OKC Sees Occupancy, Rents Increase

OKLAHOMA CITY-Following a somewhat stagnant period, the city's multifamily market is starting to experience upticks in rents, occupancy and construction. Industry experts tell GlobeSt.com that it's reasonable to expect even more gains in the near term.

According to a first-quarter report from Novato, CA-based RealFacts, rents rose 2.9% in the past year for OKC's 44-property, 13,531-unit inventory. Rent now averages $538 per month, up from $524 at the Q1 2005 close. Occupancy is 92.3% versus 90% a year ago.

"The Oklahoma City apartment market from 2000 to 2004 held its own," says William T. Forrest, first vice president for CB Richard Ellis' Oklahoma territory. "There were more concessions out there and occupancies declined slightly." But, he quickly adds: Things started to swing last year. "This is the first year we've seen improvements in rents," he says. "Owner collections and occupancies are improving as well."

Part of the reason for a perked-up interest in multifamily is a stronger economy. "This is a region that was struggling for awhile. But employment has gotten better in the past year," says Greg Willett, vice president of research for Carrollton, TX-based M/PF YieldStar, "and that means occupancy is up meaningfully and rents have started to climb again."

Armand Charbonneau, vice president for Transwestern Commercial Services in Dallas, which handles the OKC market, agrees that increasing rents and occupancies in the area are tied to a stronger economy. But, he points out so are single home sales. "The big situation you have is that single-family housing is very inexpensive and very affordable. That tends to keep rents a little lower and demand dampened, especially for class A properties," he says.

CBRE's Forrest, agreeing with Charbonneau, points out higher interest rates definitely will benefit the multifamily market. But for now, single-family housing demand is still strong. "Last year in 2005, we had record home sales in the area," he says. "Job growth and a strong economy are helping there."

Transwestern Dallas vice president Mark Freeman indicates the picture could change in 12 to 18 months as demand shrinks in the single-family sector. "We can look to the future and see a perfect storm headed toward entry-level housing, with the factors being rising interest rates on existing single-family entry level homes," he explains. Added to that is the rising cost of building new homes, partly because of construction demand in New Orleans from Hurricane Katrina. "When you put all of that together, new single-family housing won't be priced attractively enough next to luxury class A apartments," he adds.