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The metro Toledo apartment market experienced more vacancies in the first half of the year as rental rates for units rose and some landlords reported a small increase in tenants moving out after buying homes.
According to a new midyear report by Toledo commercial real estate firm the Reichle Klein Group, the area vacancy rate in the apartment market rose to 7.1 percent at the end of June from 6.9 percent at the end of 2012.
While six of 11 local submarkets registered rises in their vacancy rates, two submarkets — South Toledo and Holland/Maumee 1 — have double-digit vacancy rates.
South Toledo rose to 11.3 percent from 9.5 percent at year’s end, while Holland/Maumee 1 rose to 12.4 percent from 11.9 percent.
On the positive side, seven submarkets, the central business district, Perrysburg/Northwood/Rossford 1, Perrysburg/Northwood/Rossford 2, North Toledo, East Toledo/Oregon/Walbridge, West Toledo/Sylvania 2, and Holland/Maumee 2 all had vacancy rates of 5 percent or less. The average asking rental rate climbed 2 percent, from $601 a unit to $613.
Harlan Reichle, Reichle Klein president and chief executive officer, said while vacancy rates did increase, overall the apartment market is very healthy.
“Generally, the market fundamentals are looking really good. Yes, vacancies increased a [bit], but it’s still really in good shape,” Mr. Reichle said. “And maybe the most important thing from an owner’s perspective is the increase in asking rents,” he added.
Mr. Reichle said the soundness of an apartment rental market is generally the difference between what a landlord can ask and what the landlord gets from a tenant — minus concessions or other incentives such as free rent for several months.
“There are fewer and fewer properties that need to offer any concessions or incentives that are meaningful,” Mr. Reichle said.
“There are always exceptions to that and those that do need to incentivize are usually distressed in some way or the owner hasn’t reinvested in the property or doesn’t have a good leasing program.
“But by and large, well-run properties, .... they’ve been able to push rents and get what they’re asking for,” he added.
New apartment or multitenant construction in the Toledo area remains light or flat — the same pace that has been prevalent since the housing crisis began in 2007.
The only new construction project in the area is Briarwood Cove, a 166-unit complex in Perrysburg being developed by Redwood Management Co.
The complex began leasing activity this summer.
Otherwise, the only other activity noted in the report is a 400-plus bed student-housing project being developed on Bancroft Street at Westwood Avenue by the University of Toledo. The project is in the planning and design stage and has not broken ground.
Four northwest Ohio apartment complexes were sold in the first half of the year, which was considered slow activity by local commercial real estate standards. The report attributed the slow activity to a lack of available properties for sale rather than a lack of interested buyers.
The four sales that did occur involved distressed situations, the report said.
The largest sale was the Country Club Apartments on Dorr Street near the Inverness Club.
The 316-unit apartment complex sold for $17.3 million in February to Greystone Country Club LLC of New York. The seller was Empirium Country Club LLC of Montvale, N.J.
The other three complexes that sold had a combined 438 units. They were the Campus Village complex near the University of Toledo, the Secor Woods apartments on Secor Road in Toledo, and the Saxon House Apartments in Toledo on South Cove Boulevard.
Mr. Reichle said if there is one thing that could be considered a “little bit of a cloud” for apartment complex owners, it is that some owners noted some tenants were moving out of rentals to move into homes.
Contact Jon Chavez at: firstname.lastname@example.org or 419-724-6128.