Oklahoma City apartment market surges
Low loan rates have developers rushing to build apartments, as increased demand for rental units keeps average occupancy high.
Demand for apartments has average occupancy higher than in a decade, and rents are still on the rise even as a surge in construction is increasing supply.
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Meanwhile, investors keep pushing sale prices up for good-quality, income-producing apartment complexes.
That's the state of multifamily property in the Oklahoma City area, according to three commercial realty firms that track apartments: Commercial Realty Resources Co., CB Richard Ellis-Oklahoma, and Price Edwards & Co.
A boom surge is on.
Average occupancy was 93 percent at the end of 2012, the highest since 2001, according to a report by brokers William T. Forrest and Eva M. Wills of CB Richard Ellis-Oklahoma. Occupancy was flat in Norman and Midwest City but rose everywhere else, they reported.
Edmond had the tightest market for renters with occupancy at 96 percent, Forrest and Wills said.
“2011 was an exceptionally strong year for rent growth and, as predicted, 2012 moderated to sustainable growth levels,” they wrote in the report.
Forrest and Wills said average one-bedroom rents rose from $482 to $495 per month, an increase of 2.7 percent; two-bedroom rents grew from $586 to $601 per month, a 2.6 percent gain; and three-bedroom rents went from $755 to $782 per month, an increase of 3.6 percent. This year, rents are expected to rise an additional 2.8 percent on average, they reported.
However, construction of new apartments probably will keep occupancy stable this year. Forrest and Wills reported eight complexes under construction and two others planned for a combined 2,635 apartment units.
Broker Mike Buhl said 3,000 or more units could be coming onto the market this year, and he wonders whether demand from renters or the lure of low construction loan rates is driving the buildup.
“It appears that apartment developers aren't going to slow down anytime soon,” said Buhl, owner of Commercial Realty Resources Co. “It's easy to see why multifamily construction is booming; vacancy rates are falling, and rents are on the rise, making investments in multifamily particularly attractive.”