St. Louis posting gains in apartment sector

Apartment vacancies are falling in St. Louis.

Apartment vacancies are dropping in St. Louis.

"We see St. Louis as generally recovering," Ryan Severino, senior economist at commercial real estate analysis firm Reis, told the St. Louis Post-Dispatch.
Reis reported apartment vacancies fell to 5 percent this summer in St. Louis after remaining at 5.9 percent the summer prior. Vacancy levels were as high as 9.2 percent as recently as 2009.

"Overall you could say it's a landlord's market," Deborah Done, president of a tenant-recruiting business called Apartment Search, told the Post-Dispatch. "Two or three years ago, it would be two months free rent and no deposit. Now it's one month free rent at best."

With vacancies gradually falling, landlords have been able to hike tenant rent an average of 2 percent since the start of the year, which the Post-Dispatch reported is slightly more than inflation.
St. Louis counties with the lowest vacancies levels included Maryland Heights, Manchester, St. Charles and South County.

Holding landlords back
Rents might be even higher if the city showed greater economic growth. Landlords are hesitant to raise rent – evident by climb of only 2 percent despite falling vacancies – because people are still struggling to find employment.

"There is not a lot of rent growth," Severino said. "The labor market is not really cooperating."

Severino predicts that rents will slowly rise as vacancies continue to drop through the next few years. He predicted vacancy levels will fall as low as 4.7 or 4.8 percent by 2015. One project that will supply the apartment market is gearing for construction.  The site of the old St. Louis Arena will be home to the $42 million Cortona Apartments project.

Surprisingly, residential sales in St. Louis are also doing well, which typically doesn't happen in a city with improving apartment vacancies.

"Usually, when home sales are doing well, the rental market is slowing down and vice versa," Done said.

Single-family home sales jumped 11 percent in St. Louis County from the start of 2013. Home sales reached as high as 22 percent in St. Charles County, according to September figures cited by the St. Louis Post-Dispatch. Meanwhile, home prices were up 6.7 percent since the start of the year.

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