Apartment rental rates down but stabilizing
April 2, 2017 at 11:03 p.m.
Updated April 3, 2017 at 6 a.m.
Oak Forest Apartments is 97.3 percent occupied, up from 73 percent a year ago.
Apartment officials don't credit this to the apartments' amenities but instead to the customer service and marketing strategies.
Apartment officials also offer concessions when someone moves in. Last July, they offered six weeks of free rent to new renters, regional director Jamila Ross said.
"Concessions help, but that's not the reason why we have been able to increase our occupancy," she said. "One of the biggest players has been word of mouth. Our customer service really helped."
Apartment rental rates are down 6 percent from last year, according to a study conducted by Apartments List. Local apartment industry officials say local rental rates may be down, but they are stabilizing and looking up for the future.
"It is down, but it's gradually going back up now," said Kelley Wood, Oak Forest Apartments property manager. "The market is stabilized enough to effectively increase our rents."
While rental rates in the local market are down as a whole, Oak Forest Apartments officials have been able to increase rates from last year. The average monthly rent is $949, up from $876 this time last year, Ross said. By doing this, they are able to offer more concessions and make plans to renovate the lobby, recreation area and pool, she said.
"We're collecting more money now than this property ever has," she said.
Occupancy rates have increased all across the Victoria market. In January 2016, there were about 2,410 vacant units, said Allison Vinson, Woolson Real Estate asset manager. This January, there were about 602 vacant units, roughly a 75 percent occupancy absorption over 12 months.
"We have seen the market begin to stabilize over the last quarter and expect slow, steady growth to ensue soon," Vinson said.
From 2010 to 2014, the Crossroads experienced an oil field industry boom. The boom brought more than 1,200 new units, Wood said. Construction of Oak Forest Apartments began in 2014, and the first occupant moved into the complex in March 2015.
The rental market has always been directly influenced by the local economy, including the oil industry, Vinson said.
"We have times that are fast-paced, and times that are a little slower; this provides windows of opportunity to take a closer look at everything we have accomplished and what else we can do for our residents," she said.
The oil industry has stabilized and is on a slow but steady increase, which has had a positive impact on the rental market.
"When any employing industry picks up, such as the oil field, everyone benefits. This is the trickle-down effect," Vinson said. "When employment rates are higher, people spend money throughout the community at grocery stores, entertainment outlets and, yes, apartments. This provides more funds circulating throughout the community and in turn provides for other employing industries."
Apartment List's data, which goes back to 2014, shows the rental rate in Victoria during the past three years has been flat, said Chris Salviati, organization data analyst. At this time last year, prices were increasing, he said. Prices started to decrease in April 2016.
"Over the past month and January and February data, we saw some slightly bigger decreases," he said. "In the longer-term trend, things are definitely trending downward. It may recover a bit over the next month or two, but I think the longer-term trend we're seeing in the Victoria area is definitely down."
For Texas as a whole, rental prices have increased 1 percent from last year, Salviati said.
"Although this is an increase, the state is lagging the national average, which is at a 2 percent growth," he said.
Surrounding areas such as Houston and Corpus Christi are down 1 to 3 percent, he said.
The downturn of the oil industry is a factor that has impacted rental rates in the Crossroads and Texas, Salviati said.
"If there is an area that has a dominant industry like that, that can be somewhat cyclical like oil is," he said. "Booms and busts can definitely have a big impact on the rental market."
The year's growth for the U.S. as a whole is 2.4 percent, Salviati said.
"That is recovering a bit," he said. "For most of last year, it was pretty flat. Over the past few months, we're seeing things start to trend upward again."
Rhonda Griffin, All Star Properties property manager, manages about 130 rental spaces, including single-family homes and four-plexes. The rental rates for the four-plex units are down 18 percent from last year, she said, and houses are down 12 percent. Last year, a two-bedroom, one-bath apartment was about $795 a month. The same size apartment is now about $650.
"We were not getting any calls," Ross said. "I think the market was flooded with what else was out there."
By lowering the rates, Griffin has been able to increase occupancy from about 88 percent to 94. The market was flooded with apartments from the oil.
"When things started suffering, I was preparing my owners that we may have to reduce the rents to get it leased," she said. "We've been in that process the last two years."
Griffin expects rental prices to eventually pick back up, she said.
"We're probably at a good spot now," she said. "If something good happens, we may see prices start going back up. We need some of the good news to bring that on."