Lawrence’s tightening residential rental market has led to the merger of two of the city’s largest property management firms.

George Waters Management and Master Plan Management merged Sept. 1.

Now known as Midwest Property Management, the new company manages about 1,400 apartment units across Lawrence. Terms of the merger were not disclosed.

“I had been looking for an exit strategy for quite awhile,” said George Waters, who started the management company that bore his name in 1988. “This is a young man’s game. And Lawrence is a very competitive, overbuilt market right now, and that is one of the reasons I wanted to get out.”

For the past two years, apartment managers have been reporting higher vacancy rates and a greater need to offer incentives like reduced-deposit leases. Earlier this year a study of the apartment market found the vacancy rate had grown to 8 percent, its highest level since 1997.

John Salvino, president of Master Plan, said he had been looking for an opportunity to increase the size of his management company. The merger more than doubled the size of Master Plan, which should allow the company to take advantage of efficiencies of scale.

“I think it will allow us to be a better property management company,” Salvino said.

He said the company would be able to split itself into more specialized departments — such as management, sales and marketing, and maintenance — to better serve customers.

“The market has forced you to change the way you do business,” Salvino said. “It was about two years ago that I realized we had to focus on sales and marketing more than we used to. It used to be in this town that if you showed someone a unit and they didn’t like it, there would be someone else come along shortly. Those days are gone.”

The new company will employ about 25 people and will have its headquarters in the building at 1203 Iowa that housed George Waters. Salvino said he did not expect the merger to cause any layoffs.

Salvino is the new company’s president. Waters remains on staff as a consultant.

Waters said he intended to spend more time on George Waters Realty, a Lawrence-based commercial real estate company specializing in the sale of apartment complexes.

That business is booming, he said. In the past year, Waters said he brokered $12 million in apartment sales, many in the Lawrence area.

“A lot of existing owners saw a lot of new apartment units coming on line and they also saw that rents weren’t rising, so they decided to get out,” Waters said.

There have been plenty of buyers in the market, Waters said, in part because investors have been flocking to real estate as an alternative to the volatile stock market.

Buyers have included investors from the Chicago and California areas, as well as several area residents, Waters said.