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Vacancies plague '09-'10 housing market

Austin Fast

A "for rent" sign flaps in the breeze as a quaint house with green shutters stands in the 300-block of North Elm Street waiting for occupants to sign a lease for next year.

College Property Management manages the lease for this particular house, along with some 220 other student rentals in Oxford.

Supervisor Holly Morrical said this sight is becoming more prevalent around the Mile Square after Miami University instituted a sophomore on-campus living requirement for next year.

"It's definitely because of the sophomores," Morrical said. "We've been pretty lucky, but the 'for rent' signs are everywhere."

Morrical said 32 of her company's student rentals are currently standing vacant, while only 20 were not yet leased at this time last year.

College Property is not alone. Alex O'Brien and Tom Waldron graduated from Miami in 2002. Two years later, they started Cardinal Group Investments to fix up student housing and offer students high quality living options.

O'Brien said not all areas of Oxford are being affected in the same way by the sophomore residency requirement.

He said most vacancies are currently in regions of the Mile Square that seem too far away for students, including areas west of the "College-Sycamore pocket" and South Main Street.

"It's almost like the Mile Square is getting smaller," O'Brien said. "College (Avenue) is kind of the new boundary. As you get into the outliers, there are more vacancies."

Even the newly constructed College Suites is seeing a major reduction in the number of leases signed. Barbara Steinke, property manager at College Suites, said the apartment complex currently has pre-leased 54 percent of its 756-resident occupancy.

She said 95 percent of these leases had already been signed by this same time last year.

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"Absolutely, (the sophomore living requirement) really had an impact across the board for landlords here in Oxford," Steinke said. "I also think the current economic crisis is playing a factor as well. We have students who don't know if they will be returning (to school) next year."

As landlords get nervous about filling vacant houses, O'Brien said students who aren't picky about location could benefit from reduced prices due to the new sophomore living policy, although they may end up living among deteriorating vacant houses.

"There are pros for the students - they can shop around and find a quality product," O'Brien said. "Leasing season is a lot longer and students are waiting to see their options. Prices will fall down, since there's too much fear of complete vacancy ... come April, people start panicking and making outrageous deals."

Morrical said College Property Management has been offering incentives such as free 32-inch flat screen TVs, summer rent, cable and high speed Internet.

"We've dropped a lot of those prices," Morrical said. "I'm even saying for people to come in and give me an offer. You know, the old saying 'something's better than nothing.'"

College Suites is offering students who sign leases $800 to put toward tuition or purchasing textbooks for next year, Steinke said.

Although landlords on the outskirts of the Mile Square are feeling the pressure, O'Brien said uptown "A-locations" close to Miami's campus have not seen a change for the most part.

"Outlying areas are looking at millions and millions of dollars lost," O'Brien said. "Some locations will always be valuable. A-locations did not notice any change. A-locations are independent of normal market conditions."

Waldron said basic supply and demand are the basis for the changes in popularity of different off-campus housing options.

He called Oxford a "high-risk university" for investors because there are few renters besides students in the Mile Square, little industry and few opportunities to use vacant homes for alternative uses like law offices.

"A policy change like this (the sophomore living requirement) will scare away any sophisticated investor who doesn't know the area," Waldron said.

Waldron said it is clear to him the policy change is driven by a desire to tap into the revenue stream offered by renting off-campus housing.

"Why do they need to require students to live on campus? They're taking away one of the most important freedoms students have at a university," Waldron said.

Prospective students visiting Oxford are cognizant of the lifestyle in Oxford, O'Brien said, adding they see students interacting uptown and on their front porches and look forward to that lifestyle while at Miami.

"Now the university is limiting that and saying, 'No, you have to live in bunk beds in a dorm for two years,'" O'Brien said. "You wonder if the students will push back."

O'Brien added this change will force Oxford real estate owners who can afford it to ensure their rental properties remain at a high level of quality, while owners of continually vacant properties on the outskirts will have no money to pay for upgrades.

"If you don't want to fix up your property and stay attractive to renters, you won't find tenants," O'Brien said. "To attract tenants, they need to feel like they're getting their money's worth."

Waldron summed up the Oxford real estate market by saying it's going through a transition period and no one seems to know how it will turn out.

"It's a very unstable market and there's a lot of dust in the air in the market and no one knows how it will land," Waldron said. "It's very uncertain right now."

Despite the bleak outlook for next year's housing market, Steinke said she has hopes the leases will come in during the summer.

"The reality is that our leasing time is not over for next year - this year is a late market," Steinke said. "At this time, they're (College Suites) not really going to look at anything (actions to address vacant properties) until the July time frame. Leasing season does not end until August."


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