June 17, 2010 in Business

Incentives used to lure tenants

Complexes offer gifts from rent cuts to gardens
By The Spokesman-Review
 
Dan Pelle photo

The Rosewood Club Apartments and the Hill n’ Dale Apartments try to attract the eye of passing motorists with signs and balloons at the corner of Hill n’ Dale Street and Magnesium Road in Spokane.
(Full-size photo)

More information

The Washington Center for Real Estate Research information can be found at www.wcrer.wsu.edu.

The most recent Real Estate Report will be released this Friday. A copy of the report will be available through the Spokane Association of Realtors.

Owners of apartment buildings have turned to creative incentives to lure tenants as the vacancy rate remains above that of a year ago.

Prairie Hills Apartment in north Spokane advertises “free garden beds” to entice renters.

“People coming to the apartment community are either moving out of homes or are first-time renters,” manager Sean Rogers said. “The garden plots give a more homey feel.”

The apartment complex on East Lincoln Road, which houses 400 units, was built four years ago with the garden bed incentive in mind. Twenty-four plots behind a swimming pool are full with produce tended by the tenants. Prairie Hills also offers rent reductions and other move-in incentives, Rogers said.

Other common offers to attract renters include Wal-Mart and gas gift cards, free TVs, security deposit waivers, cash move-in specials and prorated rent.

Smaller apartment complexes are less likely to use such inducements, said a couple of local property managers.

“I don’t feel it necessary in smaller complexes to offer incentives, but potential renters have been asking about incentives,” said Ann Wick, a broker at Empire Realty who specializes in property management. Wick manages smaller rentals, usually with eight or fewer units.

Larger complexes are more likely to offer incentives because of greater competition, she said.

The average monthly rent in Spokane County was $627 in March, down $12 from the same month a year earlier, according to a recent report by the Washington Center for Real Estate Research, part of the Washington State University College of Business.

The average rent price decreased as vacancy rates showed a trend of increase. The county’s vacancy rate in March hit 7.8 percent, up from 5.5 percent a year earlier. The Real Estate Research center surveyed almost 10,000 apartment rentals in Spokane County.

Separately, the Real Estate Report, produced by the Spokane-Kootenai Real Estate Research Committee and based on a survey of about 8,000 units in Spokane County, showed the vacancy rate climb from 5.5 percent at the start of 2009 to 8 percent by year’s end, then dropping slightly to 7.5 percent in the first quarter of this year.

Home sales increased in the last year due to buyer incentive programs, low mortgage interest rates and falling prices. The buyer’s market “explains some of the reason the vacancy rate jumped last year,” said Avista Chief Economist Randy Barcus.

Still, the Spokane vacancy rate is nowhere as high as the national rate for multifamily housing, which stood at 12.1 percent this spring.

Washington’s average vacancy rate has dropped slightly since last year and is around 6 percent.

Barcus said he expected the area’s vacancy rate to climb higher than 8 percent because of the sluggish economy and home-buying incentives that lured residents away from the rental market. But thanks to population growth, vacancies didn’t become as extreme as during other recessions. A lot of the recent growth, he said, has been college students – a key rental demographic.

“More than likely the largest component of increased renters is the increased number of students at Gonzaga, Eastern and Whitworth and the Riverpoint campus,” he said.

Part of the reason apartment construction has continued is because developers recognized this growth, Barcus said.


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