If you're looking for an apartment in Southwest Florida, or to move from one apartment to another, this likely is a good time to do so.
Some people in commercial real estate believe at least one out of five units is vacant in Lee County, and in some buildings, it may be closer to one out of three. The industry considers anything above one out of ten units vacant, to be a problem.
Ten years ago real estate companies noticed that this area was short of multi-family housing. A boom started, and now there are too many units and a high vacancy rate.
"CoStar Analytics is going to put it right around 20 percent," Chase Mayhugh, President of Mayhugh Commercial Advisors, said. He explained that CoStar is widely respected and commonly used in the commercial real estate business. "The issue we have is a lot of the apartment communities are not reporting a lot of vacanies that they have. Based on some other analytics and data we've seen, I think we're approaching 30 percent vacancy in Southwest Florida."
The Florida Apartment Association said it's more than just a regional problem.
"It's suddenly something we are seeing across the state," Johnmichael Fernandez of the association said. "I would say it's not as dramatic as in Lee County but it is certainly something we see trending that way."
Mayhugh said it's a time for would-be renters to benefit financially.
"I think you can get out there and try to negotiate a little bit," he said. "Because from what I am hearing, these guys will offer you know, free rent or lower the rate for you. And they'll throw in some Publix gift cards."
One man who rented in Estero last fall described the situation now at his building.
"They had like a steamer and TV's," Todd Rubin said. "I said: like what are those? And they said: incentives to rent."
Rubin said he asked management whether he will get an incentive to renew his lease in a couple of months. He said he was told no, but he is hopeful that any rent increase will be modest: perhaps under 3 percent, or maybe even no increase at all.
Mayhugh pointed out that lower rent not only helps consumers, but also helps the local economy, as renters may have some extra spending power. But there can be a downside, and in this case building owners may feel the pinch.
"If you're concentrated in an area geographically, say in Florida, which some investors have done, and you have a portfolio of ten, and six of your buildings are struggling, then you're certainly going to be in trouble," he said. "And you will see some issues with banks, and lending and foreclosures and things of that nature. I would not be shocked if some of that starts happening."
Even when the demand catches up with supply, people looking for affordable rents may be disappointed. In Lee County, affordable is defined as $1,200 to $1,300 a month.
"There always is a shortage of affordable and workforce housing," Fernandez of the state association said. "Wages just don't keep up with cost of living, and that's why we continue to beat the drum for more affordable and workforce housing, and the supply we need for individuals in the lower income."
Mayhugh predicted it could take at least 18 months for the market to correct itself. But eventually, he said, the demand for apartments will even out with supply.
Mike Walcher is a reporter with WGCU News, and also teaches Journalism at Florida Gulf Coast University. WGCU is your trusted source for news and information in Southwest Florida. We are a nonprofit public service, and your support is more critical than ever. Keep public media strong and donate now. Thank you.
