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Regional Spotlight: Apartment Vacancy Rates Post a Big Drop

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RISMEDIA, Jan. 17, 2008-Apartment rents in Tulsa increased an average of 6.5% in 2007, the highest jump in at least 20 years. But that didn’t stop renters from filling complexes, as vacancies declined 1 point to 7.5%, matching the highest improvement since 1991, according to a survey by CB Richard Ellis/Oklahoma.

“This has been the best year for the apartment market so far this decade,” said David Forrest, author of the report.

Rents for one-bedroom units rose $26 per month to $446, two-bedroom/one-bathroom units rose $44 to $541, and two-bedroom/two-bath layouts rose $27 per month to $616.

That makes rates for all three categories the highest ever recorded in the Tulsa market. The price increases and higher occupancies come after vacancies rose and rents stalled — and even dropped briefly — during 2002 through 2005.

“Rents are currently in synch with the increased demand,” Forrest said.

Though vacancies are low, they’re still far from the 20-year low of 5.5% in 1998.

Forrest said Tulsa’s strong economy helped push rents and occupancy higher last year, just as the weak economy in the earlier part of the decade depressed them as people lost jobs and moved away from Tulsa.

The Tulsa area’s unemployment rate edged up to 4.1% for November, and total nonfarm employment for November reached 436,800 jobs, the Oklahoma Employment Security Commission reported Wednesday.

Additionally, he said, a slowdown in home sales and tighter loan standards have resulted in more families renting rather than owning.

“Apartments likely got an extra kick from the subprime mess,” Forrest said.

While high rents are bad for renters, they’re encouraging construction of complexes. Forrest said apartments totaling 1,200 units are in the pipeline for Tulsa, Owasso, Bixby, Broken Arrow and Catoosa for the next year, compared with just 856 units built for all of 2004-2007.

Forrest said he believes the area can easily absorb the announced construction without causing a dip in occupancy or rents.

“I don’t think they’ll lead to oversupply because they’re so spread out,” he said.

Renters likely won’t get any relief in 2008. Forrest predicted that the steady local economy, thriving energy sector and softer home sales will keep occupancy and rents up.

Copyright © 2008, Tulsa World, Okla.
Distributed by McClatchy-Tribune Information Services.

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