Rent rises as Tri-City apartments fill up

By Pratik Joshi and Drew Foster, Herald staff writers October 18, 2009 

Even in the midst of a recession, Kyle Pfundheller's business was booming.

The 32-year-old general contractor had extra money in his pocket and decided a couple of months ago it was time to move up. He sold his Pasco home and planned to build a custom house near Road 92.

That's when he entered the Tri-Cities' rental market.

"We didn't find a rental in time -- procrastination," Pfundheller said. "We stayed in the Red Lion for two weeks."

Unlike much of the rest of the nation, the apartment occupancy rate in the Tri-Cities continues to rise -- and so does the cost of rent.

"We are in an upward trend," said Jolene DeGarmo with Kennewick's Crown Property Management, which conducts an apartment rental survey twice a year.

Pfundheller, who lives with his brother, sold his house within two months of putting it on the market. After spending a couple of weeks at the Red Lion, the brothers got more aggressive in their search for a rental.

By the time one of the brothers would commit to a rental, it was already taken, Pfundheller said. Now, the brothers are living in a small rental house in Richland that they moved into about a week ago.

The latest survey shows occupancy rates are at 98 percent in Kennewick and Richland and 97 percent in Pasco, DeGarmo said.

And that incredibly tight availability of units means they're renting for premium prices.

Sarah Smith, 21, just ended her apartment search after several months of looking. Last year, her one-bedroom apartment cost $400. A friend who recently moved into the same building is paying $465 for a one-bedroom, she said.

"It's pretty expensive out there," said Smith, who works seasonally as a customer service representative for

She's now living with her parents in Badger Canyon and plans to stay there at least this winter.

The average rent in the Tri-Cities climbed about 6.5 percent in six months, said the survey. Pasco rents jumped nearly 7 percent.

"Rents are higher than they have ever been," DeGarmo said.

Rents for studio and one-bedroom apartments start about $380 to $450 and go up to $1,100 to $1,600 for three-bedroom units, showed the survey of 72 complexes with 24 or more units.

Dusty Hammond, 21, said he's nearly priced out of the market.

"It's not very good," he said. "It's kind of hard to find a place when you have a dog and a part-time job."

Hammond has visited more than a dozen apartment complexes in the Tri-Cities in the past two months. He's also been looking online. If Hammond is unable to find an apartment within a month, the 10-year Tri-City resident said, he's going to move to Woodland to attend a vocational school.

The high occupancy/high rent trend in the Tri-Cities is opposite of what's happening nationwide, said Glenn Crellin, director of Washington State University's Center for Real Estate Research.

Apartment vacancies are increasing elsewhere because many people have moved back in with their parents or are sharing houses with friends in an attempt to save money, he said.

"It's a case of supply and demand," Crellin said.

Crellin said he doesn't think the increase in apartment occupancy in the Tri-Cities is tied to foreclosures in the area. There have been few such cases in Eastern Washington, he said.

Occupancy rates are a cyclical phenomenon, DeGarmo said. The upward swing in occupancy and rent is in its second year in the Tri-Cities, she said, adding it may last another three years.

Hiring of new workers at Hanford partly explains the demand for apartments, she said, but also there have been no new complexes, except senior housing or assisted living, built in the area in the last few years.

Linda Dukelow, former president of the Benton-Franklin Rental Owners Association, said the tightening of credit markets has affected rental construction. However, she said, new construction will not bring down occupancy levels or rents immediately.

"Our rents have always been cheaper than the national average," said Dukelow, who owns rental properties in Richland, Ellensburg and Renton.

Pfundheller, a general contractor with Trinity Homes, said the building business has been kind to him recently. He builds custom homes and said he works in a niche market.

"People are getting a lot for what they're spending," he said.

-- Pratik Joshi: 509-582-1541;

-- Drew Foster: 509-585-7207;

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