The Vesta, a 104-unit building, is part of the West End Apartments in Boston being developed by Equity Residential. This image depicts the view from an outside balcony.

Despite the sluggish economy and talk of recession, apartment rents in the Boston metropolitan area climbed 3.3 percent in the first quarter, a new report shows.

The median rent in the area was $1,645 in the first three months of 2008, up from $1,593 during the same period last year, according to Newton-based Investment Instruments Corp. The firm compiled data for Boston and 11 other metro areas from its Rentometer.com site. It includes asking rents at large, mid-size and small apartment properties.

The jump in rents surprised some property owners who say they’ve seen much more modest rent growth, particularly on the North Shore and in other submarkets that have seen an influx of new apartments.

But some industry observers say the slumping housing market for single-family homes and condos, as well as tighter loan standards, are keeping tenants out of the homebuying pool.

“Those buyers are either staying put or looking for another rental,” said Allison Atsiknoudas, chief executive officer of Investment Instruments Corp.

George McHugh, president of Chestnut Hill Realty’s property management division, said the weak housing market and rise in utility costs have pushed up rents in some areas.

Rents at Chestnut Hill Realty’s properties in Boston, Brookline and Cambridge have climbed 2 percent to 4 percent, according to McHugh. And occupancy for the company’s properties inside Route 128 has been about 95 percent to 98 percent. Still, McHugh noted some suburban areas are facing higher vacancies and slower rent growth because of a fresh supply of new apartments. Occupancy at some of Chestnut Hill Realty’s suburban properties is in the low 90 percent range.

Rent breaks and other types of concessions are still be offered to tenants, particularly in areas where new apartments are coming online. “New competition [in those areas] helps keep rents down,” he said.

Chris Reilly, president of the Greater Boston Real Estate Board’s Rental Housing Association, agreed that properties closer to Boston are faring better. “The further you get out of the city, the market’s a little weaker,” said Reilly, who is area vice president for Equity Residential.

‘Mildly Shocked’

Indeed, the median rent for a two-bedroom unit in Essex County remained flat in the first quarter, while in Suffolk and Norfolk counties – Boston proper – rents jumped 4.35 percent to about $1,800, according to Atsiknoudas. In Middlesex County, which includes Cambridge, rents were up 3.45 percent to $1,500 from $1,450. In the area including Rockingham, N.H., rents dipped almost 2 percent.

Reilly said Equity Residential’s Bay State properties have seen rents creep up half a percent in the first quarter. Meanwhile, the occupancy at the company’s apartment portfolio in Massachusetts is about 95 percent.

“Our portfolio occupancy is as good as it’s [ever] been,” he said. “So far I’ve been pleasantly surprised and, I’d have to say, mildly shocked.”

Reilly added that rental activity has not been as glum as one might expect given the negative economic news. Surprisingly, he said, Equity has seen demand for studios and one-bedroom apartments. Interest in studios and one-bedroom units typically peaks in a strong economy but declines when consumer confidence about the overall economy eases.

Equity Residential, a national firm, is in the process of constructing a five-building, 310-unit apartment complex in Boston’s West End. The first building has been built and leased and the second is pre-leasing at a faster pace than anticipated, according to Reilly.

“We’re very pleased the market seems to respond to quality product at a very high rent level,” he said.

Some say foreclosure activity is propping up the market as tenants and homeowners are displaced.

“Not everyone is moving home with mom and dad, so that means they’re renting,” said Brecht Palombo of Provest Real Estate, which helps investors buy and sell multifamily properties.

“You have lots and lots of [multiple-unit properties] where tenants who have been there for who knows how long and the owner is foreclosed on, and now you have two or three renters [searching for apartments],” he said.

Palombo said there are many vacant properties that are on the market. “As the inventory mounts and these properties aren’t changing hands Â… that’s really creating a lot of demand.”

But Reilly said foreclosures haven’t yet produced the apartment demand that’s been anticipated.

“We’ve been expecting foreclosure activity to give us a wave of new rents. We have not seen that,” he said. “I don’t know where people are going but they’re not coming to the type of apartment communities that we offer.”

Over the last four or five years, the rental market softened because the lending environment enabled many tenants to purchase homes. As a result, rents were “artificially depressed,” according to Palombo.

With stricter lending standards, those same tenants wouldn’t be able to a purchase a residence today.

“Tightening of credit and raising of down payment requirements – that, combined with a huge turnover in the bank-owned properties, are driving the rental market right now,” he said.

One situation that property owners are eyeing is the region’s employment picture.

“We’re closely monitoring the jobs reports,” said Reilly. “Our antennae are up and we’re trying to gather us much information as possible. It’s not clear what direction the economy is going in.”

McHugh, of Chestnut Hill Realty, said the fear of recession helps stabilize the rental market because tenants don’t want to take any risks.

At the same time, some worry that further economic troubles ultimately could hurt the apartment market.

“We could go into a deep recession and then people will lose jobs and people will double up or move away,” McHugh said.

Given the housing market’s decline, some experts anticipate a boom in the rental market, especially in highly populated metro areas.

“Real estate is a business, and it’s all about supply and demand. On one hand, the number of foreclosures has increased the inventory of homes on the market, contributing to lower pricing. Yet, many first-time homebuyers and investors are reluctant to buy now as they fear the market may continue to decline, resulting in continued loss in value and a growing population of renters and landlords,” Atsiknoudas said in a prepared statement.