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Daily Real Estate News | April 29, 2009 | Big Cities See Declining Rents
Rents are getting more affordable across the United States, prompting apartment owners to get more creative to hold down vacancies and prevent turnover.

According to Victor Calanog, research director at real-estate data firm Reis, 50 percent of apartment buildings reduced rents in the fourth quarter of 2008 and the first quarter of 2009, the highest percentage since Reis began tracking apartment data in 1980.

Average asking rents fell 0.6 percent, to $1,046, in the U.S. in the first quarter, compared with the previous quarter. Meanwhile, the average effective rents, which include free months and other landlord incentives, fell 1.1 percent, to $984.

Effective rents fell in 64 of the 79 markets that Reis tracks. The nation's largest quarterly decline came in San Francisco, where effective rents fell by 2.8 percent in the first quarter of this year.

Other notable rent declines:

New York: 2.6 percent
San Jose, Calif.: 2.5 percent
Long Island, N.Y.: 2.3 percent
Charlotte: N.C. 1.3 percent
Chicago: 1.2 percent
San Antonio, Texas: 0.9 percent
Cleveland: 0.9 percent

Some apartment owners, for example, have dropped rents on a temporary basis to allow tenants time to find a new job.

But Mary Gwyn, chief innovator for Apartment Dynamics, a property management training and consulting firm that also manages apartment communities in North Carolina, says she recommends against giving renters financial incentives. She says allowing new tenants to live for free for a month or two damages profits and could create tension with existing tenants who aren't getting the same deal.

Gwyn says apartment managers can prevent turnover by creating a better sense of community in the development.

"People want to live in a neighborhood where they feel that someone knows their name and cares about their circumstances," Gwyn says.

Source: MSN Real Estate (04/24/2009)

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