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Archive for Saturday, August 13, 2011

Landlords trying to fill growing number of rental vacancies

August 13, 2011

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If you take a drive around Lawrence this weekend, you might notice more “For Rent” signs than you’d expect to see in August.

Even prime spots for students have rooms for rent.

“This will be my first year that I’ve had a vacancy,” said Quinn Miller of Second Wind Management. “It’s been an odd month.”

Miller has been managing properties in Lawrence since 2007 and noticed last year the renter pool seemed smaller. Then, he didn’t fill his last spot until July 31. This year, Aug. 1 has come and gone and he has yet to fill five of his 37 spots.

Last week in the neighborhood north of Memorial Stadium, where Miller still has a house to fill, there were seven “For Rent” signs in the 10 square blocks from Sixth and Illinois streets to 11th and Maine streets.

No one knows exactly how many rental vacancies Lawrence has because property management companies are reluctant to reveal those exact numbers. But real estate appraiser Tim Keller conducts an annual survey of property owners to try to find out.

“My estimates have shown the vacancy rates range from 6 to 10 percent depending on the part of the city,” said Keller, who has not yet released the results to this year’s survey.

That fits with the most recent estimates from the U.S. Census Bureau, which pegged Lawrence’s 2009 rental vacancy rate at 6.5 percent, with about 2,400 of the 37,900 rental units vacant. That’s actually lower than the 7.7 percent rate for the entire state that year. Nationally, the rental vacancy rate dropped to 9.2 percent in the spring, the lowest it’s been since 2004.

For landlords like Miller, lower student enrollment may be contributing to his unoccupied rooms. The head count on the Kansas University’s Lawrence campus declined by 600 from fall 2008 to fall 2010. KU’s latest enrollment numbers have not been released.

For landlords who cater to students, the decline has been felt.

“It’s been a lot of wait-and-see,” Miller said.

Development continues

There are also more apartment units. Since 2008, 997 apartment units have been built in Lawrence, with 55 built so far this year.

Tuckaway Apartments at 546 Frontier Road were completed in the spring, replacing the Boardwalk Apartments that burned down in 2005. Since becoming fully operational in June, about 35 percent of the 96 apartments have been leased.

Other projects in the works include a seven-story, 55-bedroom building on the corner of Ninth and New Hampshire streets and a 300-apartment complex on Sixth Street and Queens Road.

It might sound odd that there’s so much development in a town where there are more rooms for rent than there are renters. But for investors, it could make sense to build now.

“Construction costs will probably never be any cheaper,” Keller said. “Financing is not easy to get, but the interest rates are favorable.”

And while there are vacancies, Lawrence’s population did grow by more than 1,000 from 2006 to 2010. That growth may give investors the confidence that building now could pay off later.

“While there’s vacancy, there’s also growth the market can stand,” said Ted Haggart, president and CEO of Douglas County Bank. “There is never going to be zero vacancy.”

He said developers who build now may be able to sell their holdings down the road for a big payoff. That happened last December, when a New York-based company purchased two of the three Hawks Pointe apartments at 1421 W. Seventh St. for $12.4 million. The apartments had been owned by a Massachusetts-based company since 2004.

“Apartments are still a favored property to own nationwide,” Keller said. “That probably accounts for some of that significant investment from out of state.”

For landlord James Dunn, who still is trying to fill some of his properties, that development perplexes him. He is concerned the Lawrence rental market has become overbuilt.

“I do have places that really should have somebody living in them. A lot of them are fixed up with new things,” Dunn said. “I feel like I’m personally creating museums.”

Comments

onceajhawkalwaysajhawk 2 years, 8 months ago

Unless the regulations are changed to control and enforce compliance with the multi-family units people will start saying "WELCOME TO TOPEKA!"

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Cait McKnelly 2 years, 8 months ago

It isn't just a matter of rents being "too high". Those rental apartments that are halfway "reasonable" are veritable slum properties that are 40 years old, built from Craker Jack boxes and were never maintained properly from the day they were built. They have crumbling dry wall, door frames out of plum, leaky windows and plumbing that's falling apart. Add in landlords that try to self maintain, use used parts cannibalized from other units and you have a recipe for disaster. But hey as long as they can slap on some paint and qualify to rent to Section 8, who cares?

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MYOB 2 years, 8 months ago

All of you that think rent is "too damn high" in Lawrence have never dealt with the county appraiser's office in this respect. Guess what the county says that a one bedroom apartment should be renting for? $585! That's what our appraisals and thus property taxes are based on! And it doesn't matter that you can prove to them that your tenants are low income or that your 40+ year old property is competing against new units that provide all utilities included in brand new spaces, for less than $500! They don't budge! Our property doesn't command that much rent, yet we're taxed on it. How about griping that the county is over valuating, thus over taxing, thus causing landlords to charge too damn much?

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onceajhawkalwaysajhawk 2 years, 8 months ago

I'm amazed that this is even a story....For years now the market has been glutted with new construction (from the same SOB's) who brainwashed all the neighborhood associations to fight for the residential housing regulations. (Which was just a move to create more customers for their complexes) If people would have just stopped for a second and think about who really needs to be regulated, it is the multifamily developments. Why? because they run their business on income vs. appreciation. What does that mean? They drain the income out of the units and sell the property when their CPA's say it's time to sell and careless about maintenance, they just build them cheap and let them go until they sell to seeder suckers....I mean owners. Examples?Oh, lets see Park 25, Gateway, orchard corners, chase court,crescent heights, legends...my fingers are getting tired.. The bottom line is - Everyone that support the rental housing regulation went after the WRONG group! Drive around and tell me these complexes are well maintained and a asset or our community.. Wow ,the sheep followed the wrong Shepard on this subject!

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Carol Bowen 2 years, 8 months ago

It looks like the housing market is leveling the supply and demand. (Liberty One, Where are you?) Unfortunately, waiting for the market to correct the supply of rental housing allows too much time for neighborhoods to decline.

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kernal 2 years, 8 months ago

We shouldn't be ragging just the City for handing out more permits for apartment complexes when vacancies are high. Stockholders should be asking the banks where they own stock shares why they're granting acquisition and development loans for these projects. In a college town where the number of students enrolling has dropped and there are no large businesses moving here, requiring housing for employees, it's not making a lot of sense.

Seems to me It's that kind of bank mentality that helped cause our current economic woes.

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lunacydetector 2 years, 8 months ago

we must not forget that congested apartment buildings are promoted by the 'smart' growth people, so blame the city for caving in to the progressives who wanted lawrence to be a utopia. the apartment developers took full advantage of lawrence's naïveté.

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Richard Heckler 2 years, 8 months ago

"Obama is getting ready to release bank foreclosed houses to the market."

Which is likely to drive market values down across the board which is not the fault of Obama.

It is the fault of the crooked real estate industry and crooked financial industry and the fault of the Bush regulators who turned a blind eye to this reckless "boom town economics" which in reality had a touch or two of monster fraud within.

BUT there should be some very hot deals available. If I were to come upon one of these my offer would be rock bottom knowing the real estate industry wants to get these homes off the market. KCMO metro may have some real good deals as the last I heard there were about 10,000 homes on the market. We'll see.

Bottom line for Lawrence,Kansas.... the rent is too damn high!

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Daffy 2 years, 8 months ago

Obama is getting ready to release bank foreclosed houses to the market. Renters should make those neighborhoods look good. Obama has the midas touch for this country.

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bootlegger 2 years, 8 months ago

THE RENT IS TOO DAMN HIGH!!!!!!!!!!!!!!!!!!!!!!!!!!!

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Richard Heckler 2 years, 8 months ago

And too think all of this over building receives the approval of our city government made up of business people who take advice from the Chamber of Commerce which is made up of primarily builders and developers also considered good business people. Hmmmmmmmmm business people without discipline and ability to say no.

So why does Lawrence vote in business people who proceed to bloat the markets at taxpayer expense. I imagine that over the past 25 years the cost of tax increases and user fee increases is in the thousands of dollars to each of us taxpayers.

Rent at $300-$400 per bedroom or more is as they say too damn high for Kansas. Bedroom communities typically are more expensive for no reason at all. Mostly because they lack the support of $100,000 salaries in every home and the employer.

Lawrence west side developers brought us an illusion aka duped.

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thuja 2 years, 8 months ago

heigh-ho the merry-o

the rent is too dam high.

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lunacydetector 2 years, 8 months ago

the vacancies are much higher than reported. who benefits by stating vacancies are lower? the banks and the appraisers. the banks are only concerned about repayment ability by their borrowers and overlooking the actual vacancies make life easier trying to explain why they made a loan if vacancies are high. of course, appraisers get the business to appraise new apartments, so it basically shoots their business in the foot if vacancies are high.

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irunsowhat 2 years, 8 months ago

I was actually talking to a woman on Friday while I was at work and she was complaining that she had three of her units empty and they had been occupied for years. I told her I was looking for a place to move and offered her a price that was 50% of what she was asking for and she said she'd take it. These landlords are desperate, especially with more and more developments being built, and this will hopefully make them see that their rates are outrageous.

Probably not, but it's worth a shot.

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xclusive85 2 years, 8 months ago

It would help if more places allowed pets. I had a really hard time finding a decent place to live that allowed pets.

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Erin Graham 2 years, 8 months ago

Soooo....STOP ruining neighborhoods with dense complexes and multifamily units! kthx.

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Richard Heckler 2 years, 8 months ago

Simply because it may be the best time to build for local developers does not mean it should be done. That attitude is unfriendly to existing business and tax payers. Expanding flooded markets is dumb economics because all empty dwellings cost taxpayers money.

Once again flooded markets by way of expanding the tax base is draining our pocketbooks and raising our taxes. Quite the opposite to how taxpayers have been brainwashed for decades aka duped.

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Steve Jacob 2 years, 8 months ago

Don't think it's too hard to figure out, more rooms being built, and KU enrollment is about even or dropping. And the students are getting more bang for there buck at newer places.

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Richard Heckler 2 years, 8 months ago

The city commission should consider a moratorium on new construction for awhile. This market is flooded which means all of the rental properties will NOT be paying back the taxpayers. This is resulting in higher fees and taxes for all of us.

Same with the flooded retail market.

Isn't it magic that we taxpayers are watching how expanding the tax base is more illusion than substance.

The one consequence that usually goes unmentioned - flooded markets are draining our pocketbooks and raising our taxes.

Flooded markets is the result of over five decades of subsidies paid for by the American taxpayer. These range from the obvious to the obscure and include big projects-like the billions we spend on new roads as well as smaller ones-like the tax-breaks that encourage businesses to move to the edge of town. What about that $100 million pork barrel sewage treatment plant?

We've subsidized reckless growth at such a basic level for so long, that many people believe the status quo is actually fair and neutral. This is false-what we think of as a level playing field is tilted steeply in favor of flooding market developments.

Flooding our local markets wastes tax money. It pulls economic resources away from existing communities and spreads them out over sparse developments far away from the core. Taxes subsidize millions of dollars worth of new roads, new water and sewer lines, new schools and increased police and fire protection at the expense of the needs of the core communities. This leads to degradation of our downtown and higher taxes.

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Flap Doodle 2 years, 8 months ago

merrill's recent suggestion that landlords should not charge rent for the first three months of a lease is probably the most removed-from-reality thing he's posted in a long time.

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demonfury 2 years, 8 months ago

Lawrence is in serious decline people. The city is run like a jack in the box, the county isn't much better, and KU is crumbling right before our eyes. It all boils down to the people that are in positions of authority and what they have done (or left undone) with that authority over the last 5-7 years. I could easily go on, but you know what I mean. Believe it or not this city didn't get this way by sheer happenstance. The leaders of Lawrence, Douglas County and KU have been wrecking it for years, and now we are seeing real tangible results of their leadership (or lack thereof). With the newest brain fart in paying to keep the SRS office open, it will only get worse. Liberal or not, most intellectual people do not want to pay twice for the same thing. And that's what Lawrence and Douglas County has just forced all of us to do. KU has brought in a head football coach with a 20-30 record from an inferior conference and expects him to win in the Big 12? Well, he shows us his true ability by going 3-9 in his first season. They hire a chancellor with a reputation of doing little more than money begging the state so hard, they give in to shut her up. And she spins it like a coup of leadership. She hasn't showed me any return on investment yet, and likely won't. These are just the big 3 reasons why Lawrence is in serious trouble and obvious decline. There are many, many more that you will come to see for yourself in time. Wait til you all see what your 18 million dollar library brings.

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gl0ck0wn3r 2 years, 8 months ago

Waiting on a Merrill cut-and-paste of Kirk's nonsense...

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tange 2 years, 8 months ago

Maybe Sam could designate Lawrence a rural opportunity zone.

/ rural... not feral... rural.

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Kookamooka 2 years, 8 months ago

Oh Goodie! This will result in two great things...1. developers will slow down on the multifamily housing projects they love to build in Lawrence and 2. The slum lords in the Oread will want to sell their properties and single family people can move in and rehabilitate the neighborhood. The landlords need to realize, however, that in order to sell those properties they'll need to put in the work and not just the sloppy cosmetic fixes. Otherwise, they will REALLY need lower their prices. Since those properties are notoriously out of code and often badly maintained, people looking to buy real estate to live in, should get good deals! I recommend buyers bid low and negotiate like sharks! It's WIN/WIN for the little guy and the big dogs will just have to write off their losses. (like Compton does every year with the Masonic Lodge!)

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droppinplates 2 years, 8 months ago

The number of new apartments being built in Lawrence is absurd. Of course their are more sitting empty. The old ones don't just dissappear when the new ones are built.

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OonlyBonly 2 years, 8 months ago

What are the chances rental prices will drop a little? Ah, yeah, that's right not a chance of a snowball in Hell! This is, after all, Lawrence.

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Zac Hamlin 2 years, 8 months ago

I couldn't agree more Mark, I just got our rental occupied because I asked a reasonable rent, not a summer 2008 pipe-dream.

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RKLOG 2 years, 8 months ago

I am ready to move into one of them but can't afford the rent (hint, hint)...

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