The occupancy rate for apartment rentals in metro Atlanta has been declining, according to real estate veterans in the city.
The occupancy rate has dropped to 88 percent from the 91 percent rate in 2008, according to Dale Henson, head of a multifamily real property consulting firm. Henson has been studying the apartment market in Atlanta for over 15 years.
Despite efforts of landlords to make renting easier for prospective tenants, more apartments are becoming vacant. Many landlords have been offering reduced rents and freebies to attract renters and to win the competition.
In the Atlanta metro market, seeing landlords giving more concessions to renters is a new experience. According to Henson, the major causes of the rising vacancy rate are the housing meltdown, unemployment and tight credit.
According to Tom Wilkes, head of a real estate corporation?s apartment management division, the loss of over 133,000 jobs in the Atlanta metro area led to the non-renewal and cancellation of apartment leases. He added that job creation is one of the major metrics used in the apartment rental market.
Another factor for the falling occupancy rate, according to Russ Webb, a top executive of the Atlanta Apartment Association, is the credit score crisis. In contrast to the view that foreclosures are pushing more homeowners into the apartment rental market, homeowners are not getting approved for rental units because of their foreclosure record. The situation for people who have filed for bankruptcy is even worse.
What has been happening, according to analysts, is that prospective apartment renters have been moving in with friends and family to cut costs, effectively removing them out of the rental apartment.
Webb said that the current occupancy level is the lowest he has seen in the Atlanta metro area in many years.
The danger of foreclosure for many apartment buildings and complexes is also increasing day by day as apartment developers fail to find supplementary commercial loans and as their units remain unoccupied, according to Mike Kelly, co-founder and head of Denver-based property investment group Caldera, which run operations in Atlanta.
However, Kelly is optimistic that the apartment rental market will soon recover. But he admits that the rental market is very attractive for renters right now. He explained that renters are no longer limited to the apartment market; they now also have the choice of renting single-family homes, making the business of apartment leasing and management more challenging.