Construction Boom Busts Rent Market in Hawthorne
The residential building boom that has been going on in Hawthorne for the past few years has saturated the rental market and many owners are offering incentives such as a month’s free rent and paid utilities to attract tenants.
“We are overbuilt right now,” said Milton Mabry, owner of Mabry Management Co. in Torrance, who has lowered the security deposit on some of the 350 apartments in Hawthorne that he manages. “They built so many so quickly.”
Representatives of the real estate industry point to low interest rates, favorable zoning and the city’s proximity to giant aerospace employers for the rise in apartment construction. In 1980, the U. S. Census counted 12,525 multifamily units in Hawthorne. Since then, building permits have been issued for more than 5,200 apartment units.
Real estate representatives say the glut has been created by two factors: simultaneous completion of several apartment projects and a high turnover of existing apartments as renters take advantage of low interest rates to buy homes.
‘Double Whammy’
“We were hit with a double whammy,” Mabry said.
The additional units have increased the city’s usual vacancy rate from about 2%--which is considered very low--to about 8%, according to real estate spokesmen. The industry considers anything above 5% to be high.
In a recent Sunday edition of the Daily Breeze, apartment listings for Hawthorne took up the entire top half of a 10-column page. Torrance had a similar number of listings, but it is twice the size of Hawthorne.
“There are a whole lot of brand-new buildings that are empty,” said Bill Caslin, manager of a new 40-unit complex on the 14400 block of Lemoli Avenue. When the complex opened three months ago, Caslin was offering a 50% discount on the first month’s rent. A month later, he offered a full month free.
Complex Full
“The units probably would not have gone as quickly if we had not been offering the free month,” said Caslin. The complex is now full.
But while some owners have been forced to offer incentives to attract tenants, monthly rents have not gone down. Real estate officials say the incentives are designed to get tenants into buildings quickly, but the saturation has not lowered the market value of apartments.
Rents have remained stable for the past year, real estate brokers said, with a one-bedroom apartment renting for about $600 a month and two-bedroom units going for about $700.
The fact that owners have not had to lower rents suggests that the glut is temporary and will disappear by the end of the year, industry spokesmen said.
Mike Naggar, owner of Sunlight Property Management Inc. in Lawndale, which manages about 1,000 apartments in Hawthorne, said that as long as the aerospace industry stays healthy, apartments in Hawthorne will remain in demand.
“When the Century Freeway is completed (in the mid-1990s) people who don’t live in the area will drive by and see that they can live closer to work,” Naggar said.
Although other new apartments are expected to be built in the future--in the first six months of this year building permits were issued for 688 new units--city and real estate officials see the residential building boom losing steam.
Much of the available land has already been used, and the City Council has shown signs that it may have had its fill of apartments.
In April, the council turned down a request for a zone change that would have allowed a 219-unit apartment complex. Citing density concerns and noting a decline in home ownership in the city, the council said it prefers to see condominiums built.
“The fact is we now have more apartments than we do houses,” Councilwoman Ginny Lambert said in a recent interview. “I have always preferred condominiums to apartments.”
The company that proposed the project, Hunt Enterprises in Hawthorne, which has about 500 apartment units in the city, decided not to go through with purchase of the land. An official said that building regulations would allow construction of only 99 condominiums, which would be less profitable.
