The U.S. Census Bureau says the Richmond metro area has the highest residential rental vacancy in the country, but local rental agents aren’t buying it.
The Census Bureau reported this month that the Richmond area had a rental vacancy rate of 23.7 percent. That puts Richmond in the unenviable position of being the worst rental market out of the nation’s 75 largest metropolitan areas. In the fourth quarter of 2007, the Census Bureau reported Richmond’s vacancy rate was 16.3 percent. For comparison, the vacancy rate in Virginia Beach-Norfolk-Newport News was 8.4 percent.
The study was conducted via computer-assisted telephone and personal visit interviews of property owners at more than 70,000 addresses. Rental homes, rooms for rent and apartment units are factored into the vacancy calculation.
Patrick McCloud, chief executive of the Central Virginia Apartment Association, said he isn’t seeing the vacancy rate reported by the Census Bureau. His association just completed a survey of 52 multi-family apartment properties and calculated an 8 percent vacancy rate. The data were collected Jan. 15 through Jan. 25.
McCloud said that even an 8 percent vacancy rate is unhealthy. A normal vacancy rate for the area is between 4 percent and 5 percent, he said.
McCloud said that people choosing to move back in with family to save money has sapped demand. He said the slowing economy might lead to an even higher vacancy rate in the summer.
“A lot of college students that make a migration to find a place on their own might not make that choice,” McCloud said.
Landlords are increasingly eager to find tenants. McCloud said they are offering a lot of concessions right now to keep their rental properties occupied. He estimates the concessions amount to a 10 percent discount when spread over the course of a year lease.
Several area property managers said that the vacancy rate being reported by the Census Bureau did not reflect the percentage of vacant units they represented.
Holly Hilton, property manager at Pohlig Box Factory apartments, said she has only one vacant apartment out of 65 units. A two-bedroom unit rents between $1,000 and $1,500.
Robert Burke, residential property manager for Pollard and Bagby, said they only have 25 to 30 empty properties out of 800 units, a vacancy rate of about 4 percent.
“We’ve had a handful of people say, ‘I lost my job and can’t pay the rent,’ but we get that anyway,” Burke said.
David Gould, director of property management for Century 21 Signature Realty, said his properties have a vacancy rate close to 4 percent at the 300 single-family rental homes the company manages.
Gould said the vacancy rate of their properties is improving.
“The market was terrible up until a couple months ago, and then it started picking up again,” Gould said. “It was 10 percent a few months ago.”
Gould said he thinks the improvement could be attributed to an increase in people who can’t get approved for a mortgage and people getting foreclosed upon entering the rental market.
One aspect of the home rental market that isn’t improving is executive housing. Gould said they work with several multinational companies in town.
“There is very little corporate transfer. That has definitely had an affect on executive rental housing,” he said.
Al Harris is happy as a renter, for now. He covers real estate for BizSense.
Richmond seems to have the worst of both worlds when it comes to rental properties. While Richmond has some excellent high quality properties for purchase at good prices, the rental market seems to be saddled with Northeastern pricing and Deep South quality!
Northeastern pricing? Richmond is by far the cheapest rental market I’ve ever lived in, and I’ve never lived in the Northeast (Atlanta, Charleston, SC, and Washington, DC). I’m living in a two bedroom apartment now, and I’m paying exactly half of what I was paying for a one bedroom apartment in DC. The problem around here, especially in the city itself, is that the market is dominated by a handful of property management companies that cater mainly to the student population. When I was looking, the prices were never bad, but the agents couldn’t care less about you, and I… Read more »
This data seems extremely flawed, if almost a quarter of Richmond’s rentals are empty you would definitely be able to feel it as a lot of neighborhoods would be a lot quieter than normal. I have one rental property and had had lots of interest and no problem getting a new tenant in there 2 weeks ago. I can understand 10% or even 12%, but almost 24% is absurd.
In my opinion the data IS flawed. We manage just under 100 higher end residential properties and we are seeing really strong demand with the downturn in the sales market. If properties are priced correctly and are in good condition they rent almost immediatly. For example, in Dec. we took over The Presidential Court Club at 212. W Franklin St. which was a condo complex which converted 11 units to rentals. On March 1st, we will move in our last tenant. That is almost 4 units in 3 Months. And All of the units were priced near the $1.10 per… Read more »
Correction. I meant we rented 11 units in 3 months, which is almost 4 units per month.
Pollard & Bagby is not an example of the market. They are catering to college students on the low end of the market. However, noone expects their child to rent a mold-invested, unstablestructural unit. Paint can cover up these issues at first, but over months the truth comes out. The worst part is the denial by P&B (we have pics) and their strong arm approach. Their unmet commitments and lies will lead to certain residences being shut down in the summer of 2011. Not bitter; just a warning.
The statistics in this article may be flawed however rental activity seems to be boosting due to the influx of more apartments developing in Shockoe Bottom. If these statistics are not flawed, I have an interesting yet typical story to share. I’ve lived in Shockoe Bottom for three years now and I have lived two years at American Tobacco Center (a 400+ unit rental apartment complex) managed by Plus Management. Instead of offering incentives for their tenants and encouraging them renew their lease, they continue to raise the rent, thus forcing you to want to leave. Considering their reason for… Read more »