Sackville’s apartment market is experiencing more vacancies.
SACKVILLE, N.B. – Sackville is starting to move into a “renters’ market” as developers continue to build apartments in the community despite slowing demand over the past two years.
“Vacancy has increased over the past year,” said Tim Smith, a senior analyst and researcher with Altus Group, who recently released his third annual Apartment Market Overview report on Sackville. “And as they keep building, the (vacancy) rates will keep going up.”
Smith’s report – which aims to be a source of information for landlords, developers, real estate professionals and residents on the multi-unit market – provides an overview of the inventory, average rents and vacancy rates, as well as recent and proposed developments in the town of Sackville.
Smith said with the data he gathered in January and February, the overall average vacancy rate in Sackville is shown to have increased to 7.41 per cent, up from 4.99 per cent last year and 3.18 per cent in 2012.
“We started to move into a renters’ market last year but now even more so,” he said.
Smith said it’s important to note that landlords who own older buildings (before 2000) on the outlying edges of town are feeling the most effect of this development growth, with vacancy rates for these units averaging more than 10 per cent; while the newer buildings built after 2000 have an average vacancy rate of only about three per cent.
“With the new apartments, the vacancy rate is still fairly low. But the new builds are having an effect on the others.”
With vacancy rates going up, Smith said some landlords have had to start adjusting rental rates, a typical result of supply outweighing demand.
“The imbalance in the market has caused many landlords to maintain the same rents as last year and in some cases decrease their rents in order to keep their units occupied,” Smith wrote in his report.
Demand has gone down over the past year mostly as a result of declining student enrolment at Mount Allison, said Smith, which was down six per cent from the previous year. Fortunately, he said, only five apartment units were added to the market last year, “so it could have been a lot worse.”
But with an expected 64 units expected to be built in 2014, vacancy rates are once again predicted to go up and landlords will have to continue to keep a close eye on rental rates in order to maintain optimum occupancy.
Sackville is not alone, however, when it comes to vacancy increases, said Smith.
“Throughout New Brunswick, vacancy’s been high. So it’s not anything specific just to Sackville.”
In the past few years in particular, low interest rates have fueled a construction frenzy, with more people willing to finance new developments.
Smith said there’s not much for town officials to do about the transition, except to sit back and wait it out.
“Naturally the market will fix itself in this situation,” he said. “So I don’t think there’s much the town can, or should, do. It’s a competitive market, you can’t really control it. We’ll see what happens.”