Surging employment growth, higher interest rates, sky-high construction costs and soaring land prices are creating something no apartment tenant wants: higher rent.

The average monthly rental rate for a Triangle apartment rose $8 to a record $780 during the year that ended March 31, according to data from the Triangle Apartment Association.

And rents will only go up.

The surge is the latest sign that landlords hold the cards in the rental game after being dealt a bum hand of layoffs and low-interest loans that lured people out of apartments and into mortgages in the early 2000s.

Now higher borrowing costs and stiffer lending standards are pushing would-be homeowners back onto the rental side of the fence. And the Triangle's robust job growth is creating a stream of newcomers who can't unload homes they own in bubble-busted cities outside the Triangle, leading them to rent until they can sell.

Developers responded slowly at first. They built only 1,469 units in Durham, Orange and Wake counties during the year that ended on March 31. That's the least since 2004, and 43 percent below the average of corresponding periods from 2002 to 2006.

As a result, the Triangle's apartment vacancy rate dropped for a fifth straight year, to an eight-year low of 7.8 percent, from a high of 13 percent in 2002.

Now developers are scrambling to build more. At least 4,429 apartment units were under construction at the end of March -- the most since 2001.

The boom comes as land to build on is harder to find near major employment centers. The scarcity means that available sites are commanding top dollar. Some developers are making do with smaller tracts, building higher and adding parking decks -- construction that drives up building costs and, consequently, rent. Meanwhile, the cost of materials such as concrete and steel are climbing because of demand driven by a worldwide building boom.

A Triangle apartment complex that cost about $80,000 per unit to build three years ago would cost about $120,000 per unit today, said David Ravin, senior vice president of multifamily units at Charlotte developer Crosland, which is building or planning about 700 Triangle apartment units.

Two years ago, when Crosland finished the first phase of Oberlin Court off Wade Avenue in Raleigh, rent for a 1,000-square-foot unit was about $1,170 a month. The same unit in the second phase, which is being built off Oberlin Road, will rent for about 11 percent more.

Construction costs are rising much faster than rental rates; developers might have to wait for rents to catch up. "There's a ceiling, of course, at which that becomes unrealistic," Ravin said.

That might explain why developers are planning fewer apartments. There were 4,292 units on the drawing board at the end of March -- the fewest in at least nine years, Triangle Apartment Association data show.

Meanwhile, the delta between rents in new and existing apartments is allowing investors to pay top dollar for older apartment complexes, raise rents and still offer rates below those in new buildings.

Investors spent a record $1.1 million on Triangle apartments in 2006, according to CB Richard Ellis data -- three times the annual average over the previous decade. But cap rates, the ratio of a building's annual net income to its purchase price, didn't keep up.

A building with annual net income of $100,000 and a sale price of $1 million has a cap rate of 10 percent. That was common five years ago. Apartments sold in the year ending March 31 had an average cap rate of 6.2 percent, according to Real Capital Analytics data.

That, too, can spell trouble for renters, said Brian Reece, managing partner at Karnes Research, which collects data for the apartment association. "They can bank on more money going into the landlord's pocket," he said. "There's going to be some sticker shock."

Get $150+ in coupons in every Sunday N&O. Click here for convenient home delivery.