at various stages of construction comprising 884 units. In the Multifamily Realty Advisors second quarter report for 2016, there were 12 apartment communities at various stages of construction comprising a total of 1,809 units in the Wilmington market. 

This year, the report said, "There are also sixteen (16) proposed projects with 3,158 units that are in the early stages of development," but because some opposition to rezonings related to apartment projects has cropped up this year, it's difficult to estimate how many of those will get built.

"But I am not at all concerned about this market becoming overbuilt any time soon," Cotton wrote.

The second quarter report includes recently announced projects that involve apartments -- among them CenterPoint, a 1 million-square-foot mixed-use proposal on Eastwood Road; The Avenue, another mixed-use development that would be anchored by a Westin hotel and conference center off Military Cutoff Road; and apartments at the Waterford community in Brunswick County. 

One apartment sale had closed in Wilmington as of the second quarter, the report says. The student housing complex Lofts at Randall, completed in 2015 with 54 four-bedroom units and 216 beds, sold on June 30 for $13.75 million, or $254,630 per unit, Cotton noted.  

As for rents in the Wilmington market, "growth has slowed with same-unit rents increasing by 2.8% over the past year compared to 4.2% over the prior year. The average apartment rental rate for the entire market is now $1,023 per month or $1.10 per square foot."

Newer apartments, in the 1- to 5-year age group, have the highest average rents at $1,473 per month, followed by apartments currently in lease-up with average rents at $1,193 per month, the report says.
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