Unsold new condominiums and single-family homes are becoming more popular as rental properties, driving up vacancy rates at apartment complexes.
According to a study by Reis, a New York real estate research firm, national apartment vacancy rates were at 7.5 percent in the April-to-June period, up from 6.1 percent a year earlier. Of the 79 markets tracked by Reis, 45 showed an increase in vacancies.
These numbers are in line with those of South Florida apartment complexes. According to McCabe Research and Consulting, a Deerfield Beach company, in the second quarter of 2009, large apartment complexes in Miami-Dade County had a 7.3 percent vacancy rate, Broward County was at 7.9 percent and Palm Beach County was at 11.2 percent.
“This is usually the best month because of the student influx,” said Michael Internoscia, founder of Plum Pads, which does tenant placement for developers, investors and apartment complexes. Internoscia said his firm did about 70 leases last month, and has found that most people will choose the brand new condo instead of the apartment. “People want to live closer to where they work so they’re not going to run to Pembroke Pines to find an apartment because now there’s a slew of great product in downtown.”
Though apartment property managers choose different ways to combat rising vacancy rates, many have resorted to incentives like free rent for the first two months of a lease, and free flat-screen TVs.
Louise Giordano, vice president of operations for PMC Property Group, said all of PMC’s properties are at 85 percent to 100 percent occupancy, but “it’s been a different ball game just as it has in every market,” she said. “Right now we’re just trying to hold on to the renters we have. With new renters we’ve been a little lenient with the credit scoring and are even lowering security deposits which is usually a big no-no.”
However, apartment complexes may begin to fare better as rental space fills up. According to the multi-listing service data provided to The Real Deal by Condo Vultures, there are 10,084 rental vacancies in Miami-Dade County, 7,845 vacancies in Broward County and 8,702 vacancies in Palm Beach County. There has been the following number of leases signed within the last 60 days in each of the counties: in Miami-Dade there were 4,013, in Broward there were 3,163 and in Palm Beach there were 2,350.
“These numbers probably represent about 80 percent of the market, because there is a shadow market of developers and investors who are using alternatives to the MLS, like Craigslist, to rent out their units,” said Peter Zalewski of Condo Vultures.