Us apartment rents to increase as building starts stall

Apartment dwellers could be facing double-digit rent increases in the coming years as a shortage of new multifamily units coupled with a rise in prime renter-age households gives landlords clout they haven't seen since the mid-1990s, say development experts.

"Demand pressures are building. It's not bad today because rents have been down the last two years," said William McLaughlin, an executive vice president with AvalonBay Communities in the Northeast. "But it feels a lot like 1992, when we were coming out of a deep recession...and we ended up seeing double-digit rent increases after that," he said.

Multifamily developers broke ground on just 114,000 units in the United States in 2010, a figure so low that it wouldn't account for all the multifamily units lost last year to the wrecking ball or natural disasters, said David Crowe, chief economist for the National Association of Home Builders.

Although expected to grow 16% to 133,000 starts in 2011, that number, too, would leave a substantial deficit in the number of units needed to meet expected demand.