Orlando had more vacant houses, condos and apartments than any other major U.S. city during the third quarter, driving down rents and sparking landlord concessions just five years after finding an apartment was virtually impossible.
The four-county metro area had a vacancy rate of 28 percent for all housing in the late summer months of 2009, according to the newest U.S. census information. Orlando's vacancies surpassed those of any of the other top 75 metropolitan areas in the country.
The information, drawn from a sampling with a 7 percent margin of error, is yet another indicator of the magnitude of the housing slump in this market. The Orando area has the nation's 11th-highest foreclosure rate and what may be the country's largest drop in condo prices.
The abundance of vacant foreclosures and condominiums for rent has created a new market for tenants, driving the vacancy rate at established apartment complexes to 12 percent — its highest level in decades.
Local experts talk of rent reductions and unprecedented concessions, with some landlords offering months of free rent. Apartment-complex managers who would have shunned foreclosure victims in the past are now more willing to overlook that transgression on applicants' credit histories. Still others are offering prospective tenants deals on parking and storage.
University of Central Florida student Brian Poley said he researched rents for two months before he and Jennifer Lambert signed a lease last month for an apartment overlooking Lake Eola. While the going price for such a unit used to be $1,300, plus monthly parking for as much as $100, they got a place for $1,100 a month with free parking.
"Everyone who sees this, my friends and family, loves it," Poley said. "Plus we walk everywhere, so we don't pay tolls or parking or as much for gas."
Apartments in the Orlando area are generally leasing for 5 percent to 6 percent less than they did a year ago. Rental complexes downtown and near major employers are faring better than average, said Robert E. Smith, president of Smith Equities Real Estate Investment Advisors of Orlando.
"If you have a good property, you're not in bad shape," said the longtime apartment expert. "If you're not close to jobs, you're dying."
The last time local apartment vacancies exceeded 10 percent was after the terrorists attacks in September 2001, and they eclipsed 13 percent in 1987.
The realities of renting in Central Florida have changed completely since 2005, when Orlando led the nation in conversions of apartment complexes into condominiums, and renters had trouble finding a place to lease.
"The reason why our vacancy rate is so high is because we had 400,000 units — and then just 350,000 a few years ago, when units started converting to condo," said Mark Smith, senior investment advisor at Smith Equities. "Now they're going back on the market as rentals."
On a nationwide level, the Web portal Rent.com surveyed owners of about 1 million apartment units and found that most blame rising vacancy rates on the country's job losses. More than half of those surveyed said tenants had moved out in an attempt to save money by moving in with roommates or finding a better deal.
With so many U.S. homeowners losing their homes to foreclosure, 43 percent of the landlords surveyed said they have modified their credit policies to fill more units, while 20 percent said they now review foreclosure cases and have made exceptions for prospective tenants whose only credit flaw is defaulting on a mortgage.
About two-thirds of the property owners indicated that they have lowered their prices or provide at least one month's free rent. About one-third have reduced their deposit amounts, while a smaller percentage are offering unit upgrades, loosening policies for breaking the lease or offering breaks on storage and parking fees. Some have even relaxed their pet policies.
"We've seen landlords giving cruises for two. Laptops and iPods are big, because they're not as expensive, and everyone wants one," said Peggy Abkemeier, president of Rent.com, which represents 25,000 large-complex owners across the U.S. "We are also seeing tenants get tickets to sports games and flat-screen TVs, which increases the value when they move out."
One of Orlando's largest apartment companies, Camden Trust, is not offering concessions; instead, it shifts its prices daily in response to supply and demand for various types of units, said Ed Malone, the company's regional vice president.
The company also instituted a home-buyer protection program, which is a one-time charge of $500 that allows tenants who purchase a home to break a lease without paying a full month's rent as penalty. Malone said the service is a money-saver for residents who have an eye on getting their own place.
In terms of apartment-vacancy rates, Orlando is better than Tampa and other hard-hit markets, Malone said. And even taking into account Orlando's foreclosed homes, empty condos and rental town homes, he said, it's tough to believe Orlando has nation's highest vacancy rate.
"I still find it hard to believe that it's worse than Vegas," he said.
http://www.orlandosentinel.com/business/os-orlando-rental-vacancies-20100121,0,4745134.story
