Valley apartment occupancy falls
More
renters leasing single-family homes from owners, experts say
Andrew Johnson
The Arizona Republic
Oct. 18, 2007 12:00 AM
If
you're a renter looking for a new apartment, you could be in for some good
deals in the coming months.
Apartment managers around the Valley are starting to offer rent specials again
as occupancy falls and rents increase at a slower rate.
The culprit behind the trend, according to brokers and property
managers, is a burgeoning
number of single-family homes that are being rented out by their owners.
As the real-estate market continues to slump, homeowners who can't or don't
want to sell are leasing out their properties.
That has caused some apartment dwellers who want the experience of living in a
single-family home to leave their complexes and rent from homeowners, said
Tyler Anderson, a vice chairman with commercial brokerage firm CB Richard Ellis
in Phoenix.
Consider:
Occupancy for the third
quarter of 2007 fell to 91.2 percent Valley-wide, compared with 95.4 percent a
year ago, according to data released today by Novato, Calif.-based firm
RealFacts.
And rental rates, while
still growing, posted weaker gains.
The average rent for an apartment in metro Phoenix during the third quarter
grew 2.6 percent over the year-ago quarter, to $815.
That's down significantly from the 7.2 percent year-over-year growth rate metro
Phoenix posted during the same period last year.
"In the last two
years we've had really strong rent growth, we've had declining vacancy and
relatively low concessions," said Peter TeKampe,
a senior investment associate
with Marcus & Millichap in Phoenix who
specializes in multifamily housing properties. "That trend has reversed."
While the number of single-family rental properties is the main reason for the
trend, other factors are at play as well.
Falling home prices and
"condo reversions," or the transformation of apartments that were to
be turned into condos now being turned back into apartments, also has had an
impact on the supply of vacant units.
All those factors are putting pressure on apartment managers. When the
residential housing market was at its peak, easy credit and
no-money-down deals caused many people who would normally be renters to buy
homes.
As a result, nearly all apartment complexes were offering concessions to stay
competitive.
But when residential real estate began its downward spiral and credit markets
tightened up, many would-be buyers were forced to turn to renting again.
Occupancy rates climbed as
high as 95 percent, which allowed apartment owners to raise annual rent rates
by as much as 10 percent in certain areas.
They can't do that anymore.
"We haven't stopped increasing rents, but we're not at the level that we
were last year," said Debbie Willis, president of P.B. Bell Cos. in
Scottsdale.
The company's apartment-management portfolio includes 32 properties in the
Phoenix and Tucson areas.
Vacancy across all its
properties is about 10 percent, Willis said.
"When we track our reasons for move-outs, we're seeing more people going
into rental homes than they have in the past," she said.
The company has started offering concessions such as a free month's rent at
some of its properties experiencing higher vacancy.
Reach the reporter at andrew
.johnson@arizonarepublic.com
or (602) 444-8280.