Apartment Rental Market Drives Property Sales
- Jul 22, 2011
Confidence is returning to Cincinnati’s rental market, and that is encouraging investsors to buy. So far this year, investors have spent nearly $107 million to purchase hundreds of apartments that range from student housing to higher-end riverfront units. They are buying local apartment communities at a pace not seen in at least three years.
Six multi-million-dollar apartmant communities have been acquired just this past month. Lytle Capital Partners L.L.C. bought the 231-unit One Lytle Place for $22 million, in the largest deal closed to date this year. In addition, Chicago-based Blue Vista recently purchased the College Suites apartment community in Oxford for $18 million. The more-than-600-bed complex will undergo upgrades this summer in order to be ready for the fall influx of Miami University students.
In the past decade, Ohio’s homeownership rate dropped for the first time since the Great Depression. This, coupled with little new apartment construction in recent years and improving employment, led to a boost in occupancy rates. At the end of 2010, occupancy rates reached 91.8 percent, up from 88.4 percent in 2009. As apartments become harder to find, it is causing local rents to rise. Rents have climbed by as much as 6.8 percent downtown, where the average rent was $737 a month at the end of last year.
The strengthening performance has reflected favorably on the few new apartment communities that have recently opened. More than 80 percent of the apartments in downtown’s Current at The Banks have been leased since opening in April, and four renovated apartment communities that opened in recent months on Vine and Main streets are now completely leased.
Local economists say it could take as long as five years before homeownership rates settle back to historically stable levels of 64 to 65 percent. Until then, neighborhoods hit hardest by foreclosures and falling property values will continue to see once-owner-occupied homes also part of the rental scene.