Fueled by a reviving American economy, the apartment rental industry is turning the corner toward a rebound, experts say, but the job picture will have to improve if the apartment market is to fully recover.
That was the prevailing forecast by rental industry experts at “Preview 2005: an Annual Apartment Industry Outlook” presented recently by the Chicagoland Apartment Association. The trade group represents more than 300 members who own or manage more than 135,000 apartments in the six-county Chicago metropolitan area.
After being hit with high vacancy levels and soft rental income in recent years, the local apartment industry comeback started in earnest in 2003 with improvements in downtown occupancy and a reinvigorated corporate housing market going into 2004, experts say.
But heading into 2005, the industry is still not in full recovery, experts say. A current occupancy rate of 93 percent puts the market just shy of stabilization.
“If you look where people think the market is stabilized, that’s typically thought to be at 95 percent occupancy,” said John R. Jaeger, vice president of Appraisal Research Counselors, Ltd. “So you have a 2 percent overhang, and the market needs to absorb that 2 percent before it gets to stabilized occupancy.”
The “hidden rental market” created by condominium speculators who purchase and then rent out condos for their investment value continues to pose a threat to apartment industry stabilization in 2005, as it did in 2004, Jaeger said.