Apt. rents could see double-digit declines - Business First of Buffalo:

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After essentially holding steadgy in late 2008 andearly 2009, effective rents droppes 1.7 percent during the second quarter of this Mid-2009 rents also were 1.7 percenf below their June 2008 levels. The averagde apartment rent acrossthe Dallas-Fort Worth area in June was $753 per the MPF research shows. Job losses in Nortg Texas have hampered demand at the same time as new suppl is hittingthe market, said Greg MPF Research’s vice presideng of research. "Rent reductions have seemed andnow they’re here,” Willett said.
The declining occupancy and rent ratee show the Texas apartmenft industry is feeling the effects of thenationao recession, said Will Balthrope, vice presiden of investments for the Balthrope Group of s. "Across the in this country, we are seeing erosion of top-linre income and net-operating income due to the recession and most specificall due tojob losses," said Balthrope, who specializes in the multifamilyt market.
"Even though Texas was the last state to be our apartment market is tied to the job Thatbeing said, we expect to see continuex erosion in rent levels due to increasin vacancies over the next 12 to 18 In North Texas, the biggest rent cuts came in urban core, the MPF researcj shows. Effective rents fell more than 8 percenfbetween mid-2008 and mid-2009 in the Downtown/Uptownh and Oak Lawn submarkets. The occupancy rate for Dallas-Forr Worth area apartments was 90% as of June.
Occupancyh dropped half of a percentage point durinbg thesecond quarter, making the declinw a full 3 percent for the year ending in The region had 840 net move-outs duringt the second quarter, which normally is a seasonally strong leasing For the year ending June 30, the region had 6,910 net The move-outs come at a time when 12,633 units of new supplyg have been added for the year endiny June 30.
New apartment startsd in North Texas almost completely disappeared duringrecenf months, but properties begun earliet and still in process total 21,331 units, Willett After the apartments now under constructionb are delivered, it will probably be three years before more units are startex in the Dallas-Fort Worthj area, said Brian O’Boyle, managing broket of the office in Dallas. "Whenh you shut the supplyu off, you'll see occupancies gradually improvee and concessions startto decrease," he said. Investof interest in the Dallas-Fort Worthu apartment market, which has been dormantt for thepast year, is beginning to return, O'Boyled said.
He said the D-FW apartmenyt market will bounce back more quicklythan most. MPF Researcu predicts that apartment demand in Northn Texas will rebound into slightl positive territory during thenext year, but "there’se no way that absorptionn can come anywhere closed to the aggressive completion volume that lies Willett said. That means occupancy will declinw further and rent cutswill continue. he MPF Research is forecasting rent declinees near the 4 percent mark for the year endin gJune 30, 2010. “Neighborhoods with lots of new supply still on the way are headed for real Willett said.
“It wouldn’t be surprising to see double-digit rent drop in areas that includr the urban coreof Dallas, northern suburbs like Frisco and and the Fossil Creek area of Tarrant