With vacancy numbers for three-bedroom apartments on the rise and some landlords in the neighborhoods struggling to rent their space, students still looking for a place to live will have lots of options.
According to “Apartment TRENDS,” a quarterly survey gathered by GVA Marquette Advisors, vacancy numbers for three-bedroom apartments in the University, southeast and northeast areas of Minneapolis have increased to almost 6 percent, up from 3.8 last year. In fact, in 2002, the vacancy rate was 1.6 percent in those areas.
Although the survey only includes apartment buildings with 10 or more units, landlords in the neighborhoods are finding it harder to fill their space as well. With unoccupied properties, landlords and students lose money because landlords are often forced to raise the rent of their other properties.
Some landlords who rent out houses have had vacant rooms for months.
Mike Holm, a landlord in Southeast Como, said he has had the lower level of his duplex empty for more than seven months.
“The rental market for me is terrible,” he said. “They think all these landlords are cash cows, but what it is costing me to have that apartment empty, well, I am going in the red here.”
He said he has had to raise the rent slightly on his occupied rooms to cover for the losses from the vacant apartment.
Holm said he blames the slump on competition with the larger apartment complexes that have been built near campus in recent years, like 1301 University and Keeler Apartments.
Ted Williams, property manager at Keeler Apartments, said he agrees that complexes like Keeler have added competition to the houses in the neighborhoods because of their proximity to campus and their ability to fit a lot more people.
But renting apartments and houses are also very different, he said.
“I think it really depends on the client and what they are interested in,” Williams said. “A lot of people that are leaving my apartments this year are moving into houses.”
Right now, 86 percent of Keeler’s units are leased for next year, he said. But he’s not worried, because it’s still only April.
Because students have so many more renting options, landlords say that students have raised their standards.
Jason Klohs, who owns nine properties in Dinkytown and Southeast Como, said he hasn’t had any trouble with vacancies, but has sometimes had to discount his rent to fill spaces.
Klohs said students have higher expectations in properties, and it is harder for some people to get people to rent.
“They are looking at places with higher standards,” he said. “It is taking a little more effort; it isn’t a tremendous amount, but there’s not as many renters willing to pay top dollar.”
A combination of higher standards and more options have contributed to landlords having difficulty renting, he said.
“It’s not a cake walk; it is harder than four years ago,” he said. “It has just changed.”
Management of other apartment complexes said that although they aren’t too worried, the market has definitely changed.
Steven Schachtman, principal of Steven Scott Management, whose company manages properties such as Bierman Place Apartments, said the rental market around the University area has changed and that is why owners are seeing some vacancy issues.
Student enrollment at the University is flat; parents are buying condos or duplexes for students; more students are living at home; and competition has increased, he said.
Schactman, who has managed properties around the campus area for 40 years, said another contributing cause is that the housing stock is getting older and the condition of the properties affects the rental market.
Ultimately, he said, he’s not worried about filling space. “There will still be some vacancies though.”
