Nearly 1,500 units in the Birmingham area are under construction and another 2,500 are in the planning stages, the report states. Rock primarily studies apartments with more than 60 units.
New developments are charging record rental rates for the area, from $1.50 to more than $2 per square foot.
“Downtown is probably where the most new products are being built,” Rock Apartment Advisors President Bo Flurry said.
The gap in rent prices between newer and older apartments has widened significantly, according to the report. It’s led many owners of older complexes to renovate units and upgrade amenities to then raise the rent and keep up with newer properties, Flurry said. The strategy has been especially effective in Southside, downtown and Over-the-Mountain communities.
“For many of the over-the-mountain communities, it’s tougher to build in those areas … so they’re trying to fill that gap,” Flurry said.
Rock surveyed 159 properties, which represent more than 36,800 units in the Birmingham area.
There’s two different rents that the report measured – marketed rent and effective rent. Marketed rent is typically the rent you see advertised, while effective rent is the number on the check given to the landlord each month. Both have gone up in the last year, and that’s good for Birmingham, Flurry said.
The report found the average effective rent in 2014 was $812; the average marketed rent was $825.
The average occupancy of complexes was 92.5 percent, down slightly from 93 percent in 2013.
“The market is stable just in terms of pure occupancy, but what’s key is that effective rents are rising,” Flurry said. “That’s what apartment investors look for.”