Apartment Complexes Face Growing Glut
Posted May 13, 1998 7:00 a.m. EDT
MORRISVILLE — If you're in the market for an apartment, you're in luck. Supply is up. Demand is down. As a result, landlords eager to get your business are keeping rental rates low and some are offering added incentives.
Todd and Candace Clardy live at the Fairgate Apartments in Raleigh. But not for much longer. After renting for two years, they're buying a home and moving out.
"We're not paying the rent any more," says Clardy. "Start putting the investment into a home instead of into paying rent."
The Clardy's are not alone. Today's strong economy and low mortgage rates have prompted many would-be renters to buy. The result: an apartment vacancy rate in the Triangle of 5.4%. That's expected to double by this time next year.
Another reason is all the new construction. The 3,000 vacant units on the market now are more than enough to accommodate the annual demand. And yet, 4,100 more units are under construction and another 5,900 units are proposed. Among those currently being built, Sterling Green in Morrisville.
At Sterling Green, there will be 228 units available when the complex opens in July. Although they have already started pre-leasing some units, the developer admits he's concerned about the potential glut.
"We would not be building here without this niche location in today's competitive environment," says Gordon Grub of Grub Management.
Sterling Green's niche is the Prestonwood Country Club. But not all apartment complexes can offer golf course views. So many, about 20%, are offering incentives like free rent and reduced security deposits. But experts say it won't be a renter's market forever, so the time to cash in is now.
Although the vacancy rate is expected to peak next year, the Triangle Apartment Association expects the market to level out in about 18 months.