E-mail Story
Print Friendly
Send E-mail
Reprint story
Monday, November 08, 2010
As Apartments Fill Up, Come-Ons Disappear
By Richard Metcalf
Of the Journal
Concessions such as free or reduced rent are gradually disappearing from the apartment market in the Albuquerque metro area as the occupancy rate climbs to its highest level in a decade.
The apartment occupancy rate was 95.8 percent in September, up from 93.2 percent in the same month of 2009, according to the most recent survey by the Eagle Multi-Housing Group at CB Richard Ellis. The occupancy rate was 94.3 percent in May of this year.
The latest survey shows 27 percent of the apartment properties were offering some sort of rent concession, usually a week or two of free rent on a nine- to 12-month lease, compared to 52 percent in May. In September of 2009, 58 percent of apartment properties were offering concessions.
"Once you start getting above 93 percent occupancy, certainly 94 percent, concessions tend to disappear," said the group's David Eagle.
The recent low point for apartment occupancy was the winter of 2008-09, when job losses began to mount in the metro. The occupancy rate dropped to 91 percent in January 2009, according to the CB Richard Ellis multi-housing group.
The prevailing explanation at the time was renters moving in with family or doubling up in their rental units. There was also some indication that workers from outside the metro, particularly in the construction and service employment sectors, were returning home after losing their jobs or having their hours cut.
While the job picture hasn't improved in the metro – the unemployment rate was 8.7 percent in September compared to 7.9 percent a year earlier – from 925-950 once-empty apartment units have been filled in recent months, Eagle said.
One explanation might be a movement from single-family homes to apartments, he said. Demand jumped from September 2009 to September of this year for larger apartments with two and three bedrooms.
"To a lesser degree, it's people losing their homes to foreclosure," Eagle said. "More common is people becoming more budget conscious. It's cheaper to rent an apartment in Albuquerque than a house."
Another factor could be "decoupling," a reversal of the trend of renters moving in with family or doubling up in units, he said. If so, then it's a sign from the ground level that the local economy is improving.
"Decoupling is an indication of rising consumer confidence," Eagle said.
Rents continue to edge up in the metro. The average rent was $712 a month in September, a $15 increase from May and a $22 increase from September 2009, according to the Eagle survey. The average monthly rent was $688 in September 2008.
A similar survey by Novato, Calif.-based RealFacts put Albuquerque's average rent at $754 a month in the third quarter, a $10 increase from the previous quarter and a $17 increase from the third quarter of 2009.
Albuquerque was tied with St. Louis, Mo., for having the eighth lowest monthly rent among 30 metropolitan markets tracked by RealFacts. The average monthly rent nationwide was $950 in the third quarter, which is $44 below the record high of $1,002 a month set in the third quarter of 2008.
Average rents are lower in Albuquerque than most other metros because of a higher proportion of smaller, less expensive apartments units. Half of the 38,265 units tracked in the Eagle survey are either studio or one-bedroom apartments. Studio and one-bedroom apartments typically make up closer to one-third of all units in an apartment market, Eagle said.
Apartments, also called multifamily housing, have held up better nationwide than other types of commercial real estate during the recession and its aftermath, according to New York City-based Moody's Investors Service.
On a scale of 0-100 nationwide in the third quarter, multifamily housing had a composite score of 88 when measured on its risk as a financial investment. The higher the score, the lower the risk. Albuquerque's apartment market scored an 86.
The next best commercial property type nationwide was retail with an average risk score of 62. The riskiest commercial property type was suburban office with a score of 40.
Second Shamrock location
Shamrock Foods, which has a distribution center on the West Side, is planning to open a second location with a retail warehouse format in the shopping center at 1221 South Renaissance NE, across from the Home Depot along Montaño.
"While final details are still being determined, our ultimate goal is opening this facility in early 2011," said company spokesman Rob Ahrensdorf.
Phoenix-based Shamrock has been in New Mexico for nearly 30 years, supplying restaurant, hospitality and institutional food service customers. The company originally suppled El Paso and the southern part of the state out of Phoenix. Northern New Mexico was supplied out of Denver.
Shamrock acquired Albuquerque-based Southwest Distributing in June 2006 and, roughly one year later, opened its 180,000-square-foot center in the Cordero Mesa industrial park, just north of Interstate 40 on Paseo del Volcan.
Richard Metcalf covers commercial real estate for the Journal. You may reach him at 823-3972 or class="black">rmetcalf@abqjournal.com.
You also can send comments via our comment form
|
|
