Apartment Vacancies Continue to Rise
Posted by: Carleton Sheets in Vacant, Vacancy, unemployment, Trend, Tenant, Renter, rent, Real Estate Market, commercial real estate, commercial property, apartment on Jul 13, 2009.
A recent report on CNNMoney.com about apartment vacancies reaching historic levels reminded me of one of my blogs I wrote last October, Where Are All the Renters?, and another one, Bringing Families Closer Together, that I posted in February of this year.
The CNN article talks about how the rising unemployment rate has hurt apartment rentals. One demographic hit hard---the 18-25 year olds which is the largest tenant group---have been unable to find a job or have lost their jobs, and I assume that they are either moving back in with family or finding roommates to split costs. This means that apartment landlords need to work harder to entice tenants, and according to the article is exactly what they're doing---by offering more concessions than ever.
Now here's the part that interests me ... near the bottom of the article it talks about the 47,000 new units that have already come on the market this year---and an additional 100,000 units from new construction that will be on the market by the end of this year. This tells me that the vacancy rate may climb even higher unless more jobs are created..
And according to the basics of supply and demand, we can assume that with even more units and fewer renters, rents will trend downwards as landlords compete for tenants.
Something else that all investors should keep in mind is that the value of these apartment buildings may start trending lower. So if you're interested in acquiring a large multiunit property, you might find some great commercial opportunities this year.
Have you noticed any multiunit bargains in your market?
