November 22, 2013 - It’s a busy time for multifamily housing in the Triad. It’s quickly turning into a time for specialization, as well.
While home sales in the Triad are improving, they are still struggling to recover from lingering effects of the sluggish economy. But demand continues to be strong for apartments for a host of reasons.
Home ownership isn’t exactly the sure bet it once was, compelling many who are on the fence to opt for apartments. At the same time, tighter lending standards continue to hinder many would-be buyers, keeping them in apartments longer. But, increasingly, residents are simply deciding that they like the apartment lifestyle, which can offer luxury amenities and a lack of the maintenance and responsibilities that come with ownership.
The result has been a boom in the multifamily market. During the past two years, about 3,000 units have been absorbed in the Triad, according to research from Charlotte-based multifamily research company Real Data. According to the firm’s most recent market survey in October, the average vacancy rate is now 7.3 percent, the lowest point in a decade and a far cry from the 12.6 percent vacancy rate in March 2010. In fact, Real Data estimates based on demand trends that vacancy could fall as low as 6 percent in 2014.
Standing out from the crowd
Because well over 5,000 units are either under construction or proposed in the Triad during the next two years, developers know they must differentiate their product, mainly by offering amenities and features that appeal to certain groups.
“People want to say, ‘this is my home,’” says Lindsey Auman, director of marketing and human relationships for Greensboro-based Signature Property Group Inc. “We as developers have to speak to that. And if you give people a sense of community, they’re going to stay because they’re being surrounded by people like them.”
Jon Lowder, executive director of the Piedmont Triad Apartment Association, says specificity is key in some of the trends he’s noticed with how developers are differentiating their apartment projects.
“We’re seeing some unique product being built,” Lowder says.
Engle Addington, a multifamily analyst with Real Data who covers North Carolina and Virginia, says developers are deciding what kind of community “feel” to offer residents based on what they have the most experience with.
“It just depends on the niche the developers are most comfortable with,” Addington says. “Some tend to go the upscale route. A lot of student properties are going up because enrollment is up for colleges and universities. There are also developers who focus on affordable housing.”
Greensboro-based Signature Property Group Inc. has two upscale properties with high-end features and amenities — CityView Apartments at Southside and The Gardens at Anthony House, both currently undergoing expansions — serving as two of the Triad’s only age 21 and up communities.
Auman says younger residents are often recent college graduates who have a certain expectation of what their post-grad life should look like. Signature tries to reflect this image by offering premium living arrangements.
“You have a way you want to see yourself when you look in the mirror,” Auman says. “Our residents tend to be the people who aren’t buying homes for a very long time, but they still want to feel at home. They don’t want to move into a white box with white counter tops and no identity.”
In order to meet resident expectations, CityView is now undergoing its third expansion, which will result in an 8,000-square-foot clubhouse in addition to current amenities such as a fitness room, business center, resort style pool and entertainment room. The apartment features offered at the complex include exposed rafter ceilings, granite countertops, black appliances and solid wood cabinetry.
Auman says the options are limitless to make an even bigger impression on residents. Developers of any type of complex should make an effort to make residents feel comfortable about where they’re living.
“People want billiard tables, poker tables, craft rooms — any place where they can go hang out,” she says. “They’re looking for dog parks because a lot of people start their family with a dog. They’re looking for something to be proud of.”
As demand for apartments grows, rental prices are following suit.
The general average rent for an apartment in the Triad is currently $705 a month, up from $689 a year earlier. But the average prices can vary widely, from the mid-$500’s to more than $1,300 a month.
“Rental is definitely growing,” Addington says. “The overall average rent price five years ago was $640 per month, and it’s going up because people are choosing to rent instead of buy. This trend seems to be continuing into the future.”
Developers will continue to set prices based on how well the current market is doing for their particular product, Auman says.
“If you’re the only one offering certain amenities, you can afford to raise prices,” she says. “Then as competition increases, get back in line with competition.”