Apartment vacancy in the Twin Cities metro area sank to 4.2 percent in the third quarter of 2010, reaching a two-year low, according to GVA Marquette Advisors' just-released apartment trends report.

The local apartment vacancy rate peaked at 7.3 percent at the end of 2009 and has since declined for three consecutive quarters.

The report found that vacancy for 47 of the local area's 57 “submarkets” was below 5 percent in the quarter. Only four submarkets reported vacancy in excess of 6 percent-downtown St. Paul (8.4 percent), West and South St. Paul (8.9 percent), Fridley and Columbia Heights (7.8 percent), and Wayzata and Mound (6.2 percent).

Urban areas have greater occupancy rates than suburban areas, according to the report. Minneapolis' vacancy dipped to 3 percent in the third quarter, while St. Paul's declined to 4.2 percent. Nearly 30 percent of St. Paul's apartment vacancy is in the downtown area.

According to the report, rents seem to be stabilizing. The average market rent for the Twin Cities metro area was $905 in the third quarter, down 0.4 percent from a year ago but up slightly from $902 last quarter.

The report called the average third-quarter rent “very positive,” adding that, “owners should be in a much better position to hold the line on rents going into the winter season.”

Average rent within the Twin Cities ranges from $672 for a studio to $1,586 for a three-bedroom with a den or a four-bedroom.

Year-to-date apartment absorption is estimated at more than 5,300 units-meaning that for every 10 jobs added within the Twin Cities, about 2.8 apartment units have been absorbed within the market.

Close to 109,000 apartment units were surveyed for the report. Of those, slightly more than 4,500 were vacant.