By Jack Hagel
RISMEDIA, May 12, 2008-(MCT)-Renting a washer and dryer at The Waterford apartments in Morrisville costs $10 more per month than it did in 2005. The same goes for a room with a view at Bennington Woods in Cary. Monthly rent for some units at Northampton Plaza in Chapel Hill have grown 20 percent to $892. And keeping Fido at Durham’s Forest Pointe, once a freebie, now costs at least $250 in pet fees.
Rising demand in recent years emboldened Triangle apartment landlords — many jacked up rents and fees while offering fewer giveaways.
But the tables could be turning as a crush of new apartments hits the market and job growth slows .
“We’re starting to see adjustments that could put money into the pocket of the renter,” said Brian Reece, a partner at Karnes Research, which collects data for the Triangle Apartment Association.
Companies are delaying or reducing expansions, even in the Triangle, which has avoided the brunt of national economic woes.
The Triangle labor force is growing at its slowest pace since 2003 — 1.5 percent, to 848,097, during the 12 months that ended March 31, state labor data show.
During that period, 3,647 new units became available — the most in any year since 2002, apartment association data show.
Another bit of foreshadowing: The region’s apartment vacancy rate is climbing for the first time in six years. At least 9.2 percent of the region’s 91,800 apartments were empty at the end of March, up from an eight-year-low of 7.8 percent a year earlier.
Meanwhile, 3,687 units are being built, in addition to a growing number of unsold homes that are moving to the rental market.
“Jobs are down somewhat, and that really drives apartment demand,” said Tom Barker, a senior managing director at Trammell Crow Residential, which is building the 288-unit Alexan Panther Creek community in Cary.
For the past three years, demand hasn’t been a problem. With legions of renters, landlords were able to push rents 6 percent to a record $804.
Lessors took control
The number of landlords offering perks such as free months of rent, DVD players, iPods and even vacations to entice renters has dwindled, to 33 percent from 79 percent in that period.
Now it’s taking longer to lease properties, and concessions are creeping up, Barker said.
“There aren’t as many people out there renting,” he said. “There’s just a lot of units, and that’s making the landlords be more competitive.”
The scenario isn’t foreign to Triangle landlords.
The region’s apartment market flopped in the early 2000s after tech companies cut jobs, slowing the flow of renters amid a building boom. Home loans became less expensive, enabling more renters to buy homes.
The apartment vacancy rate rose to 13 percent in March 2002, and landlords slashed rates, offered free months of rent and played up perks such as workout rooms, washers and dryers and free utilities.
The market has tightened in recent years, because developers showed discipline during a time of rampant job growth. All the while, newcomers couldn’t sell homes they owned in cities where the housing bubble had burst. That goosed local demand for rental properties.
The housing bust — and tight lending environment that has emerged in its wake — could be working in landlords’ favor.
“You’ve got people who are moving out of houses and moving back into apartments. And renters are staying in apartments longer because they have less confidence in their economic status going forward,” said Jere Buch, executive director of multifamily management at Drucker & Falk, the Triangle’s biggest apartment management company. “They don’t want to commit to a mortgage or can’t commit to a mortgage.
“Despite a little bit of increase in supply, I think demand will hold up,” he said, predicting that concessions will continue to dwindle.
Builders hold off
Developers, meanwhile, are showing signs of caution.
Some are delaying land purchases, and others are delaying construction.
There were 7,123 units on the drawing board at the end of March, according to the apartment association.
Projects that haven’t begun might not, as lenders tighten standards by raising borrowing costs and requiring developers to pay more equity into projects.
“A few years ago, money was very easy to come by,” said David Ravin, president of Crosland, a Charlotte company that is building at least 612 apartments in communities in Cary, Chapel Hill and Raleigh. “But the money has been cut off. I don’t predict many — if any — new starts.
“And while we might have a bubble here to get over, there’s going to be a slowdown in supply.”
Copyright © 2008, The News & Observer, Raleigh, N.C.
Distributed by McClatchy-Tribune Information Services.
