GlobeSt.com UPDATE: Apartment Occupancy Slips to 92.2%

Effective rents have climbed only 1% compared to an annual rent change of 2% to 3% since mid-2000. Quoted monthly rents are averaging $721 overall and $793 for units delivered during the past decade, the study shows.

"Most apartment owners and managers have taken a conservative stance when adjusting rents of late," MP/F research director Greg Willett tells GlobeSt.com.

The fairly stable rent picture is expected to hold this year, even as new product surfaces. There are 6,974 new units still under construction. "Orlando is moving back toward the apartment growth levels typical of the late 1990s, after 2000's huge spike in completions," Willett says.

Of the 10,382 units, only 5,850 units were rented last year. About two thirds of the new product is in neighborhoods north and south of Orlando's metro core. The entire area has about 139,368 apartment units, up 8% over 2000.

"Although Orlando's tourism-dependent economy has weathered the doldrums predicted following the Sept. 11 terrorist attacks better than expected, job growth in late 2001 was not strong enough to spur significant new household formation and thus fill apartments," Willett tells GlobeSt.com.

"The considerable number of new apartments brought to market recently has left many units in leaseup (state)," the researcher says. "Orlando's leasing environment now is somewhat more competitive than the national norm."

There were 1,430 net vacancies during the October-December period, reducing overall demand and raising the vacancy mark.

"The result is well off the record demand of 2000, but holds basically in line with the apartment absorption norm for 1996-1999, a robus expansion period" in metro Orlando, Willett says.

While apartment delivery volumes in the fourth quarter are large, completions actually are trending downward from volumes seen in early 2001 and throughout 2000, the new study shows. "The 1,966 units in properties finished during the fourth quarter of 2001 are less than half of the new supply volume completed during 2001's first quarter," Willett says.

"The slowdown in deliveries during the near term is good news, given that economic growth also is expected to be moderate, dampening housing demand," he says. "While completions still are expected to slightly outpace demand in 2002, the imbalance appears likely to be less pronounced compared to the past year's results."

While all age categories of Orlando apartments register occupancy levels below the essentially full mark of 95%, leasing competition is especially fierce among product built since 1990.

"This segment, struggling to build an initial resident base in recent completions, reports an average occupancy level of 91%, off 3.4 percentage points since fourth quarter 2000," Willett says.

(Please see related story on the Miami page.)