The frenetic pace of apartment construction in Reno and Sparks might be slowing just little, says an analyst who keeps close tabs on the business.
This fall, some 3,484 apartment units were under construction, seemingly on every available piece of property around town, says Floyd Rowley, founding broker of Rowley Real Estate Advisors. While that’s a lot of construction, Rowley says it’s a decline of more than 750 from the number of apartments that were under construction this summer.
The number of future apartments that are somewhere in the planning pipeline also declined, Rowley said. At least one project was postponed during this year’s economic uncertainty. Another planned apartment complex was taken off the boards when the developers decided they could do better if the land was devoted to single-family homes. And some projects that have been in the pipeline for years simply haven’t gained enough traction to move forward, Rowley says.
By the analyst’s count, about 7,626 apartment units were in the planning stages this fall, about 8% fewer than this summer.
Already this year, developers have added about 1,400 new apartments to the supply of rental housing in Reno and Sparks, and Rowley says they don’t appear to be having much trouble finding tenants.
Using data prepared by the real estate appraisal firm of Johnson-Perkins-Griffin, Rowley says the vacancy rate in apartments this autumn is a very tight 2.24% — down from 3.3% this summer. That’s particularly remarkable given the region’s continued high unemployment rate, about 7% at last count.
“This could be attributed to tenants not wanting to lose their residences as a safe space to quarantine, combined with the continued influx of new residents moving to the region for jobs,” Rowley says.
Tight markets bring rising prices, and the Johnson-Perkins-Griffin survey found that rents currently average $1,421 a month — increasing by more than $50 since this summer.
On the other hand, Rowley notes that vacancies are rising in downtown apartment complexes, and average rents in the central part of town are falling.
What’s ahead for the region? Good question, says the analyst.
On one hand, some apartment tenants haven’t been paying rent since losing their jobs with the onset of the pandemic. The state’s no-eviction rule expired in mid-October, and landlords have begun filing notices to kick out some of their worst, non-paying tenants. That’s going to create more vacancies.
On the other hand, he says new companies and new jobs continue to pour into Reno and Sparks, and all those new workers need someplace to live.
“Anecdotal evidence suggests companies are ‘massing at the border’ to relocate here from California,” Rowley says.