Apartment occupancy goes down

Thursday, Oct. 30, 1997 | 11:25 a.m.

An influx of new apartment units in Southern Nevada has resulted in a reduced occupancy rate, but the increased number of jobs anticipated for the area should fill them in the months ahead.

The quarterly U.S. Apartment Market Report, researched by Dallas-based M/PF Research Inc., says the Las Vegas occupancy rate fell to 90.6 percent in the second quarter of 1997 after three consecutive quarters at or above 93.5 percent.

Las Vegas' apartment market bucked national trends for the quarter. Researchers said nationally, the occupancy rate was 94.8 percent for the quarter, 0.3 percent higher than the same quarter a year earlier and 0.2 percent more than the previous quarter.

The average Las Vegas rental rate also has climbed as a result of the opening of new units. However, rates on existing units fell slightly as older apartments competed with the new ones coming on line. Researchers said the Las Vegas survey measures 52 apartment communities with 12,996 units.

Overall average rents jumped 10.1 percent to $706 a month for the quarter. But the area's survey of existing units, those more than a year old, showed rents fell 0.4 percent for the quarter. Las Vegas was one of four markets surveyed nationwide that experienced a rate decline in that category, the report says.

Researchers also indicated that the continued generation of jobs in the area should provide tenants for new units being built and those anticipated under new permits authorized by local governments.

The 7.7 percent increase in the number of jobs generated in Southern Nevada led the nation for the quarter and the 45,200 jobs generated for the year ending in the second quarter of 1997 was the seventh highest in the nation behind Phoenix, Dallas, Seattle, Los Angeles, Chicago and Detroit.

The approval of building permits for 2,558 apartment units in the second quarter was the fourth highest among 56 metropolitan areas surveyed. The report says annual permits rose 5 percent in the past year after construction activity previously peaked in 1988 at 16,000 units. Permits then slowed to a decade low in 1993 before rebounding to a six-year high in 1996.

M/PF's breakdown of Las Vegas indicates that efficiency apartments represent the tightest market in the city. Occupancy rates for those are at 98.7 percent. Other occupancy rates by size: one-bedroom, 90.3 percent; two-bedroom, 90.2 percent; and three-bedroom, 93.1 percent. Apartments built in the 1980s had an occupancy rate of 96.2 percent while units built in the '90s were 84.6 percent full.

The $706 average rent translates into a price of 77.9 cents per square foot. The rent breakdown by size: $454 a month for an efficiency ($1.31 per square foot); $627 a month for a one-bedroom (88.4 cents per square foot); $743 a month for a two-bedroom (73.3 cents per square foot); and $856 a month for a three-bedroom (72.8 cents per square foot).

The rent on apartments built in the 1980s averaged $682 a month (75.8 cents per square foot) and on those built in the '90s, $755 a month (80.3 cents per square foot).

The average monthly rent nationwide was reported at $735 a month, a 3.7 percent increase over the same period a year earlier.

Other highlights of the report:

* The highest average monthly rent rate is paid in San Jose, Calif., where the price is $1,437 a month. Nearby San Francisco is a close second with an average of $1,409 a month and Oakland is third at $1,171.

* Apartments in Newark, N.J., had the highest occupancy rate -- 99.4 percent. But the Bay Area also had high occupancy with San Jose and San Francisco hitting 99.3 percent and 97 percent, respectively. San Diego was fifth nationally in occupancy at 97.5 percent.

* Regionally, rents were highest in the West, averaging $807 a month in the 16 metropolitan areas surveyed. The lowest monthly rents in the West are offered in Tucson, Ariz., $516 per month. That's not far off from the lowest rate in the nation, in El Paso, Texas, $510 a month.