Apartment Glut Raises Concerns Trend Could Benefit Renters, But Cause Trouble For Owners

Spokane County has an excess of apartment buildings and more are being built, a real estate market observer said Wednesday.

If that trend persists, the news will be good for renters, but bad for landlords.

Owners will increase incentives to potential renters, charge less rent for apartments in older buildings and have more trouble selling their buildings, said Steve Gill, director of residential property management at Kiemle and Hagood Co.

“We’ve got some problems on the horizon unless we make some adjustments now,” Gill told about 400 people who attended this year’s Real Estate Market Forum at the Ag Trade Center. “Every quarter for the last four years, the vacancy rate has increased.”

Though the apartment vacancy rate continues to rise - from 4 percent the first quarter of 1993 to 9 percent in the fourth quarter of 1996 - the surplus of apartments also is growing. There was a surplus of 38 apartments on the market in 1994. In 1995, 379 surplus units were added, and in 1996, 665. Already in 1997, Gill said, an extra 393 apartments have been added to the market.

“In the last three and a half years, we’ve delivered 1,475 (apartment units) in excess of what we need,” Gill said. Builders are talking about adding 1,600 more in 1997 and 1998, he said.

In 1994, building permits were issued for 731 apartments. That number jumped to 974 in 1995 and 1,177 in 1996.

“The potential is there to get much worse,” Gill said. “To continue overbuilding carries serious consequences.”

The picture is not as bleak in Kootenai County, though vacancy rates are relatively high - about 10 percent, said John Bennett, chief operating officer of Tomlinson Black Group of Cos.

“In the apartment market, there’s not a lot to laugh about,” Bennett said.

The most difficult apartments to rent, Bennett said, are two-bedroom, two-bathroom units.

One-bedroom units are in the greatest demand, he said.

Turnover in apartments is relatively high, at 50 to 60 percent per year, Bennett said, partially blaming a lack of high-paying jobs in Kootenai County.

“A lot of people move here, then move out quickly because they don’t find the level of employment they’re looking for,” he said.

Bennett predicted rents would be flat and that apartment-hunters would see more incentives to rent, such as discounts on the first month’s rent or free vacations.

Also noted at the forum:

Kootenai County has 3,000 acres of zoned industrial land, but only one-third of it is platted, said Steve Ridenour, development services manager for Coldwell Banker Schneidmiller Realty.

Land inquiries are coming in from manufacturing and high-technology industries, Ridenour said, but in many cases the infrastructure is not there to service them.

Spokane County has 30 million square feet of industrial space, said Richard Rollnick, president of Crown West Realty. Two-thirds of it is owner-occupied, leaving 10 million square feet of leasable space. There was 645,000 square feet of new industrial space construction in 1996, with 468,000 square feet of that absorbed, he said.

Rollnick said Spokane County is lacking large 40,000 to 50,000-square-foot spaces demanded by businesses interested in relocating.

, DataTimes