This week, we’re shifting our focus eastward of San Diego, CA to take a look at St. Louis, MO. Prior to the economic slump, St. Louis was making great strides—in fact, in 2006 St. Louis received the World Leadership Award for urban renewal. Additionally, the city houses eight Fortune 500 Companies, is a hot-spot for medical and biotech companies, and serves as the headquarters for several national companies, including Anheuser-Busch (acquired by a Belgian beer company in 2008), Enterprise Rent-A-Car, Energizer, Boeing Integrated Defense Systems, Wells Fargo Advisors, and Purina.
A September 1, 2010 article on STLToday.com describes the area’s current rental market as “somewhat soft.” Also according to the article, which is based on recent reports by Reis Inc. and the HUD’s most recent Housing Market Conditions Report, this market is due to St. Louis’ economy, which has suffered considerable job losses (as of September 1, the unemployment rate stood at 9.5%) and out-migration. The vacancy rate currently stands at 8.8%, with an average monthly apartment rent of $726. With these units already going unfilled, approximately 900 additional rental units are currently under construction in the region.
In other words, there is about to be even more competition for renters in an already-soft market. Happily, employment appears to be edging forward with 7,800 new jobs created in August 2010. Clearly, there’s competition for these jobs—according to job search engine Juju.com, there are 13 candidates for every available job in St. Louis.
All of this means that, like so many other places, St. Louis is beginning to edge forward in fits and starts. Long-term, the outlook is good. However, landlords in the St. Louis area still have to contend with an overabundance of housing for an area that is experiencing low employment rates and a migrating population. With more people re-entering the job market, potential tenants are out there—you just may have to work harder to attract them than in previous years. Also, with new housing options and competitors looking to fill their own vacancies, it’s essential to remain competitive and retain those tenants you already do have to the greatest extent possible.
A few tips with these thoughts in mind:
Be flexible. If a current or potential tenant expresses interest in another property that has slightly lower rent or includes paid heat, etc., sit down and really look at your budget. Can you consider matching such offers? Sure, it’s not an ideal scenario, but when faced with the alternative of an empty unit to fill, you may be better off with a slight rental rate cut.
Be on your A-game. Of course, you should always be on your landlord A-game, but in conditions like this it’s particularly important. Keep the tenants you do have and generate good word-of-mouth and referrals by taking extra care to stay on top of things. Handle maintenance requests as quickly as possible, get back to tenants quickly, and keep everything on your property in tip-top condition.
Stay on top of the market. Remember, other landlords in your area are in the same precarious position. Stay abreast of the tactics others are using by perusing rental sites, staying connected to online industry resources, and attending available meetings with local associations and professional groups. This will ensure that you stay up-to-date in the fluctuating market and generate your own ideas on which strategies are working for others in your profession.
For more tips and strategies that may be applicable to your own situation, be sure to check out last week’s blog post, Rental Market Focus: San Diego.