When the Inland Northwest home market has been hot in the past, apartment-vacancy rates have risen as people who were renting flocked to buy homes of their own.


Thats not the case this time around. Despite the current record-setting home-sales market, apartment vacancies here remain surprisingly low.


As active as the home-sales market has been, one would have expected an increase in vacancies, says Glenn Crellin, director of the Washington Center of Real Estate Research, at Washington State University The development activity is consistent with overall growth in the Spokane economy, so everything is staying on an even keel.


The apartment-vacancy rate in Spokane County was 5.3 percent in December, according to the real estate research centers most recent survey. Thats nearly the same as the 5.4 percent rate here a year earlier and is down substantially from the 7.5 percent vacancy rate in December of 2003.


Im shocked that the market has been as stable as it is, says Kevin McCathren, owner of McCathren Management & Real Estate Services Inc., which currently manages 700 apartment units in the Spokane area. At all levels, were seeing good occupancy and fill-up rates.


He says the hot home market includes many renters who have decided to buy homes, and annual turnover of apartment tenants in some cases is as much as 50 percent. Still, he says, apartment managers for the most part have been able to fill units when they come available.


While the vacancy rate remained essentially the same, average monthly rents increased 3 percent, to $572 from $555 a year earlier, according to the research centers study. Average rent per square foot increased at about the same pace, to 69 cents a square foot from 66.5 cents a foot a year earlier.


McCathren says some of the new and recently refurbished apartment complexes are commanding much more on a per-square-foot basis. Living units in one complex McCathren Management manages, Pasadena Ridge, in Spokane Valley, leases units for around 86 cents a square foot, he says.


According to the survey, vacancy rates in December were lowest in central Spokane and on the North Side, where they were 3.9 percent and 4.1 percent, respectively. The vacancy rate on the South Hill was 5.2 percent, nearly the same as the overall rate, and Spokane Valley had the highest rate, at 6.4 percent.


Of the four parts of the Spokane area, the Valley had the highest average monthly rents, at $600. Central Spokane and the South Hill both had average rents of about $560, and average rents on the North Side were $526. Crellin says rents here basically kept pace with inflation last year.


In Kootenai County, where home sales have increased at an even faster clip than they have in Spokane County, apartment-vacancy rates rose to 7.2 percent last December, up from 4.6 percent a year earlier.


The higher vacancy rate in Kootenai County is due largely to the addition of 250 apartment units to that market, which is enough in a smaller market to skew statistics, Crellin says. The additional units raised the total number of apartments in the Kootenai County survey to about 1,500, from about 1,250 a year earlier.


Despite the increase in the vacancy rate, average rents in Kootenai County increased 7.5 percent, to $581 a month in December from $540 a month a year earlier. Average rents per square foot were nearly flat, though, at 66 cents a square foot in December, compared with 65 cents a year earlier.


Amid sustained, firm rental rates in the Spokane area, developers are continuing to add living units at a strong clip.


The city of Spokane, city of Spokane Valley, and Spokane County issued building permits for a smaller volume of multifamily housing projects in 2005 than they did the previous year, $82.7 million last year compared with $93.1 million a year earlier.


Still, new living units continue to become available in a number of large complexes, and more projects are proposed.


Those projects include:


The 288-unit Parkside at Mirabeau complex, which Pinehurst Development LLC, of Spokane, is developing at 2900 N. Pines, in Spokane Valley.


The 212-unit Windhaven Apartments and the 96-unit Selkirk Lodge, both of which are located near the intersection of Indian Trail Road and Barnes Road. Selkirk Lodge LLC, of Spokane, has started development of that complex, and Spokane developers Harlan and Maxine Douglass have received preliminary approval from the city of Spokane for the Windhaven project.


The 168-unit first phase of the River Rock Apartments complex, which is going up just northeast of the Pines Road-Interstate 90 interchange. A 200-unit second phase of development could start there later this year.


The latter phase of construction on the 328-unit apartment complex that Lanzce G. Douglass Inc., of Spokane, is developing at 5015 S. Regal, on the South Hill.


McCathren says that with all of those projects and other potential developments, substantially more rental units will come onto the market this year and in 2007.


Will the Spokane market be able to handle that? Thats the question, he says. My hunch is that I think its going to stay steady.


Contact Linn Parish at (509) 344-1266 or via e-mail at linnp@spokanejournal.com.