Business

Apartments a hot commodity in Tri-Cities

Apartment occupancy in the Tri-Cities is at a record high. Occupancy rates are 99 percent in Kennewick and Richland and 98 percent in Pasco,according to the latest survey by Kennewick's Crown Property Management.

"It's the highest since 2000," said Jolene DeGarmo, multi-site property manager for Crown, which conducts the informal apartment rental surveys in March and September.

The survey of 72 apartment complexes with 28 or more units shows a steady increase in occupancy and rental rates.

In September, occupancy rates were 98 percent in Kennewick and Richland and 97 percent in Pasco, and average monthly rents for apartments -- mostly one- to three-bedroom units -- ranged from almost $580 to about $900.

By March, monthly rents had increased $25 to $30 across all categories in response to increased demand, DeGarmo said.

It's a cyclical pattern, said Garrett Thiemens, assistant manager at Arborpointe apartments in Richland. "Right now everything is too tight," he said.

The overall vacancy rate in Benton and Franklin counties fell from 2.9 percent in March 2009 to about 1.2 percent in March. And rental rates saw a 10 percent increase -- the largest in the state, according to a survey by Washington State University's Center for Real Estate Research.

Statewide, average rents fell 3.4 percent, despite increased occupancy. The statewide vacancy rate for apartments fell from 6.3 percent in March 2009 to 6.1 percent in March, the WSU survey said.

The Tri-Cities is different, said Glenn Crellin, director of the WSU Center for Real Estate Research. "You have got jobs. You are marching along to the beat of a different drummer," he said.

Home sales in the Tri-City area also have outperformed the state, he said.

The demand for apartments is high because a lot of new people have moved to the area for work, Crellin said, but no new apartment complexes have been built.

He said most property managers shop their competition to set their rents, and "if everybody charges more, they'll do the same."

There are about 12,000 apartment units in the Tri-Cities, but soon there will be more.

Richland's On the Boulevard apartment complex plans to add 32 one-bedroom units at its existing location, said Jason Archibald, architect for the project. Construction starts this fall and is scheduled to be completed next spring, said the president of ALD Architects in Richland.

Nicole McIntosh, assistant manager at Pasco's The Crossings at Chapel Hill, said her company plans to break ground in June on the first of three proposed 24-unit buildings at its current location. The first building will be completed by November.

McIntosh said the complex will have 100 percent occupancy by the end of the month and there's a waiting list of prospective tenants. Shedoesn't expect a let-down in demand or rents, and added, "It's going to stay up for a few years."

The Tri-Cities' apartment rental market historically is considered volatile given its linkage with employment swings at Hanford, said Arborpointe's Thiemens. But he believes the growing economic diversity and population growth of the area slowly is weaning the market's dependence away from Hanford.

Thiemens, who also looks after two other apartment complexes, Aaron Ridge in Richland and Hawaiian Village in Kennewick, said Tri-City renters include individuals and families who are new to the area or moving from a different apartment complex. "We aren't seeing people moving from homes to apartments in the Tri-Cities," he said.

"Three-bedroom apartments are the hardest to find," said McIntosh, of The Crossings. She said that's because there are a lot of families who have moved to the area to work at Hanford or at local medical facilities but are holding back on buying a house.

A three-bedroom apartment rents for $1,110 a month at The Crossings, McIntosh said. She said location and amenities generally are a big draw, and her complex offers a free pool and a gym.

Phoenix Manor Apartments in Kennewick has 16 three-bedroom units, all rented out, as are 79 of its 80 two-bedroom apartments, said Frank Ramirez, resident manager.

Phoenix Manor, which has amenities like a pool and recreation room, charges rent ranging from $625 to $850 a month. About 95 percent of its existing renters are families with kids, Ramirez said.

Robert Young, a longtime owner of Tri-City apartment properties who lives in San Francisco, said occupancy rates at his apartments are about 97 percent to 98 percent.

He said supply and demand ebb and flow over time, and too many rent increases may increase vacancy rates.

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