Rental Vacancy Rate
Vacancy rates on rental properties throughout the United States reached 6.6% in the third quarter of 2023. Q3 in 2022 was 6.0%, while Q2 in 2023 was 6.3%.
However, Memphis and the surrounding areas have seen a much higher than average vacancy rate:
This makes the average vacancy rate within Memphis city limits 14.9%.
So why is the vacancy rate so high? There are several factors:
1. New builds throughout the city
Memphis has seen an influx of new multi-family builds throughout the city. Downtown and Midtown, in particular, have seen multiple new apartment complexes built or in development.
Multi-family Realtor Steve Woodyard said, “Midtown, Downtown and several other submarkets had a lot of new construction hit the ground at the same time. This was due to… 2019-2021 pre-covid planned construction projects being stalled for several years and then landing at the same time as the 2022-2023 planned construction coming on line.”
2. Renters are staying put
Many renters are not moving out of their current rentals due to concern about the economy, as well as the rising cost of rent. For many renters, it’s cheaper to remain where they are rather than moving. There are also many current renters who are waiting for mortgage interest rates to drop in order to buy rather than rent.
Fogelman Properties president Mark Fogelman says the biggest challenge to the multifamily market in Memphis is “the economic uncertainty in the air these days.”
3. Renters have more options
Because the vacancy rate is so high, this means renters that are moving are opting for properties that offer desirable amenities. These could be things like updated kitchens and bathrooms, pools and fitness rooms, or properties that allow pets. Many properties are also offering incentives for renting, such as lower deposits, free months, or even things like gift cards.
4. Rent prices are still comparatively high
While pricing your property competitively is always smart, it’s especially important right now. Apartments.com’s February rent report for Memphis shows that rents are up 0.7% month-over-month and up 0.5% year-over-year. These prices can be out of reach for many Memphians. Your property should be priced to compete with similar units in the area. The condition of your property should also factor into your rental rate. A condo may be in pristine shape, but if fixtures, flooring, appliances, and appearance are dated, your price should reflect that.
What’s New
We are constantly looking for ways to improve our property management services. Each month, we’ll highlight a new service that we have implemented as a benefit to you.
PetScreening.com
Making it easy to keep up with residents’ furry friends
At 901 Real Estate Services, we recommend all of the properties we manage allow pets (unless there are HOA restrictions in place). There are a variety of reasons we have this recommendation, but disallowing pets can limit the amount of prospective residents a property may attract.
- 68% of U.S. families own pets
- 76% of millennial renters own pets
- Pet-free homes can take twice as long to rent
- Pet friendly homes receive twice the amount of applicants pet-free homes do
We use PetScreening.com is the perfect way to track both pets and service animals. This program keeps all documentation on an animal in one place, including vet history, pet insurance, and more.
When a resident is first approved for a home, they are required to set up a profile for each pet or SA they own. PetScreening.com then creates a ranking based on the breed, documentation, vet history, and more. One “paw” is the lowest ranking, with five “paws” being the highest. The amount of paws determines the monthly pet rent a resident will pay. This encourages our tenants to keep up with their vet appointments and vaccinations, as these documents help raise the pet’s paw ranking.
For service animals, PetScreening.com requires adequate provider documentation that an animal is a registered SA. PetScreening.com will reach out to providers to determine if the service animal designation is authentic.
Residents without pets also create a “no pet” profile. This way, there’s no question if a resident has a pet or not. Should we find an unregistered animal at a residence, this gives us documentation that the resident said they had no pets.
“Screening pets… was a very manual and very cumbersome process. With PetScreening, we have a remarkably efficient and thorough solution that allows us to determine the risk posed by a pet, track our pets onsite, and handle accommodation requests for assistance animals.”
— Katie Ashley, COO Fortis Property Management