The growth in new apartment construction in the Dayton market is helping keep down rent costs for renters.
Average rent for a two bedroom apartment in Dayton was $848 last month, down from $852 in June. The rent is up 0.4 percent year-over-year, according to Apartment List, which tracks apartment costs in the United States.
“As a general rule, we’re starting to see that rent growth is slowing down, but it’s still healthy,” said vice president of Oberer Management Services Lloyd Cobble.
Competition is one of the biggest factors for the growth slowdown in the Dayton metro area. As more units come online, older properties have to make rent more appealing or renovate and update apartments to keep up with the newer facilities. There are currently 609 Dayton-area units under construction, according to a report from Colliers International.
“We have lost people who really want that new product,” said Tina Warner, regional supervisor for PMR Companies and vice president of the Greater Dayton Apartment Association Board.
Area experts said they aren’t convinced that rents are dropping, but the increases have slowed. Both Warner and Cobble said their apartment portfolios in the Dayton market saw rent growth between 3 and 4 percent annually in the last couple of years.
Some pockets of the Dayton market are doing better than others. Namely, downtown is still seeing strong growth, where Miamisburg is struggling.
In Miamisburg, new housing is absorbing part of the older apartments’ market. Ackermann Group’s Austin Park Apartments and Buckingham’s The Flats at Austin Landing both opened last year. Redwood also built apartments in Sugarcreek Twp.
Meanwhile LexisNexis has moved many of its engineers out of the apartments they were living near Miamisburg, Cobble said.
That forced Warner’s company to do renovations on its Centerville Ashton Glen Apartments.
“There are people who want to be near all the restaurants and retail and those sorts of things that we don’t provide. We’re just a little bit smaller community,” Warner said. “But we have had to do rehab and we have done updates to some of our units so we can offer a little bit of an updated product, but we have been able to get an extra $100 a month premium because of that.”
Some apartments chose to renovate; others have adjusted rent and offered concessions to make units more attractive than the newer developments. Warner’s 2019 budget includes discounts for resigning a lease to retain tenants.
“By Austin Landing and the Dayton Mall we’re having to give a month free, but we’ve got other areas in town that we really offer no incentives or very little,” Cobble said. “I don’t think it’s time to panic yet and we haven’t seen any indication that we need to start offering heavy concessions.”
Cobble’s portfolio still has 95 percent occupancy, which is about ideal, he said. If it reaches 100 percent, that would mean rent was too low. The Dayton market’s overall occupancy rate is 95.2 percent, according to the Colliers report.
On the opposite side of town, the new Woodard Development luxury apartments in downtown Dayton are on a wait list, said Jason Woodard, the firms principal. These downtown apartments have become more popular as people gravitate toward living, working and playing all in the same area.
Luxury apartments are also growing in popularity during a healthy economy, where consumers have more confidence to spend. The same applies to houses, Warner said. As rents grew, more people began considering a mortgage that could cost about the same.
“A headwind to the apartment in Dayton, though, is the relatively low cost of buying a single family home,” said real estate analyst for Colliers International Loren DeFilippo.
With growing competition among new units, houses and luxury apartments, Warner said she’d be leery of any new units coming on the market that aren’t already planned.
“I can’t think of one area in the region where I’m like ‘wow they could really use some additional units,’” Warner said. “I think that we’ve already hit the bubble of the rent increases.”
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