Did we really build that many more units? Are rents so
unaffordable that people are doubling or tripling up?
Did a bunch of people move out of the city? Exactly
what happened?.
I can't precisely say what happened over the course of the last five years and I doubt anyone can.How about some local examples to compare with other anecdotal evidence?
Five years ago the rents in the buildings I worked in were about $425 for a studio and $525 for a one bedroom. There had been a long period where rents would only go up $10-$15 dollars at lease renewal time. Pretty reasonable for Loring Park.If you worked downtown you could get by without the expense of a car and it became even more reasonable. We screened credit and crime histories closely. Maintenance was on site (that was myself) and prompt. We constantly upgraded the apartments. The result was full occupancy with many long term tenants.
About three years ago there appeared to be a rental shortage (I still do not understand if there actually was; how could it go away so quickly?). People were signing up on lists to get into places like this. Naturally the rents started to soar in much larger and faster increments than previously. Soon studios were $550 and 1 bedrooms $675. This had at least a few effects: younger folks just starting out could no longer afford even a studio, longer term tenants started feeling insulted by the huge leaps in their rents and the buildings became attractive to buyers due to the newly rich income per square foot. Long story short, some new people bought out the owner I'd been working with for seven years, immediately canceled any more upgrades , scaled back hours for maintenance, raised rents yet again and pretty much sat back and waited for the coffers to fill to the brim.
The long termers started the exodus. When it started taking quite a while to re-rent their apartments (remember, no upgrade while it's empty) I sensed a lowering of standards on the screening process and some far less desirable people started moving in. Well, that just flushed out most of the rest of the good tenants and today we're approaching 25% vacancy. We've had apartments empty for months on end.
Now of course this is just one story but I'll bet it's been repeated in many instances in the last few years.
Now if David will indulge me one small list faux-pas, the negative cash flow here has approached hemorrhage proportions and last week I was informed my services, no matter how cut back, were no longer affordable. So after nine years and with no notice I am out of my base job. Any of you owners out there need a mature fellow with almost twenty years experience in multi-unit maintenance and remodeling, write me off-list.
Jon Gorder
Loring Park
