Future apartments could make market crowded

Developers worry about a glut of apartments

 Developer Clint Ward, attracted to metro Augusta’s growth potential, felt he got a jump-start on the area’s burgeoning apartment market.

When work started this September on his 192-unit apartment community near Grovetown, however, Ward started to ponder about future competition.

“We felt like, at the time when we started, that the apartment market wasn’t that saturated,” said the president of Macon-based Ward Construction. “If it was next year, I may would have second thoughts with those other properties coming up, but I think that right now there’s enough room for all of us.”

A time frame for the second phase of Ward’s project, an additional 150 units, hasn’t been decided, he said.

Ward’s Riverstone Apartments, just off the Interstate-20 interchange across from the Gateway shopping center, is one of several multi-family developments that started or were announced in the surrounding Augusta area this year, leading Ward and others in the industry to wonder if the future supply of rental units will be met by an equally abounding demand.

Lisa McTier, market sales manager for Augusta’s Apartment Guide, predicts the eight apartment communities being built will add another 2,250 units to the local inventory once they’re all finished.

“I think it’s going to have an impact on our properties that we have now,” said McTier, also a member of the Apartment Association of Greater Augusta. “The older communities are going to start seeing a dip in occupancies.”

McTier said the average occupancy level for most of the 120 apartment communities that post local rental listings with Apartment Guide is currently hovering at about 93 percent. In south Augusta, where there are two apartment complexes in the works, the occupancy level is about 90 percent for existing multi-family developments.

Staff at West Eagle Green off Boy Scout Road in Augusta and Ansley at Town Center off Old Evans Road in Evans said their units are more than 90 percent filled. West Eagle Green was built in the 1970s with 165 units, while Ansley at Town Center was constructed in 2009 and has 242 units.

Across the area, McTier said there are another 75 apartment communities in addition to properties accepting housing- choice vouchers that make up the local apartment market, which are not included in the Apartment Guide.

 

THE POSSIBILITY that Augusta’s apartment market could soon be overbuilt was enough for Atlanta-based Quintus Development to nix a 260-unit complex off Riverwatch Parkway.

The company, which has developed about 2,000 apartments in Atlanta, was under contract with Village at Riverwatch developer MGHerring to purchase nearly 26 acres near the Delta call center for construction of 12 two-story and three-story apartment buildings. The project, expected to start by early 2014, was ultimately called off in May, said Quintus Development President Kelly Keappler.

“You have two new projects coming out of the ground right now,” said Keappler, referencing the Gateway development and a new apartment community near CarMax. “They were out ahead of us. We were looking at absorption and new jobs coming into that market and the economics of bringing a third 200-plus units into the market. We were afraid that it would be too much.”

After Keappler made his development public in April, a handful of other apartment complexes were announced, including 350 units at Lullwater at Riverwood Plantation, 252 units off Alexander Drive and 240 to 330 units off Walton Way Extension near I-20.

Blanchard and Calhoun Commercial is developing part of the mixed-use property off Walton Way Extension as an upscale apartment community called Grand Oaks at Crane Creek. The real estate firm’s president, Mark Senn, said they feel confident the site’s accessibility and proximity to shopping and local employers give them a competitive advantage.

“We always have independent consultants evaluate each market before we build,” he said. “They look at the market demand and potential projects in the pipeline and then give us a realistic projection of what we should expect.”

 

THE BOOMING apartment industry in the metro area seems to be following a national trend.

In October, multi-family housing permits increased nationwide by 15.3 percent to 414,000 and were up 22.5 percent from last October, according to statistics released in November by the U.S. Census Bureau and Department of Housing and Urban Development.

A comparison of permits issued so far this year to those in 2012 shows a 16.8-percent surge on the multi-family side.

In Augusta-Richmond County, there have been a dozen multi-family building permits pulled this year, with seven authorized in November alone, according to figures compiled by the city’s planning and development department. Multi-family permits issued in 2012 and 2011 were 17 and 2, respectively.

Augusta Planning and Development Director Melanie Wilson said she sees a continual need for apartments. The city’s shifting demographics, she said, have resulted in a growing population of students and older citizens who want to remain local.

“Their housing needs are very similar in that a lot of times they want an apartment,” she said. “Just as many people that want home ownership also want to have the flexibility of being able to rent and rent in a nice place.”

Wilson said the key to cultivating a positive apartment environment is to develop units that are “market-rate.”

 

MCTIER, WHO HAS worked locally with Apartment Guide for 20 years, said the last time the area saw such a big spurt in new apartment construction was in the mid-1990s. Then, it took nearly two years for the market to level out, she said.

“It may take a little bit longer (now) with as many new units as we have coming,” she said.

McTier said that the new apartments could also affect the local housing rental market as a whole, particularly in Columbia County where there is already a large base of home rentals.

Though the timing might not be right now for Keappler’s Riverwatch Parkway project, he said all it would likely take to draw the group back to Augusta is an announcement of a major job creation or news surrounding the medical community or Fort Gordon.

What initially attracted him to the River Shoals Parkway property was its accessibility to downtown, Georgia Regents University, hospitals and the scenic Augusta Canal.

The project, however, was slated to cost about $22 million and that was too much to gamble on, he said.

“I’d love to do business there, but it’s just getting the economics right,” Keappler said. “It all comes down to numbers, and it’s a business decision. When you make those, you want to make sure you don’t make a bad one for yourself and for the town too.”

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