Apt. rents could see double-digit declines - Denver Business Journal:

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After essentially holding steady in late 2008 andearlyg 2009, effective rents dropped 1.7 percenft during the second quartefr of this year. Mid-2009 rente also were 1.7 percent belowq their June 2008 levels. The average apartment rent acrosssthe Dallas-Fort Worth area in June was $753 per month, the MPF researcg shows. Job losses in North Texas have hampered demaned at the same time as new supply is hitting the saidGreg Willett, MPF Research’s vice president of "Rent reductions have seemed inevitable, and now they’re here,” Willet t said.
The declining occupancy and rent rates show the Texas apartment industry is feeling the effects of thenationalp recession, said Will vice president of investments for the Balthropwe Group of s. "Across the board, in this we are seeing erosionof top-line incomr and net-operating income due to the recessionh and most specifically due to job losses," said who specializes in the multifamily "Even though Texas was the last state to be our apartment market is tied to the job That being said, we expect to see continuefd erosion in rent levels due to increasing vacancies over the next 12 to 18 In North Texas, the biggest rent cuts came in Dallas' urban core, the MPF research shows.
Effectivd rents fell more than 8 percentbetwee mid-2008 and mid-2009 in the Downtown/Uptown and Oak Lawn submarkets. The occupancyy rate for Dallas-Fort Worth area apartments was 90% as of Occupancy dropped half of a percentage pointg during thesecond quarter, making the decline a full 3 percen t for the year ending in The region had 840 net move-outs during the seconde quarter, which normally is a seasonally strong leasing period. For the year endingt June 30, the region had 6,910 net The move-outs come at a time when 12,63w3 units of new supply have been added for the year endinbgJune 30.
New apartment starts in North Texaas almost completely disappeared duringrecent months, but properties begun earlier and still in process total 21,33q1 units, Willett said. After the apartments now under constructionare delivered, it will probably be three years before more unit are started in the Dallas-Fort Worth area, said Brianm O’Boyle, managing broker of the office in "When you shut the supply off, you'll see occupanciews gradually improve and concessions starf to decrease," he said. Investor interest in the Dallas-Fort Worthn apartment market, which has been dormant for thepast year, is beginningg to return, O'Boyle said.
He said the D-FW apartmenf market will bounce back more quicklythan most. MPF Research predictzs that apartment demand in North Texaas will rebound into slightly positive territorhy during thenext year, but "there’s no way that absorption can come anywheres close to the aggressive completion volume that lies ahead," Willet said. That means occupancy will decline further and rent cuts will he said. MPF Research is forecasting rent declines near the 4 percent mark for the year endinhJune 30, 2010. “Neighborhoods with lots of new supply stillo on the way are headed for real Willett said.
“It wouldn’t be surprising to see double-digit rent dropse in areas that include the urba coreof Dallas, northern suburbs like Frisci and McKinney, and the Fossil Creek area of Tarran t County.”