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Tampa Bay apartment rents keep rising. Here are some of the reasons why

Darron-Kattan-457x296
Published: Aug 29, 2019
Excerpted from Tampa Bay Times story.

Tampa Bay renters, take note: If your apartment complex is sold, your rent almost certainly will go up. And there’s a good chance your complex will be sold.

Since 2013, the bay area has been one of the nation’s most active apartment markets. Investors — be they hedge funds, insurance companies or rich local individuals — know they can make money from apartments as more people choose or are forced to go the rental route. And as the demand for apartments grows, prices climb for apartment communities.
 
"Pricing is so high on the investment side now that if they don’t raise the rents, the deal likely is not going to make any sense,'' said Darron Kattan, managing director of the commercial brokerage Franklin Street. "So the business plan from Day One is raising rents.''

Tenants are safe from rent increases until their lease is up. Once it is, nothing can to stop a new owner from jacking up the monthly rent by $30, 60, even $100 or more. Rents have increased so much that half of Tamp Bay renters are "cost burdened,'' a Harvard study found, and more than a fourth are "severely burdened.''
 
One reason rents are rising: the rapid turnover of apartment communities.

In the past three years, at least 172 communities with 50 or more units have changed hands in Pinellas and Hillsborough counties. The record price paid so far was $126.3 million last year for Camden Pier District, a 19-story tower with 358 units in downtown St. Petersburg. Two other bay area communities have sold for more than $100 million each since July 2017, and four have sold for between $90 million and $95 million.

"There’s a lot of value appreciation in recent years, which is enabling people to make a big profit, which is why everybody buys commercial property,'' Kattan said.

In February 2017, Franklin Street brokered the sale of the 296-unit River View Apartments in Tampa for $23.4 million. A year and a half later, the complex sold for $31 million. "They did do work in that period,'' Kattan said, referring to improvements made by the sellers, "but that’s still a pretty dramatic increase.''

Though investors in commercial real estate typically have to hold a property five to seven years to turn a profit, Tampa Bay’s market is so strong that "people are hitting their five to seven years value in two years,'' Kattan said.

For full story, visit 
Credit: Susan Taylor Martin
Source: Tampa Bay Times
URL: https://www.tampabay.com/