Foreclosures explain sudden popularity here
By DICK HOGAN • dhogan@news-press.com • January 22, 2009
Apartment complex occupancy grew faster in Southwest Florida than anywhere else in the state in the fourth quarter even as average rents fell – but experts said that’s because people lost their homes to foreclosure in record numbers.
RealFacts, a Novato, Calif.-based data company, released statistics Wednesday showing that the average occupancy rate for complexes with 100 or more apartments increased 5.7 percent in the Cape Coral-Fort Myers area and 7.5 percent in Naples-Marco Island compared to September.
That made Naples first and Cape Coral-Fort Myers second among 16 metro areas in Florida.
“One of the factors might be people who are moving out of houses that the banks are ending up with,” said Jim Garinger, a commercial real estate agent with Colliers Arnold Southwest Florida who tracks the multi-family rental market. “People are losing houses and they still have to live somewhere.”
With a lot of people in reduced financial circumstances, the rent declines are “a function of the market seeking equilibrium in terms of rates,” he said.
On average, more than 2,100 foreclosure filings a month in 2008 have saturated the real estate market, with existing homes at fire-sale prices. There’s a backlog of about 30,000 properties in the foreclosure process.
The occupancy rate was 92.8 percent in Naples and 85 percent in Cape Coral-Fort Myers, according to RealFacts.
Meanwhile, average rents declined 13.5 percent in Naples-Marco Island to $795, making it 15th in rent increase, while in Cape Coral-Fort Myers the average rent declined 4.1 percent to $884, putting that market in 13th place.
Nationally, rents and occupancy declined almost everywhere, according to the study.
Caroline Latham, owner of RealFacts, said the combination of rising occupancy and falling rents isn’t the typical situation.
“It’s an unusual combination,” she said. “What we saw mainly around the country was rents down a little, occupancy down a little.”
A pattern similar to Southwest Florida’s occurred in Houston because of the battering that city received from Hurricane Ike in September, Latham said.
Extensive damage from the storm discouraged people from moving there, so average rents went down in response, she said.
In Lee County the glut of unsold apartments and condominiums has discouraged new construction of major apartment complexes and none are planned, Garinger said.
