Losing Momentum Due To A Historic Construction Boom
A report from the Colorado Real Estate Journal. “There will be stunning views from Shea Properties’ 28-story apartment building in the middle of downtown Denver, but the most interesting view may be from the street. Passers-by of the high-end apartments on Curtis Street will look up to see people swimming behind a 40-by-9-foot wall of glass at the end of the pool. ‘This is going to be iconic,’ said Peter Culshaw, Shea Properties executive vice president. While Culshaw said there probably are a ‘few too many’ apartments being built downtown right now, he doesn’t believe the market is wildly out of scale, and he thinks there are many millennials who will continue to rent vs. buy.”
From Crain’s Chicago Business in Illinois. “The developers of a 29-story apartment tower in the Fulton Market neighborhood have put the ‘For Sale’ sign up, even before taking the ‘For Rent’ sign down. Chicago-based Shapack Partners and its partners are cashing out quickly, capitalizing on a downtown apartment market that has been on a roll but is losing momentum due to a historic construction boom that’s increasing competition for tenants.”
“Other new luxury apartment buildings in downtown Chicago have sold for more than $500,000 a unit, and a few have fetched more than $600,000 a unit.”
ABC 15 in Arizona. “Developer Michael Lafferty tells ABC15, the draw of downtown caused a boom in apartment construction–with more than 3,500 apartments slated to be built or in the process of being built in downtown Phoenix. The boom of living units is causing rents to fall flat, but developers like Lafferty aren’t worried. ‘People will now be able to afford downtown, and we will fill the 3,500 units,’ he said.”
“Many developers are sealing the deal with huge incentives, making the current market a renter’s dream come true. Lafferty says the most outrageous deal going right now is 3 months free rent. ‘Probably every month for the next six months there will be a better [offer], so if I was a shopper for rent in the downtown market I would wait until summer.’ he suggested.”
The Houston Chronicle in Texas. “Jose Guerra is ready to start his afternoon shift at a fancy wine bar downtown. There’s just one problem: His 1997 Mercury Grand Marquis broke down, and there’s no public transportation from the friend’s house where he’s staying. Rents in and around downtown, which average $1,750 for a one-bedroom, would seriously stretch his income of about $3,500 a month. And, Guerra says, he has it relatively easy: Housekeepers make less than half his earnings and those who find something close put up with crowded and unsafe conditions in boardinghouses. ‘They’re constantly worried about how to pay their rent,’ Guerra says.”
“If current trends continue, it’s the kind of problem that could sneak up on the city, leaving downtown establishments without the workforce they need to stay open. ‘It’s getting tougher for candidates to live in the downtown area on lower salaries,’ says Amber Watts, the Houston Branch manager for the staffing firm Robert Half. ‘I’ve spoken with several candidates that can’t afford a car and housing in the area.’”
The Ocolly in Oklahoma. “Like spring flowers, new apartment complexes are popping up in Stillwater to meet the demand for amenity-flush living from students willing to pay top dollar while challenging local landlords to stay competitive and modernize. Longtime property owners are absorbed in fierce competition, a touchy subject after years of foregoing maintenance and upgrades because of little competition in the neighborhoods near campus. They must now spend thousands on new bathrooms and kitchens or see their units go empty, they said.”
“Even OSU is adjusting housing rates, offering Apple Watches and free parking to returning students and touting its amenities, including the Colvin Recreation Center, trying to fill dormitories. Stillwater is one of many cities across the country that private developers have targeted in recent years for student housing development, adding almost 281,000 beds to college town markets from 2012 through fall 2016, according to Axiometrics. Kelsy McGuire, a sales and marketing specialist at Aspen Heights, which has operated in Stillwater four years as one of the newer complexes farther from campus, said the increase in student housing has had an impact. ‘Each time a (complex) is built they are the new exciting thing,’ McGuire said.”
The Times-Picayune in Louisiana. “A promised crackdown on short-term rentals in the French Quarter could shake up the real estate market in the city’s priciest neighborhood, where an estimated 400 houses and condos were listed on Airbnb last month. ‘You’re going to have a tattle-tale system like none other,’ said Bob Ellis, a French Quarter resident and an attorney representing short-term rental operators in the city. Ellis said he’s never seen so many for-sale and for-lease signs when he walks through his neighborhood, and some landlords and owners are worried.”
“‘There are a ton of people that have vacation rentals here,’ Ellis said. ‘That’s how they offset the cost of owning a home here. It’s going to be extraordinarily hard on people, and I think that’s why you see so many listings right now.’”
“Lisa Shedlock, a French Quarter real estate agent and resident, said since last fall, more properties have become available for sale and for rent in the neighborhood, but that should be attributed to the market correction rather than a reaction to short-term rentals.”
‘The French Quarter rental market has changed,’ said Robert Ripley, another French Quarter real estate agent. ‘Rents are dropping in the French Quarter.’ Rent for a typical two-bedroom with a balcony has gone down from about $2,500 to $1,800, he said. A one-bedroom that used to be rented for $1,500 to $1,750 now fetches only $1,100 to $1,300, he said. “
