Apartment ownership a hot market
8/31/2017Apartment living space in metro Toledo is in high demand, which in turn is pushing the apartment ownership market into red hot territory.
“I can’t remember it ever being this aggressive. That’s saying something for an old gray-haired guy,” said Tony Plath, an agent and apartment property specialist with Toledo commercial real estate firm the Reichle Klein Group.
Mr. Plath, who got his commercial real estate license in the mid-1970s, said, “I can tell you is I have a list on a yellow pad that has about 4 pages of people wanting various numbers and sizes of apartments.”
According to Reichle Klein’s mid-year report on the apartment market in metro Toledo, the segment had its overall vacancy rate rise to 5 percent from 4.5 percent at the end of 2016. But four key submarkets — a section of West Toledo/Sylvania, a section of Perrysburg/Northwood/Rossford, South Toledo, and Holland/Maumee all had their vacancy rates drop.
The Holland/Maumee vacancy rate, in particular, dropped from 4.2 percent in December to 2.6 percent at mid-year, the report shows.
Rents in nearly every submarket continued to increase. The overall average asking rental rate was $690 per month at mid-year, up 2.2 percent from December’s $675, the report said.
Construction also was up from year-end, reaching 774 units overall at the end of July and matching a post-recession high that occurred in December, 2015.
The report indicated that areas it does not include in its statistics, Temperance, Mich., had a 86-unit apartment complex nearing completion and Dundee, Mich., had a 132-unit expansion of an existing property.
Meanwhile, older properties that are put up for sale are drawing significant interest, Mr. Plath said.
“In most instances, if we take something to market, list it, and package it, we shop it in a way that creates a bit of an auction atmosphere. In those instances, we’ve been seeing six to nine offers on the last few properties we’ve gone out with,” said Mr. Plath. He recently sold two Toledo complexes, the LeParc Apartments at 2144 W. Sylvania Ave. and the Hidden Village Square Apartments at 2822 Eldora Dr.
Mr. Plath said the torrid demand for apartment complexes began about four years ago. It followed a period a period of housing troubles and a high number of foreclosures.
The demand for apartment dwelling space has remained high, and now it is coupled with a new wave of retirees who want apartments with amenities like garages and fancy kitchens, and who are willing to pay rents of up to $1,400 a month.
Since 2013, Mr. Plath said has been offering properties for sale without a list price. High demand for investment properties lets the market set the price, particularly from out of the area buyers.
As with the local housing market, available inventory is a problem.
Construction costs for new apartment complexes are extremely high, so many owners have begun rehabilitating properties in order to put them up for sale to capitalize on the hot market, Mr. Plath said.
Contact Jon Chavez at jchavez@theblade.com or 419-724-6128.