4.30.2005

Apartment Boom

The Herald Journal — 4.17.05

Free April and May rent. Month to month contracts available. Free movie tickets or discounted rent if you sign up now.

Browse the classified or on-line apartment listings, and it's a buyer's market right now in Logan. Deals abound, options exist like never before, and construction sites on the northwest and northeast sections of town and Utah State University indicate selection is expanding. In fact, the very nature of what is available has drastically changed in the past few years, as large complexes and community style projects may be taking over from basement or attic apartments as the preferred choice for transient residents.

While the evolving market may provide more choice for rental customers, it could also present a challenge for landlords and potentially impact the real estate market itself. The proliferation of giant apartment complexes — for example, the Maple Valley Apartments at 400 West and 1500 North that will be the largest complex, with nearly 175 units, when completed — have drawn tenants away from smaller four-plex buildings or rental homes. However, any perceived "glut" has yet to impact the development market, and more apartments and condos are planned for the far north end of town — not to mention a 500-bed facility at USU scheduled to open in fall 2006 — that could increase a rental vacancy rate that some interviewed estimated to currently be above 10 percent.

"We're being told by some of the landlords that we're getting built out," said Jay Nielsen, community development director for Logan city. "The units that people want to live in get the highest priority, and those that are overpriced or of marginal quality suffer."

Even if the vacancy rate was currently at normal, prices would indicate that apartment managers are facing a tighter market as well, as many newspaper ads indicate decreased rates that dip under $350 per person, or the average cost of a single tenant would pay in one of the newer shared units. If the trend continues, especially with summer around the corner when a majority of students leave town, the days ahead could be even leaner for some landlords until the rental population catches up with the supply.

"All of these new units will be competition," said one apartment manager who asked not to be named because of business concerns. "The supply is going to be set, and the demand will not be there."

Driving the current market is a combination of factors, according to landlords and tenants interviewed by The Herald Journal. Some accuse out of area money of inflating the market with the large complexes — at least two large scale developments were built by Salt Lake City firms — while others said it's a feeling of entitlement among renters that creates the need for "luxury" living.

"If any apartment wants to be successful, the biggest thing is service," said Germain Costa, property manager at Oak Meadows Apartments, a five-building, 132-unit facility built in 2001.

Costa called Oak Meadows revolutionary in the local market because of the amenities offered to renters, including a clubhouse, workout room and swimming pool in addition to community events for tenants like a garage sale, water aerobics and babysitting services. He said a waiting list for apartments — which range from 1,000 to 1,300 square feet and two bathrooms in each — has been common since the opening, and other developers have approached him for ideas on how to build the community style complexes. Now, the area is becoming home to similar projects, like Maple Valley — which has a clubhouse with a jacuzzi and fitness room planned as well — and a large community of condominiums that cater to a need for more than just a bed and bathroom.

Larry Nichols had been a renter in other communities he's lived in, like Phoenix, but hasn't ever experienced the frills that come from his current situation at Oak Meadows.

"Everything is really accessible, and really good quality as well," said Nichols as he shot billiards with a neighbor in the clubhouse along 1500 West.

He said he regularly uses the pool, basketball court and grassy areas at Oak Meadows — perks not always available in a traditional apartment.

"They just expect more," said Joe Needham, who rents several properties in Logan and confirmed that homes divided up into apartments have been increasingly difficult to lease out.

But Needham, unlike some other local landlords who declined to speak on the record, said the market change could ultimately benefit Logan neighborhoods. Needham, also a Logan Municipal Councilman, said the migration from old style rentals to newer complexes in areas designated by the city for multi-family development could mean that areas that were shifted to rental over the past 50 years — like the Island or Adams neighborhoods — could return to single family homes if renters chose to go elsewhere.

"With a lot of better apartments, and more units, it's causing a change to the rental market of Logan," said Needham, who is also in the process of converting one of his rentals back into a single-family home. "I see it as a good thing. Eventually our neighborhoods will go back to what they were."

Approximately 54 percent of of Logan's housing market is rental, according to the city's Community Development Department. Nielsen said that the city doesn't monitor the amount of apartments approved to control the market, and any project that meets city standards is welcomed. He said a flooded rental market may simply be cyclical, and while it may impact landlords now, a growing community like Logan should eventually catch up to the supply as population grows.

Like Needham, he agreed that ultimately the explosion of rental property, especially those built in the new community style, could ultimately be a benefit.

"When demand for higher quality units goes up, the market responds," said Nielsen. "If in fact there were enough higher end, you'll see (dilapidated rentals) go away, and see people try to get in line with the market demand."

Until then, keep an eye out for those deals.

3 Comments:

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