Big players in the Bay State’s rental market are increasingly cheerful lately, with a solid first quarter performance suggesting the state may have reached an early turnaround to the rental doldrums.

“The first quarter for many of us was more positive than we had anticipated, and we hadn’t quite thought that we would see this turn as early in the year as we appear to be seeing it,” said Lynn Bora, area vice president for New England at Equity Residential, a national owner and operator of apartment communities with a significant presence in Massachusetts.

“Occupancy is strong and rents are stable,” said Howard Cohen, chief executive officer of Beacon Communities, developers, owners and/or managers of 23 apartment communities statewide. “We’re starting to see the possibility of modest rent increases as we come out of the recession.”

Scott Dale, vice president of development for Avalon Bay, operators of 29 apartment developments in Massachusetts, said March was particularly strong.

“March of this year was the first time we had seen market rent growth in eighteen months or so,” Dale told Banker & Tradesman.

He said some of Avalon’s developments saw rent growth of as much as 5 percent in the first quarter, with strong showings in areas as diverse as Chestnut Hill and Shrewsbury suggesting a broad strengthening in the market.

Locally Strong

National survey figures released recently by the National Multi-Housing Council showed increases in all four indexes the group measures, with improvements in sales volume, rent and vacancy rates, and debt and equity financing. It was the first time all four indexes have shown improvement during a single quarter since October 2005.

Locally, according to data complied by Property and Portfolio Research (PPR), a Boston-based analytics firm, vacancies in the Boston metro market peaked in early 2009. Last year’s price cuts have brought stability to the market, but real growth is unlikely to come until the job market has fully recovered, said Mark Hickey, PPR’s real estate economist.

“From 2010 to 2011, we think that vacancies will flatline,” Hickey said, returning to their historic average of 4.8 percent sometime in 2013. The firm projects that rents will bottom at the end of the year, while average net operating income will not begin to increase until 2011.

That makes the Boston slightly better than average, as many cities nationwide are still experiencing rising vacancies.

“If you look at the nation, people are like, ‘oh my God, this is absolutely horrible.’ But if you look at the reality, especially for Boston, [vacancies are] actually going down,” said Hickey.

Bright Prospects

The change in prospects after the doom and gloom of a few months ago seems to have come as a welcome surprise, and the early-year strength is already helping landlords manage one of their biggest problems of late – maintaining renewal rates.

“One of our biggest challenges in 2009 was that market rates were on that rollercoaster…our residents were aware of a negotiating ability in renewals which had never existed before,” Bora said. “So we’re back taking some control in that area, which is great.”

Concessions, too, are on the wane.

“I think they have been burning off, and they’re lower today than they were several months ago,” said Avalon Bay’s Dale. “So that’s a positive sign.”

Beacon Communities’ Cohen felt even more strongly, saying he thought the days of concessions were “pretty much over.”

The prospect of an end to concession and renewal woes has brightened landlords’ moods, and some suggest there may even be modest growth in new development by year’s end.

“There are more and more sites that people are talking about construction,” said Cohen. “I think you’re likely to see something in the next six to nine months.”

Still, others were more cautious.

“We still don’t have the job growth that would make us more comfortable,” Bora said. “When that starts it would give us all another opportunity to revisit stronger growth [in development] than we’re seeing now.”

But for the near future, a swelling market is streaming into a dried-up supply pipeline, with few new projects underway. Property managers and owners expect that combo to push rents up in 2011 and 2012.

“There’s very little new development under construction, very little new supply that has the ability to get out on the ground in the next 12 months, or even the next 24 months, given the lengthy entitlement process that exists here,” according to Dale. “So we think the supply picture will remain very constrained over the next 12 to 24 months.” He said that constraint has him “fairly optimistic about 2011, 2012, 2013.”

That suggests that after all the damage caused by the housing boom-and-bust, there might be somebody who comes out smiling.

“Homebuying not being the ideal scenario, based on what’s happened over the past few years, then if not in 2010, we think 2011 and 2012 will be pretty good years for those of us in the apartment industry,” said Bora.