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Creasy336

Highrise apartment in Charlotte. Is it feasible?

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Why aren't highrise apartments considered more often? I can envision highrise apartments around 25 stories and mixed use street level retail/ (affordable) condos along North Tryon just outside of I-277 crossing across to the NoDa area. Highrise apartments would add high density, a greater need for street level retail, and diversity. If Highrise apartments were built around the neighborhoods adjacent to uptown or even uptown that would add alot more density to the skyline. Alot of people young and old are interested in highrise living. Apartments would add another option. I know that highrises have high construction cost. Maybe developers prefer the larger sums of money gained from highrise condominiums (Down payments and mortgages) to monthly rent. Are their any thoughts on this. I used North Tryon as an example because of its proximity to uptown and the future Northeast LRT line but it could be applied to a number of places throughout charlotte.

can someone fix my title please? I meant apartments^

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I have wondered that, too. It is certainly just a function of math, construction costs compared to market rents. I had thought that when Fifth and Poplar converted to condos, that it would leave a large space in the market place for a new apartment tower or at least large midrise apartments.

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Rents have to be able to cover the costs. Thus, rents would be pretty high. It is possible, but not probable. If a developer can get a proforma to work and get a decent cap rate, then you'll see apartment deveopment. Atlrvr can give us more detail on this.

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Without a doubt, there is a shortage of apartment space in uptown Charlotte. I wouldn't be surprise if a (semi)high-rise apartment complex is announced shortly. The demand is there.

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Yeah. I think there will be a highrise apartment uptown, but it will not be in the CBD. One should replace that hideous mill looking thing near 277 in 3rd ward.

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That is Charlotte Pipe and Foundry. They're still in business, so it'd be tough to put apartments there. But I know what you are saying, though, it is definitely ugly.

I think the opposite, that the only way we'll get apartments is by way of corporate apartments that get some kind of deal with BofA or Wach. Then they'd be in the CBD.

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What I don't understand is where all the Johnson & Wales students are going to live. They're still adding another two classes, basically doubling the size of the school. Their three existing dormitories already are full. And the supply of rental housing in Uptown is headed down -- particularly if Citadin actually gets built.

Is the University planning additional dormitories?

I also don't understand -- and I'm sure it's just basic ignorance -- why a developer can't undercut the existing apartment market. I hear this figure quoted about the need to charge a premium above existing rents. Why? Wouldn't that apply only if you're trying to compete for the same customers?

Build a cheap tower with cheap materials and charge cheap rents. It seems like there's plenty of expensive apartments, but just as you can build condos to different price points based on materials and amenities, surely you could build cheap apartments. They certainly managed it at Edwin Towers. I'm not suggesting they build another one of those, but not everyone wants or needs (or can afford) the best and finest.

At any rate, I think this question of why no one is building apartments is interesting and long overdue. I've heard the economic explanations, but somehow they just don't seem like explanation enough.

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Most residential construction in Charlotte is driven by short term gains. If a developer throws up a building, they get all their money and profit back as soon as the units are sold and they can walk away from the building. In the case if high rise towers, people are much willing to share in the high cost of building a condo tower because they feel they will get their money back and there is a mortgage tax deduction which makes it possible for them to afford it.

Compare this to an apartment building were there is no tax deduction for the residents and people don't get any kind of equity build up. They simply won't pay the same rent as they would for a condo even though the costs are practically the same to build the units. Since there is no profit for a developer, that is why highrise apts don't get built. (I though the epicenter was supposed to have apts however)

If the Bush Administration manages to eliminate the mortgage tax deductions, as they have hinted at doing, you may see this situation change.

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Sure its feasible to build high-rise apartments, but they're not going to be cheap. To do high-rise with bare bones as suggested above, the average rent is $1.65 per square foot per month. This would include carpet throughout 8.5' ceilings, particle board cabinents, formica countertops, etc.....that would translate into $1,075 a month for a 650 square foot apartment.

With the tax benefits to buying as Metro.M has mentioned, your after tax monthly cost at a place like Avenue is only $1.80 per month per square foot. There is no way to compete in apartments. We are likely to see some luxury high-rise within the next 10 years, but that will be aimed at people looking for temporary housing needs (while their condo is under construction or temporary assignment in Charlotte), and these people aren't going to settle for suburban apartment quality finishes.

The cheapest an uptown low-rise apartment could be built for right now is $1.40 per square foot if it is 5 stories, wood-framed, and in a less-desireable location (behind a baseball stadium or other side of Morehead, or in 2nd Ward if the city or county is willing to sell land at a below market value). This would still be comparable rent-wise to places like Uptown Place and Gateway Place.

The only hope for cheaper apartments uptown is to get VERY cheap land from the city or county or for building materials to come down greatly. Otherwise, every new community will be higher than the current top-of-the-range.

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I think it would serve well for a luxury apartment building to spring up in uptown. There are plenty of people coming here short term to set businesses up that live in the hotels basically. It would serve a market of professionals who don't really have interest in being here longer than a year, but want to live in luxury. (I.E.: my boss living at the Westin right now) Plus, there are many others that I think would be interested as well. I would like to see a tower that has a condo/hotel/apartment mix... then you could really stay there as long as you would like ;)

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I know there would be high cost with a highrise apartment, but could there be any situations with affordable rent? I think there is a void in that market. Some of the high rise apartments could be on the higher end, but some could be very affordable. Having a mix would be great. Many people would love to live in a high rise but can't afford the cost of a condo. Also some people locate to charlotte for tempary periods of about 9 months to a year. Highrise apartments seem to me to be the easiest way to add density in Charlotte. As I said in an earlier post, the areas immediate to the high density of a highrise apartment building would benefit. Any area around a highrise apartment or apartments would easily support street level retail and services. Light rail station areas especially on the northeast line (maybe around 36th street) would greatly benefit. There are more benefits that I know I left out.

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I know there would be high cost with a highrise apartment, but could there be any situations with affordable rent? I think there is a void in that market. Some of the high rise apartments could be on the higher end, but some could be very affordable. Having a mix would be great. Many people would love to live in a high rise but can't afford the cost of a condo. Also some people locate to charlotte for tempary periods of about 9 months to a year. Highrise apartments seem to me to be the easiest way to add density in Charlotte. As I said in an earlier post, the areas immediate to the high density of a highrise apartment building would benefit. Any area around a highrise apartment or apartments would easily support street level retail and services. Light rail station areas especially on the northeast line (maybe around 36th street) would greatly benefit. There are more benefits that I know I left out.

a little off topic but.. I also left out any highrise apartment infill between the existing skyscrapers and any new skyscraper would do wonders for the skyline and street level activity. If a developer came to Charlotte and thought out the box by putting a skyscraper in a wierd place like adjacent to I-77 near the Trade Street interchange (similar to the empire state building in midtown manhattan when it was first built) the infill of highrise apartments/offices would add a new dynamic to charlotte skyline.

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In what way could there be affordable rent? Government subsidized? A developer could receive tax credits if they offer 20% of the units in the tower to people making less than 60% of the Area Median Income (AMI). This means 20% of the 2 bedroom units would need to be less than $800/month to qualify. Trust me, the tax credits they recieve aren't making up the difference, because this is more than a 50% discount over market price.

Perhaps the bigger question is, why would a developer build lower priced units, when there is so much demand right now? Uptown vacancy on the newer communities is less than 2%, which means there is way more demand than supply. I can't believe any developer would minimize profits out of some altrustic belief.....besides, the major apartment developers in Uptown are REIT's which as corporations have legal obligations to maximize shareholder value, not provide options for the middle-class.

Lastly, many apartment communities are now going to a new rent-generating software called Yeildstar, which prices units based on demand, very similar to the software used by airlines and hotels. First indications are that apartment prices in Uptown and other desireable locales will be rising dramatically in the next couple of months.

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In what way could there be affordable rent? Government subsidized? A developer could receive tax credits if they offer 20% of the units in the tower to people making less than 60% of the Area Median Income (AMI). This means 20% of the 2 bedroom units would need to be less than $800/month to qualify. Trust me, the tax credits they recieve aren't making up the difference, because this is more than a 50% discount over market price.

Perhaps the bigger question is, why would a developer build lower priced units, when there is so much demand right now? Uptown vacancy on the newer communities is less than 2%, which means there is way more demand than supply. I can't believe any developer would minimize profits out of some altrustic belief.....besides, the major apartment developers in Uptown are REIT's which as corporations have legal obligations to maximize shareholder value, not provide options for the middle-class.

Lastly, many apartment communities are now going to a new rent-generating software called Yeildstar, which prices units based on demand, very similar to the software used by airlines and hotels. First indications are that apartment prices in Uptown and other desireable locales will be rising dramatically in the next couple of months.

you're right atlvr about uptown and the increasing price of rent. Developers want to get in the market and get as much profit as possible.

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Rental demand would improve if people could establish "future home buying" accounts kind of like 401ks. Allow renters to deduct some of their desposits into such an account... it would be kind of like having the mortgage interest deduction a few years early.

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MZT - One community I know of does this. Links at Citiside retains something like 20% of the rent over the life of the lease that the renter can then use as a downpayment with many of the nations larger homebuilders.....I think M/I, Ryan, KB and a few others.

There is a more urban project in the works where the developer may do something similar, but not to 20%.

It is an interesting concept though, especially if the apartment community gets to keep the interest earned....it could be a win-win, though of course it would result in higher rents.

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What I don't understand is where all the Johnson & Wales students are going to live. They're still adding another two classes, basically doubling the size of the school. Their three existing dormitories already are full. And the supply of rental housing in Uptown is headed down -- particularly if Citadin actually gets built.

Is the University planning additional dormitories?

I also don't understand -- and I'm sure it's just basic ignorance -- why a developer can't undercut the existing apartment market. I hear this figure quoted about the need to charge a premium above existing rents. Why? Wouldn't that apply only if you're trying to compete for the same customers?

Build a cheap tower with cheap materials and charge cheap rents. It seems like there's plenty of expensive apartments, but just as you can build condos to different price points based on materials and amenities, surely you could build cheap apartments. They certainly managed it at Edwin Towers. I'm not suggesting they build another one of those, but not everyone wants or needs (or can afford) the best and finest.

At any rate, I think this question of why no one is building apartments is interesting and long overdue. I've heard the economic explanations, but somehow they just don't seem like explanation enough.

My friend -- a J&W student -- was able to live on campus her freshman year but after that she couldn't live on campus anymore... and of course she couldn't find any affordable apartments in the area so right now she lives in an apartment complex off of Woodlawn Road... 5 miles away.

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MZT - One community I know of does this. Links at Citiside retains something like 20% of the rent over the life of the lease that the renter can then use as a downpayment with many of the nations larger homebuilders.....I think M/I, Ryan, KB and a few others.

There is a more urban project in the works where the developer may do something similar, but not to 20%.

It is an interesting concept though, especially if the apartment community gets to keep the interest earned....it could be a win-win, though of course it would result in higher rents.

I guess if it works, that's cool. But, I find it frightening that people have to rely on gimicks to force themselves to save money. Why not just save X amount a month and pay a lower rent? I guess in the U.S. where we have a negative savings rate, we should take anything that works.

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My friend -- a J&W student -- was able to live on campus her freshman year but after that she couldn't live on campus anymore... and of course she couldn't find any affordable apartments in the area so right now she lives in an apartment complex off of Woodlawn Road... 5 miles away.

I'd be interested to hear more about this. Maybe it deserves a separate topic. Anyone know anything about Johnson & Wales' plans for housing its students? It just doesn't seem like there's room for them in Uptown.

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If the city wanted to really do something about this, they can use their newly granted powers of eminent doman and simply sieze a lot of low density housing near the center city, then turn around and sell it to developers willing to build higher density apartment buildings and even condos. I can see them siezing land down S. Tryon, on W. Morehead, up N. Tryon and a bunch of other places to build midrise Apt and Condo buildings.

While it hasn't come to this in CLT yet, other cities have started doing this. It's actually very profitable for everyone concerned except the original property owner who only gets "just compensation" for their land. Expect that trend to show up here as I am sure there are developers who are putting pressure on council members to consider this.

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Lastly, many apartment communities are now going to a new rent-generating software called Yeildstar, which prices units based on demand, very similar to the software used by airlines and hotels. First indications are that apartment prices in Uptown and other desireable locales will be rising dramatically in the next couple of months.

I wonder how that will affect the property values in desirable locations where condos and apartments are in close proximity? My guess is that if apartment rents rise, it would cause the market value of the condos to go up faster as well.

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If the city wanted to really do something about this, they can use their newly granted powers of eminent doman and simply sieze a lot of low density housing near the center city, then turn around and sell it to developers willing to build higher density apartment buildings and even condos. I can see them siezing land down S. Tryon, on W. Morehead, up N. Tryon and a bunch of other places to build midrise Apt and Condo buildings.

While it hasn't come to this in CLT yet, other cities have started doing this. It's actually very profitable for everyone concerned except the original property owner who only gets "just compensation" for their land. Expect that trend to show up here as I am sure there are developers who are putting pressure on council members to consider this.

I believe NC prohibits this use in our constitution.....though the city IS trying to figure out a way to take Hunter Wrecker (on N. Davidson) and flip it to a developer.

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