There's no sign advertising the $1,000 in free rent being offered at the Arden Woods Apartments in North Raleigh, and when prospective renters first hear about it, their first response is often skepticism.
"Some people think it's too good to be true," said Rebecca Darby,Arden Woods property manager, noting that the offer applies to a 12-month lease.
From free rent to flat-screen televisions to waived deposits, Triangle apartment owners are offering an increasing number of concessions to attract residents.
Such deals are the most visible sign that the Triangle's apartment market, while healthier than most other parts of the country, is hurting.
The apartment vacancy rate in the Triangle was 9.5percent in September, up from 8.7 percent a year ago, according to data from the Triangle Apartment Association and Karnes Research. Average apartment rents had their first year-over-year decline in five years in September.
Market conditions are nowhere near as advantageous for renters as they were in 2002, when vacancy rates topped 11 percent and some landlords were offering up to four months of free rent.
But the decline in rental income comes as apartments, like other types of commercial property, are losing value because of the credit crunch.
The average Triangle apartment cap rate - the ratio of a property's annual net income to its purchase price - through the third quarter was 7.6 percent, up from 6.1percent a year earlier. That was the highest it has been since 2002, according to Real Capital Analytics, a New York research firm.
Rising cap rates are expected to cause more distressed apartment buildings to come on the market.
With property values dropping and refinancing expensive, owners who have debt coming due will be forced to sell or come up with more equity.
Already this year a handful of Triangle apartment properties have sold at a discount:
In April, The Point at Chapel Hill Apartment Homes sold for 25 percent less than what the seller paid in June 2007, the peak of the commercial real estate boom.
In June, Olde Town at Carpenter Village in Cary sold for $28.1 million, 8 percent less than the seller paid for it in July 2006
In July, Foxfire Apartments in North Durham sold for $8.5 million, 40 percent less than the seller paid in 2000.
Most investors are confident that the Triangle apartment market will bounce back quicker and more strongly than the rest of the country.
Raleigh and Washington are the only two markets in the country where the total number of apartments occupied has continued to rise, according to MPF Research, which analyzes apartment data in 64metro areas across the country.
"You're still absorbing units, just not as many as are being built," said Greg Willet, MPF's vice president for research and analysis.
In the Triangle, 1,834 new units were added during the six-month period ending in September. An additional 2,404 units were under construction, 15 percent less than were being built in September of last year.
Willet attributes the Triangle's resiliency to the fact that job losses have been less severe than elsewhere, and the region has fewer single-family homes and condominiums for rent.
"Rental housing is primarily apartments in [the Triangle], where as in all these other markets, you have other choices," he said.
Still, the Triangle continues to see people moving elsewhere to find work or moving in with a friend or relative to save money.
Brian Reece, a partner with Karnes, said the trend of more people sharing housing is particularly tough on the market.
"That hits the marketplace as just a vacant unit," he said. "We're thinking they're going to go buy a house. Well, they're not."
