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A renter's market

As rental vacancies rise, those looking for a good deal may find one

POSTED: March 28, 2009 11:56 p.m.
Tom Reed/The Times

An apartment complex on Thompson Bridge Road has posted several incentives to lure tenants.

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Gainesville may be one of the fastest-growing areas in the country, but the many "for rent" signs on homes, apartments and businesses around town seem to suggest otherwise.

The recession that has affected the real estate market also is trickling into the rental market for both residential and commercial sites.

Free rent, reduced deposits and paid utilities have all become common at apartment complexes during recent months.

Doug Bachtel, a demographer at the University of Georgia, said the market could be positive for people looking for a new place to live.

"You'll see more of a buyer's market," Bachtel said. "It might be a good time to be looking for a new apartment. There's probably a glut of them on the market and you could kind of begin to have more control over the terms."

Dottie MacMorran, manager of the Columns at Chicopee, said the economy has forced many residents of her complex to move or downsize.

"A lot of my people have lost their jobs," she said. "It's been rough."

The job market has had a negative impact on apartment complexes, said Gainesville real estate executive Frank Norton Jr., president of The Norton Agency.

"We have seen sort of a leveling off of new employment in the city of Gainesville over the last six to 12 months and that is affecting some of that home rental," Norton said. "Because we have seen a decrease in the number of Hispanics and blue collar workers in this community over the last 18 months, some of the complexes that were heavily weighted toward the Latin community now have fairly high vacancies, and it will be a period of time before we have the ability of absorbing those."

MacMorran said the majority of people that have left the Columns at Chicopee are Latino.

"Most of them are very hard working people who have lost their jobs. So they're struggling," MacMorran said. "A lot of them have been picked up for not being legal."

MacMorran said 14 percent of the units in the complex are empty.

She said residents are also asking to transfer within the complex; single tenants are finding roommates to help with rent and families are moving from three-bedroom apartments into cheaper two-bedroom units.
Norton said that's a trend across the area.

"We're seeing some more doubling up," Norton said. "The individual who used to have his apartment by himself has now taken a roommate."

Currently, 15 percent of apartments in Hall County sit empty. Certain units, such as one-bedroom apartments, have an even higher vacancy rate as people try to save money, Norton said.

To attract residents, MacMorran is offering the first month free for three-bedroom apartments and a half month free for one- and two-bedroom apartments. She also lowered the security deposit from $250 to $150.

But business is slow despite the deals.

"I thought we would get a lot more calls because of a lot of foreclosures," MacMorran said. "And the calls that I get, a lot of them are so unqualified that we couldn't move them in."

Many owners of commercial properties also are offering deals.

Signs on empty commercial sites offer reduced or even "free" rent, an offer made on a neon-colored banner on a brand-new Cleveland Highway strip center.

"We're seeing entrepreneurs going into these strip centers and are cutting themselves pretty good deals, 20 to 30 percent off the base rate," Norton said.

He said the going rate for a retail site is around $13 to $17 per square foot annually, which translates to $1,625 to $2,125 monthly for a 1,500-square-foot location.

"Some of the higher vacancies are in shopping centers in North Georgia that are above that number," Norton said. "It may be well worth it, but in this market, people are retreating to value."

While some apartment complexes and strip malls are struggling to fill units, there are bright spots in the rental industry. Retail sites in some areas are getting new tenants and the demand for rental homes has increased.

For Hall retail sites, it seems to come down to the old business axiom: location, location, location.

Storefronts near busy shopping areas are at or near capacity. Other locations without a major retail anchor are likely to have vacancies.

The Stonebridge Crossing center in Flowery Branch has major stores like Target, Kohl's and The Home Depot. The small specialty locations in the center, most around 1,200 to 1,500 square feet, are largely filled.

Norton says that is creating demand for nearby retail space.

He said the most successful entrepreneurs are offering products for value-minded customers. Among them are surplus stores, consignment and nearly new stores, rental stores and "dollar" stores.

"We're seeing some dress shops open up that are value-priced dress shops," he said.

Norton said the area around Lakeshore Mall and the shopping venues along Dawsonville Highway have also been in demand as potential new retail sites.

Brent Hoffman, a commercial agent with Prudential Georgia Realty, said those looking for commercial space may find a bargain.

"It's a tenant's market," Hoffman said. "I would lock in for as long as I could."

Hoffman, who was the leasing agent for the new location of Dave's Goody Barn on Memorial Park Road, pointed to that as an example of a different use of space.

"He's got a great business model and he's got a lot of customers," Hoffman said. "We found a retail warehouse location with rent of $3 to $5 per foot and that's about one-third of what normal retail space can bring."

Hoffman agrees that location is important, he said good spaces less than a block away from main thoroughfares can be difficult to fill.

While apartment rentals may be down, the increase in foreclosures has resulted in an increased demand for rental homes.

"The individuals who have lost their house to foreclosure over the last 12 months tend to want to move from their foreclosed house into another house rather than going back into the apartment pool," Norton said.

The Norton Agency has increased the number of houses it handles from 100 houses last year to 220 currently.

"We have had a number of developers who have approached us. Much of what we've gained in the number of houses we've rented have been developers who were not able to sell some of their inventory and have rented it in the interim. From that standpoint, that has increased our total volume," Norton said. "Those are primarily in the South Hall and East Hall area."




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