Rental Rates Forecast to Rise in 2012

By Sword, Doug | Sarasota Herald Tribune, May 28, 2012 | Go to article overview

Rental Rates Forecast to Rise in 2012


Sword, Doug, Sarasota Herald Tribune


Vacancies fall in state as economy improves and more people are able to rent their own homes again

THIS COULD BE THE YEAR GREAT rental deals on apartments, condominiums and single-family homes disappear as rents move upward.

Statewide, a mixture of an improving employment picture, a lack of new apartments being built and falling vacancy rates has commercial real estate broker Marcus & Millichap forecasting hikes in rental rates in Florida's major markets this year.

"We've started hearing very frequently that people were able to raise their rents for the first time in a long time," said Bryn Merrey, vice president and regional manager for Marcus & Millichap's Tampa office.

There may be a bit of a lag locally, however, because smaller markets like Sarasota and Bradenton are slower to attract investment and had somewhat higher vacancy rates, says Frank Carriera, associate vice president of investments for the firm's Tampa office.

Rents have remained in check locally because of the number of foreclosed and bank-owned homes that are competing with the apartment rental market.

After a large decline in rents locally that began in 2007, rates started recovering this year and will likely go up 3 percent to 5 percent in 2012, said Jayci Grana, rental division director at Michael Saunders & Co.

New apartment complexes have not been built since the downturn, but construction projects are being considered in Florida's major markets. And Grana expects that, within the next year or two, new apartment complexes might become a popular investment in this area.

"I've spoken with a couple of investors looking at it," she said.

With bargains apparently still available and vacancy rates down, apartments are trading hands in the region already.

Earlier this year, Avalon Square Apartments LLC bought a 155- unit complex on U.S. 41 Business in Bradenton out of foreclosure for $4.1 million, the same price it had been bought for in 1998.

And a Tampa company bought a 194-unit apartment complex at 1818 9th Avenue E., in Bradenton, for $5.5 million. It had last sold in 2006 for $13.2 million.

Nationally, the apartment vacancy rate stood at 5.2 percent at the end of last year, down from 6.6 percent at the end of 2010.

Merrey notes the demand for apartments is tied closely to the unemployment rate. …

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