Managers struggle to satisfy tenants APARTMENT COMPLEX--LOW RENTS, MANY VACANCIES

November 07, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

At the brick garden apartments known as 4300 North Charles St., owners never used to worry much about attracting new tenants or putting up signs. The tenants came anyway, some as referrals, others from nearby Homeland, Guilford and Roland Park looking to trade in a big house for something smaller.

Those days are over. For the first time two months ago, owners of the 25-year-old complex south of Loyola College felt the time had come to devise a marketing scheme. The company -- 4300 Management -- turned to Frederick Realty Inc. for help. For starters, the agency has put up new signs, expanded rental office hours and begun extensive remodeling of outdated interiors.

Elsewhere, in and around the city, apartment rents are being slashed. Some complexes waive the first month's rent, others require no security deposit. Managers have even worked out short-term leases or helped with moving costs.

In the rental market, times are tough, industry experts say. Layoffs, a slow economic recovery and low mortgage rates drawing tenants into homeownership have taken a toll. Occupancy levels of 85 percent to 90 percent have become the norm in an area with levels historically closer to 100 percent, said Ben Frederick III, of Frederick Realty.

And times might get worse. The rental market might not feel the full effect of this year's low mortgage rates until next year, said Robert Sheehan, consulting economist for the National Apartment Association. So far the percentage of homeowners in Baltimore has increased only slightly, from 62.5 percent to 63 percent, he said.

Apartment managers have responded with several come-ons and specials.

At the 219-unit Maplewood apartments in Waverly, managers cut rent on one-bedroom units from $394 to $354, and reduced the security deposit to $250 instead of one month's rent.

"Vacancies tend to be a little higher than normal," anywhere from 10 percent to 15 percent, said Melissa Schutz, resident services coordinator for Maplewood and three other rental properties in the city. "We've been decreasing rents to generate traffic. With the economy the way it is today, people are not too eager to move anywhere."

In Reisterstown, renters can sign a lease at Owings Manor garden apartments with two months' free rent, and no security deposit or application fee required. Rents range from $485 to $675.

"It's a very competitive market," said Kathy Wandling, Ownings Manor's district manager. "We try different ways of attracting people. With the interest rates where they are, it's very attractive to buy a townhouse."

And at Northbrooke Township on Hillsway Avenue near Towson, managers reduced rent a month ago from $485 to $450 on two-bedroom townhouses. Two-bedroom apartments, formerly $445 per month, now rent for $399.

"You wouldn't be seeing these incentives if the occupancy levels were higher," Mr. Frederick said.

Moving in with parents

Layoffs and the scarcity of jobs for college graduates have prompted would-be tenants to double up with roommates or move in with parents or relatives, said Edward G. McCoy, vice president of the Apartment Builders and Owners Council of the Home Builders Association of Maryland. He estimated average vacancy rates at 6 percent or 7 percent in the Baltimore area.

Because of that, "rent has flattened out to some extent," Mr. McCoy said. "In the past, 10 percent to 12 percent [increases] were not uncommon. That's not happening at all. You have to temper what you ask for with what people can pay. It's a slow recovery, and people are being cautious."

Adding to vacancies are those tenants propelled into the housing market by mortgage interest rates of 7 percent and below.

"A lot of people are coming out of apartments and buying low-end homes," said R. Bruce Campbell, president of Wallace H. Campbell Co. Inc., which manages 7,000 rental units in the city and Baltimore County, such as Ruxton Towers, Northwood Apartments and Loch Raven Apartments. "We lost people to that and to unemployment."

Rents at the company's townhouses and high-rise, mid-rise and garden apartments -- ranging from $350 for a one-bedroom unit to more than $1,000 -- typically had risen 3 percent to 5 percent a year, Mr. Campbell said. This year, for the first time, the company asked for no increase.

"Rent increases are very close to nonexistent in Baltimore, from what I hear," said Mr. Sheehan of the National Apartment Association. "If you don't give breaks to existing tenants, tenants are canceling their leases and moving down the road."

Small rent increases

Rents in Baltimore rose an average of 2.9 percent in 1991 and rose only 1.8 percent in 1992, said Mr. Sheehan, quoting Department of Labor statistics. He predicted an average rent increase for this year of 3.5 percent nationwide and 2 percent in the Baltimore area. A National Apartment Association survey of 35 properties in the Baltimore region shows last year's average rent -- the latest available -- at $622.33. The survey showed the average vacancy rate for 1992 at 9.63 percent.

Because managers have kept rents down and offered creative deals, vacancy rates that had shot up as high as 20 percent have begun to creep down again, Mr. Campbell said.

"There's been a steady improvement since spring, shaking out all the people who bought homes or condos," he said. He noted his properties' vacancy rates now average about 5 percent.

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