Red hot Tampa Bay apartment market means rents are on the rise
Victoria Clark's family may be the best example of why Tampa Bay's apartment vacancy rate is at the lowest level in years.
Clark and her three kids live at the Gateway on 4th Apartment Homes in north St. Petersburg. Her sister lives in the Meadows, a rental complex next door. And their parents retired to Viera Bayside, a gated rental community less than a mile away.
"I like apartment living because of all the amenities like the pool, the gym, the park, the playground,'' Clark, 42, said Tuesday as she toweled off after a swim. "It's clean, the grounds are kept well, I don't have to worry about the upkeep or the pool, which my kids are in all the time.''
According to a new report by Real Data, a Charlotte, N.C.-based apartment market research firm, just 4.9 percent of all apartments in Tampa Bay are currently vacant — the smallest percentage in nine years. The bay area's vacancy rate is expected to remain below 5 percent over the next 12 to 18 months, lower than in the 19 other southeastern metro areas that the company tracks.
The flip side — that 95.1 percent of all Tampa Bay apartments are occupied — means that rents will go higher as demand nears supply.
"At 95 percent occupancy, you can raise rents,'' said Darron Kattan, managing director of the Tampa real estate brokerage Franklin Street.
By Real Data's figures, the average monthly rent for a two-bedroom bay area apartment this year is $1,046 — $40 a month higher than a year ago and $176 higher than in 2010. Rents are expected to rise another 2 to 3 percent annually, the most in the Southeast, the report says.
Kattan and other experts on multifamily housing cite several reasons for the apartment boom — the decline in home ownership, partly due to the foreclosure crisis; the desire of young professionals to live in urban settings; and the lack of apartment construction from 2008 to 2013.
Now, with the economy perking up, nearly 5,000 new apartment units are under way in the bay area, with more than 6,700 proposed.
"A lot of people are scared by the numbers but I think we're at the right level of construction right now,'' Kattan said. "If it all happened, it could get overbuilt, but not all happens.''
Seth Mattox is typical of the millennials foregoing a home of their own for the convenience and ambiance of urban apartment life.
At 27, Mattox describes himself as an entrepreneur who already has started two businesses — one that helps companies draw more Web and foot traffic, another that provides Internet hosting for players of the wildly popular video game Minecraft.
After attending an entrepreneurial seminar at the University of South Florida St. Petersburg, he decided to move from Sarasota to St. Petersburg. He first lived in Fusion 1560, whose 2011 opening sparked a surge in downtown apartment construction, then switched last fall to the newly completed Beacon 430 at Fourth Street and Third Avenue S.
There, Mattox and a roommate share a two-bedroom apartment for which they pay $2,200 a month — more than $1,000 above the bay area average. But he likes overlooking a European-style courtyard and being so close to restaurants, shops and many of his clients.
"I have a business rental car that I used to put 15,000 miles (a year) on," he said. "Now it's 3,000 miles."
At the north end of Fourth Street, Brenda Armstrong has been renting in the Inlet Bay at Gateway Apartments since 2010.
Born in Scotland, Armstrong spent 24 years on the Caribbean island of St. Thomas, where she once worked as a charter-yacht cook, before deciding to try a warm locale in the States. She figured Tampa Bay would be less frenetic than Miami, and that an apartment would be less trouble than a house.
"Apartment living is so easy compared to anything else,'' said Armstrong, who owns a holistic health business in Largo. "This is convenient to everything. You can get to Tampa easily, you can go to the beaches, you can go to downtown St. Pete, and I like being close to the airport for when I go see my family.''
Armstrong, who has a one-bedroom apartment, worries a bit about rising rents. When she first looked at the complex five years ago the rent was $650, but it quickly jumped to $850 and is now $1,000.
"Rents are going up,'' she said, "and when the renewal comes up it might be a consideration.''
As of Tuesday, the 464-unit apartment complex had an impressive 97.8 percent occupancy rate. The dearth of vehicles in the parking lot at noon suggested that many of the residents were at work and somewhat younger than 75-year-old Paula Lee.
After decades as a high school history teacher, Lee is happily retired and enjoying the two-bedroom apartment with a plant-filled screened porch she has rented for the past 10 years. She once had a big, five-bedroom house in Gulfport but doesn't miss home ownership at all.
"The people here are friendly, it's not noisy, it's really my golden place.''
If and when the stairs pose a challenge, Lee said she'll move from her second floor apartment to a first floor unit.
That's assuming any are available in Tampa Bay's red-hot rental market.