Apartment Rents Expected To Stabilize This Year New Construction, Higher Vacancy Rates Should Limit Increases

People looking to rent apartments in Spokane and Kootenai counties can expect prices to stabilize - maybe even decrease - this year, experts said Wednesday.

Market watchers based their predictions on vacancy rates, which have increased due to a variety of factors: slower population growth; low interest rates, which allow more renters to buy homes; and the number of new apartment units built in recent years.

“It is our projection that rents will be relatively flat in 1996,” John Bennett, president and chief operating officer for Tomlinson Black Management Inc., said of the Spokane market.

Bennett and others involved in the local real estate industry spoke Wednesday at the Real Estate Market Forum, which drew about 350 to the Spokane Ag Trade Center.

In the Spokane market, apartment vacancies have steadily increased throughout the 1990s, hovering around 3 percent between 1990 and 1992, then jumping to 4.2 percent in 1993, and 5.2 percent in 1994.

The percentage of vacant apartments leapt to 6.4 percent in 1995, with the highest vacancy rates in central Spokane, Bennett said. Studio and one-bedroom apartments are in highest demand, with vacancy rates of 3.3 and 5.3 percent, respectively.

Meanwhile, increasing numbers of five-plus unit apartment buildings are being built. In 1995, almost 1,000 building permits for such projects were issued, up from 731 in 1994, and 880 in 1993.

“The main factor we see is the volume of construction,” Bennett said. “As new construction is absorbed, the market will strengthen in the third quarter of 1996.”

Kootenai County’s multifamily housing industry switched to a buyer’s market in 1993, said Glenn Sather, an associate broker at John Beutler and Associates in Coeur d’Alene.

Though Sather doesn’t see a significant difference in numbers of units for rent, he sees an increasing number of larger projects.

“I think there’s vacancies, which leads to rent concessions,” he said. Some renters can expect to be offered deals such as a reduced deposit or a free first week.

Another factor in the downswing in Kootenai County’s rental market is the decreasing number of people moving to North Idaho from other states - California in particular, Sather said.

Also affecting the rental market, he said, are low interest rates, which are helping more people buy a house for the first time.

That’s good news for them, he said, but bad news for the apartment industry.

“People are being taken from the tenant pool,” Sather said.

, DataTimes ILLUSTRATION: Graphic: Spokane’s annual apartment vacancies