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Tampa Bay area apartment complexes see gloom but renters see deals

CARROLLWOOD — Like gas stations undercutting each other to the tenth of a penny, the apartment complexes up and down Gunn Highway are bidding for business.

Marbrisa and nearby Lofton Place have been advertising $100 move-in specials. Across the street, St. James Crossing offers $99. And Lakes of Northdale, just south of Gaither High School, will move you in for a buck.

Like so many industries these days, the multifamily rental sector is hurting.

With the epidemic of home foreclosures in the Tampa Bay area, you might think more people would be moving into rental apartments. But even that flood of potential renters hasn't compensated for the masses that have moved in with friends or relatives, doubled or tripled up in homes, or simply can't find a job to pay for rent.

There is considerable disagreement as to what the future holds. Some analysts predict the rental market will flourish as middle-income Americans remain skeptical about home ownership. Others predict a wave of apartment foreclosures as tight credit markets put the squeeze on owners unable to get the financing they need to renew loans.

But this much is clear, said complex manager Marc Rosenwasser: "If you are a renter, you are in great shape."

To condo and back

Like so many industries, the apartment sector is cyclical. A few years ago, condominium conversions were the rage, from the Snell Isle Club in St. Petersburg to Vista Grande in New Tampa. For a while, renters faced occupancy rates of 98 percent. It was hard to find a place to live.

Today both Snell Isle and Vista Grande are rentals, and many others also have reverted, increasing the supply. The resulting glut has complexes offering one and two months of free rent.

Randy Duchesne says he and his girlfriend got a great deal on a two-bedroom, two-bathroom Tampa Palms apartment. Normally more than $900, the place is his on a 15-month lease for $770 a month. "I love it up here," he said.

Managers worry that with so many concessions, they will see a higher turnover in renters, who might flock from building to building to get a good deal.

They also are treading carefully on the issue of the credit check. Previously, they say, a foreclosure might make a family ineligible to rent. Today, however, they are more likely to overlook the foreclosure if other factors, such as bill payment and employment history, are stable.

The problem, they say, is that job creation is so important when it comes to filling apartments. Think of 22-year-old college grads who just landed their first jobs and are looking for places to rent. Or the couple who move to the area for work and want to rent for a while before looking to buy.

"In Tampa and Florida there was a net decrease in jobs for the first time in a decade," said Byron Moger, a broker for Cushman & Wakefield in Tampa. "For a lot of renters, that means moving in with friends or family, or doubling up. … If I were a young person, I would stay home another six months."

Complexes also are competing with the so-called shadow market of vacant homes that are being marketed as rentals.

In one Brandon-area community, Rosenwasser said, real estate agents sent postcards to his apartment renters, advertising pool homes for $700.

Looking ahead

Many renters are on a fixed income, new to the work force or at a transitional point in their lives. The industry also relies on "renters by choice" — people who could buy a house but prefer to be mobile and maintenance-free.

"Sometimes I do think that I'm pitching my money away," said Duchesne, 34, a former homeowner. "But then I know people who own houses, and for what they paid, they are pitching their money away also."

Looking ahead to a post-recession economy, managers hope the renters by choice will increase, sobered by memories of the foreclosure crisis.

"We have lots of residents who don't want the headache," said Rosenwasser, president of Meadow Wood Property Co. "They want to be able to walk down to the swimming pool and know it is clean. People are working longer hours. When they get home, they don't want to have to fix something."

Moger equated the decision to the risk of investing in the stock market or the relative safety of a bank account.

"Today, if you rent, you are being pretty prudent," he said.

As the local rental industry struggles to attract more customers, apartment foreclosures loom. The complexes often need to be refinanced every five to 10 years. At a recent conference in Washington, D.C., the National Apartment Association predicted that in the next two years $60 billion to $80 billion in multifamily mortgages will need to be refinanced.

But tighter credit markets make refinancing harder.

That's bad news for some owners. Residents of large complexes, though, would likely be okay. Typically, the bank will either renegotiate the loan's terms or, in the case of foreclosure, bring in its own manager and allow the renters to stay.

Despite the current challenges, some industry experts predict a strong recovery, especially as renters lose their lust for that generously financed starter home.

Michael Slater, president of Triad Research, believes the effect of job losses is largely offset by several factors. People who have lost homes will still need places to live. Many of the newly unemployed are in dual-income households, and therefore tied to the Tampa Bay area. And, as always, new households are formed by marriage and divorce.

Although statistics expected in April might show average occupancies at the break-even level of 90 percent, Slater said, "my prediction is that six months later, we will be at or near 94."

Lobbyists in Washington, meanwhile, are calling for long-term policies that will encourage apartment living for the mainstream middle class.

"Most of the financial problems our country now faces were caused by the excessive embrace of home ownership,'' association president Douglas Culkin said in a prepared statement. "We need a more balanced housing policy."

Reach Marlene Sokol at (813) 269-5307 or sokol@sptimes.com.

. BY THE NUMBERS

Who lives there?

• 31 percent are under 30.

17 percent are over 65.

Half are single.

Half live alone.

• 10 percent have incomes over $75,000.

Source: U.S. Census Bureau, 2007.

Tampa Bay area apartment complexes see gloom but renters see deals 03/28/09 [Last modified: Saturday, March 28, 2009 4:32am]

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