As Army shrinks, rental homes sit empty on and around Fort Bragg

Soldiers based at Fort Bragg are accustomed to being at the center of heated global conflict. As the Army trims its numbers, troops and their families now find themselves in the middle of a local bidding war as landlords compete to fill empty houses and apartments with a shrinking pool of renters.

Five years ago, when U.S. forces were fighting two wars and the Army was relocating two of its command headquarters to Fort Bragg, families hoping to get a house or apartment on the nation’s largest Army base faced waiting lists up to four months long.

Today, it’s a renter’s market, with property managers on and off post waiving fees and offering rent reductions, YMCA memberships, apartment upgrades and other specials in an effort to attract occupants to thousands of empty units.

“People are moving out at the same rate as before, but we’re not seeing the troops coming in to replace them,” said Scarlett Tyner, spokeswoman for Corvias Military Housing, the private company that took over operation of Fort Bragg’s on-post housing in 2003.

Since landing the 50-year contract, the company has invested more than $588 million renovating, rebuilding or adding new houses and apartments on post, while enjoying occupancy rates of around 95 percent for most of those years.

But during the past two years, all branches of the military have cut costs and troop numbers, with more reductions in the Pentagon’s proposed 2015 budget.

In 2012, according to the Department of Defense, the Army had about 550,000 active-duty members. As the U.S. moves away from a strategy of large ground wars, the Army plans to draw down to 490,000 troops by September 2015 and to cut 40,000 to 70,000 soldiers in fiscal 2016.

The trims have resulted in a net loss of 2,300 active-duty Army members based at Fort Bragg since 2012.

School system surprised

The Army’s contraction seems to have come as a surprise to property managers and investors, who have built at least nine new apartment complexes around Fayetteville in the past three years. The county school system also has been shocked by the shrinkage; this week, Cumberland County Schools announced it had lost 900 students since last year, and the enrollment drop will force the system to return about $1.5 million in state funding.

Superintendent Frank Till Jr. said administrators weren’t too concerned when many students didn’t show up for the first week of class, but when they didn’t come back after Labor Day, he asked his staff to find out where they were. Requests for transfers of the students’ records indicate that a few had enrolled in area charter or private schools. But Till said the great majority had moved out of state, which he attributes to parents relocating with the military or getting out of service entirely.

“We did not see it coming,” Till said. “Everything we had heard was the net effect of all these changes on Fort Bragg would be negligible. And conceivably, when it’s all over, it could be negligible. At some time in the future, there may be more troops coming in.”

That could happen if, as Defense Secretary Chuck Hagel argued this year, the military undertakes another round of base closures and realignments in 2017. Congress has not been receptive to the possibility of closing bases, which are economic engines in their communities.

The 2005 base realignment brought additional troops, including high-ranking officers, to Fort Bragg with the closure of Fort McPherson in Atlanta. But Bragg also lost the 4th Brigade Combat Team, and the Air Force has proposed deactivating the 440th Airlift Wing based at Pope Field on Fort Bragg. State and local officials have protested losing the 440th, which could eliminate more than 1,400 jobs that came to Bragg as part of the 2005 realignment.

Recently, Fort Bragg released a report indicating base population figures would remain relatively steady from now through 2020, with 47,000 to 48,000 active-duty service members assigned to the post, along with about 14,500 civilian employees. Another 5,000 to 6,000 troops spend some time at the post each year for training or temporary duty.

They all have to live somewhere. And unlike other parts of the country, where renters make up about 30 percent of the housing market, in Cumberland County renters are about half the market, said Daren Blomquist, vice president of RealtyTrac, a real estate information company based in Irvine, Calif. Blomquist said his data show that average rents in the county have declined as occupancy rates have dropped into the 85 to 89 percent range since fall 2013.

By comparison, the national occupancy rate for apartments was 95.9 percent through the first half of 2014.

Making properties attractive

Corvias Military Housing is doing everything its marketing staff can think of to bring its numbers up.

When the company took over the operation of base housing at Fort Bragg 11 years ago, the post had a mixed inventory of relatively new, modest houses and apartments, elegant historic homes and some dilapidated structures that had been cheaply built and poorly maintained.

Under its agreement with the Army, the for-profit company finances, plans, designs, builds, renovates, manages and maintains about 6,500 Fort Bragg housing units – all of the base’s living quarters except for single-soldier barracks.

It knocked down entire apartment complexes where tenants had complained of mold and electrical problems and built new, three-bedroom townhouses. It updated kitchens in historic homes and turned buildings with five cramped units into spacious tri-plexes. It built nine community centers with big swimming pools, gyms, computer banks, media and billiard rooms, and other amenities that rival upscale developments outside Fort Bragg’s gates. It added a new group of apartments just for single soldiers or those whose families don’t want to relocate, where roommates can share the rent and live in separate master suites.

To make money on its investment at Fort Bragg and other military installations, including Seymour Johnson Air Force Base in Goldsboro, Corvias has to make its properties as attractive as anything off post, said Gary Kalinofski, a retired Army officer and now senior vice president of military affairs for Corvias.

“Families don’t have to live on post,” he said. “We want to make it so they choose to.”

The company first noticed a drop in housing applications last fall. When they didn’t rebound this summer, Corvias, based in Rhode Island, began offering various incentives to attract new residents, including families already living in rentals in Fayetteville or elsewhere around Fort Bragg. Since the Army had stopped reimbursing cross-town moving expenses as a cost-cutting measure, Corvias offered up to $900 to pick up the tab. It offered to up-size apartments, giving three-bedroom units to soldiers whose rank and family size would normally qualify them for two bedrooms.

The company increased its marketing efforts and played up the peace of mind it says comes from living within “the ultimate gated community.” It emphasized the cost savings that young military families, usually living on a single, stretched income, would see from living on post where water, electricity, and often cable and Internet service are included.

It was the money that made the difference for Jessica Hall, who moved into the Hammond Hills neighborhood on post with her husband and daughter at the end of August. When Pfc. Aaron Hall was assigned to Fort Bragg a year ago, they took others’ advice about living away from Hall’s job and found an apartment in town. Hall’s basic housing allowance from the Army was enough to pay the rent but didn’t cover gas, electricity and water.

“Every month, we were about 100 or 150 dollars short,” Hall said, and she was constantly shuffling bills to pay everything each month.

Moving on post, she said, where the housing allowance covers everything, “was like having a giant weight lifted off my shoulders.”

Cycles less severe

Corvias’ competition off-post is taking similar measures to try to lure residents. Jessica Smith, property manager at The Plantation at Fayetteville, five minutes from one of Bragg’s main gates, said her resort-style complex that opened in January 2013 saw a drop in applications last fall as well. The company increased its advertising and offered other perks.

“We’re practically giving away rent to try to encourage new occupants,” Smith said. But last month, 21 people moved out of the 240-unit complex, and only 18 moved in.

Tom Keith, who has worked in and studied the local real estate market for more than 40 years, says cycles of military buildup and drawdown are not as severe as they once were. While some families leave town when their soldier deploys, better managed troop rotations throughout the Army have made it so Fayetteville no longer empties of people when the U.S. conducts a mass deployment. During the Gulf War, many businesses went under when spouses and families went back to their hometowns.

The rental market can probably weather 10 to 15 percent vacancy rates for a while, Keith said, but if vacancies increase, so will foreclosures – especially on newer properties that were heavily financed.

“But that’s a risk you take in a military town,” he said.

This story was originally published September 12, 2014 at 6:59 PM with the headline "As Army shrinks, rental homes sit empty on and around Fort Bragg."