Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 16, 1993 TAG: 9302160055
SECTION: BUSINESS PAGE: A-4 EDITION: METRO
SOURCE: CHARLYNE H. McWILLIAMS STAFF WRITER
DATELINE: LENGTH: Medium
THE RENTERS GO A-BUYIN'; APARTMENT OWNERS CRYIN'
BUT APARTMENT BLUES are good news for the cost of living, you see; incentives to rent become the norm.
Home sales in the Roanoke Valley were higher in 1992 than they had been in four years, and that made most people happy because rising real estate sales often indicate a rebounding economy.
Richard Shumaker had mixed feelings, however.
Home sales "are a tool for spuring part of the economy, but it's not a great thing for other parts of the economy - like the apartment industry," said Shumaker, manager of West Wind Apartments off Hershberger Road and president of the Roanoke Valley Apartment Association. "It's going to hurt a lot."
Last year, 3,818 houses were sold, the largest number since 3,917 in 1988, according to the Roanoke Valley Association of Realtors. The 1992 count was 51 percent over 1991's 2,527 sales.
Shumaker said he has lost several residents recently to the attractive housing market. The occupancy rate at West Wind is about 80 percent, he said, below what the 288-unit community needs to be really profitable.
The average occupancy rate in Roanoke-area apartment complexes is about 88 percent to 90 percent, Shumaker said. There are more than 5,000 units listed in the Roanoke Valley Apartment Guide, a publication endorsed by the association. Monthly rents run from about $200 to about $600.
Apartment-complex managers wouldn't say they've changed their rents to make their units more attractive to prospective tenants, but many admit they're now more flexible.
Shumaker worked at properties in Blacksburg and Newport News before coming to Roanoke. The characteristics of those cities - like being near a college and a Naval yard - have had dramatic impact on the rental rates in those markets, he said. Although Roanoke doesn't have those variables, it still has some of the same problems in renting.
Kim Hardy manages 162 units at Sterlingwood Apartments, across the street from Shumaker's property. While she agrees that there has been an increase in the number of people leaving her apartments to buy homes, she's optimistic about replacing tenants.
"It all runs in cycles," she said of occupancy rates.
Hardy has been at Sterlingwood for five years. She said she has seen a lot of changes during that time. More properties offer limited leases that allow tenants to rent for six months at a time or even month to month.
And some complexes have offered several months of free heat, free rent and other deals to lure new tenants.
Recently, Shumaker had one of the most lavish incentives. He offered a trip for two to the Bahamas or $500 in cash to new tenants who signed a one-year lease. Rent at the complex ranges from $374 for a one-bedroom apartment to $569 for a three-bedroom apartment with a den, including heat and water.
Everyone took the cash, he said, but the fact that the trip was offered was evidence enough of what lengths some managers will go to get new tenants.
Incentives such as these end up costing complexes money, Shumaker said. However, "We have to do something in order to cope with problems," he said.
Hardy said she has seen apartment managers become more willing to share information about their occupancy rates and to pass information about prospective tenants because of the tight market.
"You want to keep up with what others are doing," she said. "It's healthy competition and it keeps us on our toes."
"I've just had to work harder," said Violet Smith, manager of Winthrop Apartments near Towers Shopping Center. There are 145 units at her complex and 95 percent of them are occupied.
"If I'd lose five [tenants] in a month, at least three of the five would be buying a house," said Cindy Bell at 144-unit Brookside North on Clubhouse Drive.
The apartment managers, however, are cautious about the impact of plant closings and mergers that are expected to eliminate hundreds of jobs in the Roanoke Valley this year.
"We have more retirees here, but layoffs have a way of trickling down to everyone," Bell said.
Shumaker said he thinks his occupancy will remain the same: He expects the bad news to be offset by efforts to lure new companies into the area, bringing him new tenants.
Despite the seemingly unstable times that have fallen on the apartment market, local managers said they've heard rumors of another complex being built.
"It would be extremely unfortunate for anyone else to get into the game right now," Shumaker said.