As long-time apartment renters take advantage of low mortgage interest rates and buy their first home, Washington-area suburban landlords are offering huge security deposit discounts and free weekends in Florida to attract new tenants to fill their complexes.
Landlords, particularly those in Maryland, now are offering giveaway items to prospective tenants, including videocassette recorders, microwave ovens, telephone installation, cable television subscriptions and substantial discounts on security desposits and rent payments.
Landlords traditionally have required tenants to post security deposits equalling one month's rent. But now some are requiring only between $100 and $300 as security for apartments renting for $500 and up a month. A month or two of free rent also is being offered.
Edna Hopper, an assistant resident manager at Westchester West garden apartments in Aspen Hill, said that at least one-third of her former tenants have moved out since January to purchase a house. To entice new tenants to the 444-unit complex, the management company has offered to foot the hotel bill for a three-night, four-day stay in Daytona Beach and a $300 rent rebate, Hopper said.
Annette Dioso, an assistant resident manager at the Manor apartments, a large Silver Spring building, said her management firm greatly reduced the required security deposit from one month's rent to $250 "to stay up with the competition." She said the advertised discount has generated a larger interest in the building's vacancies than in other slow rental periods.
Donald R. Slatton, executive vice president of the Apartment and Office Building Association, which represents a large share of the Washington area's apartment building owners, said landlords have been giving away "concessions" for years to compensate for lags in the rental market such as the present one.
Slatton said an oversupply of apartment buildings also has contributed to more rental vacancies. "It's really nothing unusal to give away concessions in order to get your rental rate back up," he said.
Slatton said that suburban Maryland's rental community has been the hardest hit by those who left the rental housing market to join the hordes of new home buyers. He added that most of these tenants-turned-owners are in the middle- to upper-income brackets and have saved their money over the years and waited for interest rates to take a dive.
He added that Northern Virgina has the strongest rental market in the area because of its huge commercial business base. "More and more businesses are relocated in Virginia, and people obviously prefer to live as close to work as possible," Slatton said. The District's landlords have not joined in offering the giveaways, in part because of low vacancy rates in the city and because owners feel the D.C. rent control law does not permit them the financial leeway to offer rental incentives, Slatton said.
Alexandria landlords have the least worry about filling their rental units, Slatton said, with a vacancy rate of less than 1 percent. Maryland's overall vacancy level hovers near 5 percent, the highest in two years, although numerous buildings have a higher rate.
"But that rate in Maryland is going to fluctuate," he said. "If you go back to the same buildings three months from now, assuming they are in good locations and offer good amenities, you'll find they are relatively full.
"In the rest of the country, if you're running an occupany rate of above 90 percent, you're fine," he added. "We're used to a different market here. We don't like vacancies."
Slatton said property owners and apartment management firms should not lose faith in the normally booming rental market.
"Money, more than any other commodity, is very volatile. Just little itty-bitty things can make the stock market girate wildly," he said. "Vacancy rates will climb when interest rates are low. But as the lower rates go up, the vacancy rates will drop."