Rental rates down as apartment construction booms
The boom in apartment construction in Durham County and across the Triangle has helped to bring down average rental rates, according to a recently released report from the Charlotte-based market research firm Real Data.
However, a real estate company behind one of the new apartment complexes in downtown Durham expects to be able to buck that trend due to the location and type of product it’s offering.
Across Durham County, the average rental price per unit in January was $887. That was down 2.3 percent compared with the average in July of last year. That’s a larger decline than was seen in the three Triangle counties of Wake, Durham and Orange, where the average was down 1.7 percent to an average rate of $868 per month.
Vacancies have risen as some of the units in the new complexes have come online, the firm reported. Real Data had a total of number of 3,045 units under construction in Durham County, which is 30 percent of the number of units – at 10,028 – under construction across the Triangle.
Although averages are coming down, according to the firm’s reporting, it appears that the newer units are being rented out at the expense of older communities. Existing communities saw a net loss of 306 renters across the Triangle, according to Real Data, while there was a positive net unit absorption of 1,436 units.
The new construction going on in Durham County includes a new complex at Patterson Place on Southwest Durham Drive, Armada Hoffler’s project downtown on Jackson Street, as well as the student-targeted complex on West Chapel Hill Street that’s a partnership between two companies including publicly traded Tennessee-based firm EdR, or Education Realty Trust.
According to information from the company sent last fall, EdR’s complex, called 605 West, was expected to have units starting at a rate of $880 per month. That’s the expected rate for only one individual lease in a two-bedroom apartment, however.
Crescent Communities also has two communities going up near Ninth Street – one near the corner of Ninth Street and Hillsborough Road, and another off 15th Street. The complex off Ninth Street is leasing units before the June 1 opening date. Studios in the complex are renting for a starting rate of $1,040 per month and for three-bedrooms are starting at $3,238.
Federal Capital Partners, the majority owner of the downtown West Village project comprised of renovated group of former Liggett Group tobacco buildings downtown, plans to open a new apartment complex off West Morgan Street this summer.
The Maryland-based real estate company is planning to start pre-leasing of the 156 units in the new apartment complex later this spring starting sometime between April and May, said Mae Klinger, asset manager for Federal Capital. The complex is expected to be finished by August.
Rental rates of the new units are expected to be $1,100 for the studio apartments, around $1,300 for the one-bedroom apartments, and starting at $1,770 for two-bedrooms.
The units in the new complex will be at a premium to the existing West Village apartments because of their newness, Klinger said, also because they’ll be coming with new amenities such as a pool deck and club room. Comparatively, she said units in West Village’s second phase are leasing for about $1,250 for one-bedrooms, for $1,450 for two-bedrooms, and $2,400 for three bedroom units.
Even with the new construction, she said the company is still excited about leasing in the next couple of months because of the type of product they’re offering.
“We’re pretty excited about holding steady where we are today or being able to push rents,” she said. “I think what’s unique about West Village, and why it’s performed so well, is because of the product. People want to live in downtown Durham with the walkability and the uniqueness of the product.”