Survey of Tuscaloosa Multifamily Housing Market by UA Real Estate Center Shows Most Managers Think Market ‘Overbuilt’

TUSCALOOSA, Ala. – Most managers of multifamily housing properties in Tuscaloosa – more than 75 percent – say they think the multifamily housing market in Tuscaloosa is slightly overbuilt or severely overbuilt, according to a survey conducted at the close of the spring semester by the Alabama Center for Real Estate at The University of Alabama.

In the past few years, there have been appropriately 2,000 apartments built and more than 700 condominiums, according to Grayson Glaze, executive director of UA’s Alabama Center for Real Estate, known as ACRE.

“The University, during the same period, has built approximately 2,100 dorm rooms with another 960 dorm rooms scheduled for delivery in the fall of 2009,” Glaze said. “Another 1,500 apartments are in different stages of development around town with the same delivery date of fall 2009. So the question becomes clear: Can our local market absorb the additional inventory in an orderly fashion in the years ahead?”

“The Tuscaloosa Area Multifamily Housing Survey was conducted to determine the current occupancy rate of the city’s multifamily housing market, to establish a baseline for future analysis,” Glaze said, “and to identify potential developments in the pipeline that would impact the level of supply in the Tuscaloosa market.”

The center surveyed 87 multifamily properties with 50 or more units and received 79 usable responses, Glaze said. He said six of the 79 properties were in lease-up – the period during which a new facility is accepting new residents – and two were in construction, leaving 71 properties classified as existing properties.

The survey found the current occupancy rate for existing properties is about 92 percent.

The ACRE survey also broke the data into four geographical submarkets: North, which is north of the Black Warrior River; Central, which is south of the river and west of McFarland Boulevard and north of I-59/20; South, the area south of I-20/59; and East, the area east of McFarland, north of I-20/59 and south of the river. The Central submarket, which includes the University, had the highest existing occupancy rate, of approximately 98 percent. In the North submarket the rate was approximately 88 percent, while the occupancy rate in the South submarket was 92 percent. The East submarket was at 86 percent.

Glaze said the survey further analyzed the occupancy rates according to whether the property was an apartment building, a condominium or rent-by- bed.

The existing apartment occupancy rate was 91 percent, and existing condominium occupancy rate was 98 percent, the survey found. The occupancy rate for existing rent-by-bed properties is 99 percent.

“Rent-by-bed is akin to the current University of Alabama housing where there is common area that includes a TV-living room, a kitchen and showers but distinct bedrooms with separate locks. You rent the bed that includes the use of the common area,” Glaze said.

“When we looked at all rent-by-bed properties as opposed to only those existing, we found the occupancy rate to be about 59 percent,” Glaze said. “The low rate is due to the fact that more than half of the rent-by-bed properties are either in lease-up or under construction.”

“The study is yet another example of the University’s commitment to student-centered research,” Glaze said. “The report would not have been possible without the tireless efforts of two of our recent graduates with concentrations in real estate. Bobby Martin, now employed as a financial analyst by Diamond Properties in Washington D.C., and Brandon Cohen, now a real estate analyst with Grandbridge Real Estate Capital, located in Birmingham,” Glaze said. “Now, that is what it’s all about – great learning environments and great futures for our real estate students.”

Glaze said a digital copy of the report is available from ACRE by phoning 205/348-4117 or by contacting Jean Fuller, program assistant, at jfuller@cba.ua.edu.