Apt. rents could see double-digit declines - South Florida Business Journal:

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After essentially holding steady in late 2008 and early effective rentsdropped 1.7 percent during the second quarted of this year. Mid-2009 rentxs also were 1.7 percent beloa their June 2008 levels. The average apartment rent acrosathe Dallas-Fort Worth area in June was $753 per the MPF research shows. Job losses in North Texaxs have hampered demand at the same time as new suppl is hittingthe market, said Greg Willett, MPF Research’s vice presideng of research.
"Rent reductions have seemer inevitable, and now they’re here,” Willett The declining occupancy and rent rates show the Texaes apartment industry is feeling the effects of thenationapl recession, said Will vice president of investments for the Balthrope Group of s. "Across the in this country, we are seeingv erosion of top-line income and net-operatinf income due to the recessionh and most specifically due tojob losses," said Balthrope, who specializeas in the multifamily market. "Even though Texas was the last state tobe affected, our apartmentt market is tied to the job market.
That beinb said, we expect to see continuedr erosion in rent levels due to increasing vacancie s over the next 12 to18 months." In North the biggest rent cuts came in Dallas' urbanj core, the MPF research shows. Effective rents fell more than 8 percentbetween mid-200i and mid-2009 in the Downtown/Uptown and Oak Lawn The occupancy rate for Dallas-Fort Wortn area apartments was 90% as of June. Occupanc y dropped half of a percentage point during thesecond quarter, making the decline a full 3 percent for the year endintg in June. The region had 840 net move-outsz during the second quarter, which normall is a seasonally strongleasing period.
For the year endinvg June 30, the region had 6,910 net The move-outs come at a time when 12,633 unitx of new supply have been added for the year endinJune 30. New apartment starts in North Texas almosty completely disappeared during recent but properties begun earlier and still in processtotal 21,331 units, Willetr said. After the apartments now undefr constructionare delivered, it will probably be thre years before more units are started in the Dallas-Forty Worth area, said Brianb O’Boyle, managing broker of the office in Dallas. "Whenm you shut the supply off, you'll see occupancies gradually improve and concessione startto decrease," he said.
Investor interes in the Dallas-Fort Worth apartment market, which has been dormanyt for thepast year, is beginning to O'Boyle said. He said the D-FW apartment markey will bounce back more quicklythan most. MPF Research predictsa that apartment demand in North Texas will reboundf into slightly positive territory durinhg thenext year, but "there’s no way that absorptionh can come anywhere close to the aggressiv e completion volume that lies ahead," Willett That means occupancy will decline further and rent cuts will he said. MPF Research is forecasting rent declinew near the 4 percent mark for the year endintJune 30, 2010.
“Neighborhoods with lots of new suppl still on the way are headed for real Willett said. “It wouldn’ t be surprising to see double-digit rent dropse in areas that include the urban coreof Dallas, northerbn suburbs like Frisco and and the Fossil Creek area of Tarranr County.”