Vacancy Rate Soars, Rents Drop
Landlords are facing a higher than expected vacancy rate going into 2010.
In fact, vacancies have hit a 30-year high, rising to 8% according to real estate research firm Reis, Inc.This is higher than projected by other forecasters like CBRE, which expected a rise to 7% a couple months ago.
A year ago, vacancies were at 6.7%.
Unemployment appears to be the biggest factor, driving renters to move in with families and friends. But the fear of unemployment is also a problem. Many eligible renters are hesitant to sign leases.
The worst market, according to the Reis report, is Jacksonville, Florida where vacancies hit over 14%. Chattanooga, Tennessee enjoys the lowest rate of 6.4%.
Rents have also dropped overall. Reuters is reporting that many large apartment complexes, 60% in New York City, are lowering rents, offering move-in incentives, and stepping up efforts to retain existing tenants.
However, real estate agents in some areas are seeing fewer rental listings, which helps shore up the rents in those communities.
One Reis analyst suggests retaining existing tenants to avoid income loss for the next six months. Then, it will be more clear what the job market will do. Once confidence in jobs is restored, the numbers should go down. If that doesnt happen soon, it will be another bad year for landlords.
See more on Tenant Incentives.
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