It's a Good Time to be Renting Apartments

Cash flow. Liquidity. Income. These are all good words for us in the business world trying to make our Profit and Loss statements appear in the red. Why mention P&L's, cash and other fancy financial terminology? Well, we are sitting on the cusp of another great revival in renting and in some places like Manhattan and San Francisco said revival is in full swing. This bodes well for the rental community as a whole and as a marketing partner to the industry, this bodes well for us too.

That being said, msnbc.com yesterday posted a great article about the renter's boom and how housing has directly influenced the economics of our industry. The first part of the article is pretty obvious stuff, particularly to those in the Florida market where the 'shadow market' (we always think of a sinister man in a cape and tights committing dastardly deeds when we hear this term) has saturated the market with available condos and houses to rent. 'A' product, predictably has been hit the hardest as more and more families rent homes for less than what you could rent a 3 bedroom/2 bath apartment or even a 2/2 at an upscale 'A' community. However, we have talked about the up-tick in traffic and occupancy rates (see our last surveys, here, here and here) that Susan Whitney with property management company Riverstone Residential Group in Boca Raton, Fla. alludes to in the article.

The shadow market battered the rental market in the last two years, Whitney said, as renters opted for investor-owned homes and condos, which helped to drive down rents in the area. But as news spread of tenants getting burned by delinquent landlords, renters returned to the traditional market.

"(They) have become more weary about investor homes and condos, and now concessions in the market have started to decrease," she said.

Ms. Whitney is absolutely correct! More and more foreclosures in our area have left many renters and/or foreclosed homeowners with no option but to rent. Why would these renters rent again from a home or condo when the same act of foreclosure could happen again? The answer is they would not, even if it meant paying more rent per month for an apartment than they would pay for a home or condo for rent.

This trend is only going to increase and to us in our market, this is the real story. Tampa, Orlando and Ft. Lauderdale communities need to start preparing their forecasts and budgets for a turnaround in the market that will, admittedly, continue to trend upwards percentage point by percentage point. This trend will be slow, but as more foreclosures trickle into the market, more renters will be created and the renter's pool will expand. Renter's will crave the stability of an apartment community and now is the time to prepare to welcome them with open arms.

Housing downturn is a boon for some renters (msnbc.com)