In January I mentioned 6 things that we should watch in 2013 – inventory, home prices, distressed sales, confidence, buyer frustration and apartments. Being nearly September, I figured it a good time to look back at where these things stand. I’m going to be looking at these six things over the next few weeks. Starting with Apartments.
Apartments – there are going to be a lot more available in 2013 and 2014. A few of the new complexes: Arden Place (Rio Road), The Pavilion at North Grounds (Millmont/UVA), Stonefield Commons (Hydraulic & 29), The Reserve at Belvedere (Rio), the Plaza on West Main (UVA), City Walk (Downtown – more on the Coal Tower). As I said, a lot more apartments will be coming on the market soon.
City Walk is taking shape, the Plaza on West Main is moving fast, The Pavilion at North Grounds has people moving in (and presumably Sedona Taphouse is loving life), Arden Place and Stonefield Commons are leasing.
Another 192 apartments will be coming to West Main Street directly across from the Plaza on West Main – called “The Standard” :
“We’re proposing a new multifamily apartment complex and we’re working now on a design that will cater to the surrounding uses of the university and the hospital,” said Jason Doornbos, vice president of development for Georgia-based Landmark Properties.
Another 56 units are proposed for 10th and Market Streets Downtown:
In all, the developers have proposed 56 units and 20,000 square feet of commercial space on the ground and first floors. A structured parking garage with 100 spaces is also planned underneath the building.
The ramifications for bringing all of these are apartments at pretty much the same time – staggering. The first few thoughts and questions that come to mind:
– To my mind, this is confirmation that the 0-5 Buyer is GONE. The buyer who would move to Charlottesville, buy and then sell in under 5 years: thing of the past. (really, read that story if you’re interested in this trend)
– If you’re looking to buy an investment property in the City, you would probably be advised to think about the competition against which you’ll be renting.
– Transportation. I really hope these new developments actively promote bicycling and walking as opposed to being purely car-centric. Adding about 1,000 new apartment units in the City of Charlottesville will presumably add a commensurate number of vehicle/pedestrian/bicycle trips.
– Where are these people working? UVA? Startups? Restaurants?
– Will any be designated “affordable”? And whose definition of “affordable” applies?
– Parking. Each of the two new proposed developments above seem to have about a 2 to 1 ratio for spots to units; presumably the commercial development will use some of these spaces as well.
– Maybe this is a sign that we’re in the midst of a more mobile economy â€¦
– Or maybe it’s a reaction to the trend that driving isn’t cool (if you’re a millennial).
– Maybe it’s a reaction to the forthcoming “renter nation” many have discussed for so long.
But really the number of new apartments in Charlottesville is a reaction to the better economy. Financing is available and developers are obviously confident that there is demand for these products – commercial and residential. Who is the market for these apartments? If it’s not the “families” some in the City of Charlottesville would like to see, why are they approving them?
And finally, how do these all fit into the just-adopted Charlottesville Comprehensive Plan?
I’m hoping/planning to touch on some of the additional ramifications of these 6 things things in my monthly note. If you’re interested, I’d greatly appreciate your subscribing.
Update 29 August 2013:
– Graelyn Brashear has an extensive article in the C-Ville detailing some of the upcoming apartment approvals.
– The Wall Street Journal notes: Student Off-Campus Housing Is Back-to-School Bargain Oversupply Is Prompting Some Landlords to Cut Rent
Hmmmm … applicable to Charlottesville?
Some of the millions of students heading back to collegeâ€”and their parentsâ€”are finding a pleasant surprise: Landlords nationwide are cutting rents because of an oversupply of student housing in college towns.
But developers appear to have overshot the mark in numerous markets. Some of them failed to take into account other construction that was planned, say experts. Others misjudged future enrollments or the willingness of students to pay up for off-campus living at the time when many families are still pressed in the aftermath of the economic downturn.
Update 2 September 2013: And now the Daily Progress is reporting on the coming (glut of) apartments.
As I noted on Google+:
As both a real estate agent and a parent paying for college, I’m not sure I could disagree with the use of the word “want” more.
“There’s a lot of mom and dads out there that really want little Johnny and Suzy to have that high-end apartment,” he said.”
I think selected 0-5 buyers will exist, but in smaller numbers and in very limited neighborhoods. (think JAG, residents at UVA Hospital, especially those with kids).
I think both West Main projects are geared toward some capacity of student (grad, medical, upperclass) and therefore more walking/cycling, especially with where they are located.
I have no idea where these people are working, maybe at the new hotels being built downtown? At the retail in Stonefield? Nurses at UVa Hospital? Might also be based on the expectation of more UVA students coming. UVA is planning to grow (largest 1st year class ever arrives today and tomorrow).
I think nearly all the developers will be contributing to the city’s (or county’s) affordable housing fund. None of these are really being marketed as affordable.
I’ve heard that some of the larger developments are leasing quite handily. I’d expect they’re more government, UVA, young professionals, but I really don’t know.
As to the 0-5 buyers – I’d wager 90% of that market is gone and are now looking to rent.
Is the increase in apartments also looking at a segment of the population who is no longer able to purchase due to prior short sale/fc or tightened lending standards? I wonder how many people relocating to the area are unable to buy due to their financial situation….
City Walk has been on the books for years and it seems now the market allows for it to come to fruition. I think the same can be said about the Plaza at West Main. The others, I’m not sure.
I think they’re more of a response to the market segment not wanting to buy, who want to live in a nice place in a good location without the headaches of homeownership, satisfying as they may be. 🙂
So many apartment units being built can be a scary prospect for investment property owners. With so many new units, it is more than likely that older units will have to adjust their rents to stay competitive which will only lower the value of these properties. I wonder if the demand is really there. I guess the only way to know would be to take a look at the vacancy rate.