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smeagolsfree

Can Nashville absorb all of the announced apartments

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William has an article in the cp today concerning all of the new apartments being announced on the core of the city. Thought this would be a good discussion thread and maybe take some bets to see what will be built. We have discussed this at length over coffee on several Saturday mornings. Just wanted to get everyones thoughts.

http://nashvillepost.com/news/2011/11/27/nashville_braces_for_major_influx_of_apartment_buildings

I am in agreement with some of this as the market is now, but who knows what the market will look like in a couple of years when all of this would be on line. The big question is, can Tony G. & Ray H. have two large luxury condos under construction at the same time? That would be about 560 units between the two projects.

I have mixed feelings as both would be in sort of different markets with one being in SoBro and the other in the Gulch. I just don’t know what the market for high end apartments is to make an educated guess. One thing that could happen is that one or both of these projects could be turned into a mix of apartments and condos with the current supply of sellable units in the DT area being taken by mid next year. There are only a few condos left at the Encore with no new units coming on line or planned for DT over the next two years. Which one of these major projects has the best chance to be the winner?

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Here is a list of projects with unit totals

Apartment Construction 2011 and announced for 2012

Elliston 23 331 units

Park 25 200 units

West EndVillage 244 units

Mid town Lofts 60 units

The SoBro 270 units

Ray Henslers Project on Demonbreun 300 units

Bristol Development on Round About 240 units

Germantown Vista 235 units

Eleven North 302 units

Ryman Lofts 60 units

Pine Street Lofts 305 units

Broadstone @ Centennial 235 units

Gatewood Workforce Housing 72 units

Note 16 Apartments 86 units

The Melrose199units

Total 3139 in 15 developments

I know of now at least of two more pending announcements, one of which I have seen the rendering but cannot mention and another pending announcement in the Midtown / West end area.

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Not all these apartments will be built. I know there will be some projects that are not going to get out of the ground. The big question is at what rate will they come on line? There are probably a few we do not know about too.

The ones that are not mentioned here is the 705 Woodland project and the 703 Woodland project, plus the new 98 coming on line at Werthan. There is one smaller project I know will that be announced a little later on and another couple over on OHB. One of those is senior upscale. That is the 144 unit’s expansion of St. Martin Corner. There is another large building that is supposed to go off Zermat Dr. close to Nolensville rd. Those would not affect the core properties, but would impact the overall vacancy rate of the Nashville area.

We know the ones that are under construction will be built. 705 Woodland, Ryman, And Gatewood are all income based housing which will be below market prices.

If the downtown properties are built, I think it will hurt some of the rental in Brentwood and Franklin. Some of those people will want to be in the core for sure.

William seems to think we will only have one of the high rise projects (SoBro and Ray Henslers project) under construction. I am staring to agree with him; however I hope I am wrong.

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I would say Hensler's project is 1000x more likely to happen. It might take longer for these apartments to fill than the developer's would like, and they might make less money than they hoped, but an apartment bubble is a lot easier to overcome than a condo bubble for various reasons. Clearly all of these projects will not come to fruition, but that's perfectly fine and healthy. Nashville is still in its infancy when it comes to city living. Creating a market for something where there was none 5 years ago takes a lot of time.

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I wanted to get this thread out in front because I knew of one that has been postponed of not canceled. The alliance project (Broadestone @ Centennial) on W. Charlotte across form the OneC1ty project has fallen through. This is from William at the Post and is a paid article but I know most of what it would say, but they are not buying the property involved. Too many projects coming online at about the same time is the main factor I would think. I am not really surprised by this because I was surprised by the original location of this project to begin with. It was on the wrong side of the tracks, so to speak. There is going to have to be a lot more development in this area for projects like this to do well. I guess we will have to see what Boyle gets planned for the North Gulch area. That would surely include residential, but I do not expect anything to start here for at least a year and a half to two years at the earliest.

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Without question, Yes! Nashville can and will absorb all of these units coming on line. The demand is there now and will continue to be. With that being said, I think we will see more projects torn down and more workforce section 8 housing like we see on Charlotte with the red and yellow houses. There are also some units like that off Main Street in East Nashville. Those are red and green.

The days of the projects are going away, and we will see 100's of mixed uses apartment buildings spring up for all incomes all over the urban core.

These above listed properties are only the beginning.

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What is the current vacancy rate in the apartments we already have? Seems like Adelicia and some in the gulch have struggled in the past. So I can def see the concern. But maybe having more choices and availability would help push more people to move to the core. I know I am wanting to move there within the next few years because I currently am in the suburbs (Mt. Juliet) and I hate being this far from the city.

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I fear a looming recession will make many of those projects be scrubbed. Hope I'm wrong, but I just read about 10,000 layoffs announced just in the past week across the USA.

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95.8% occupancy. Wow.

And I still feel like we're in severely short supply in the core. All of these coming on line will certainly help. What needs to be done, though, is ensure that we have a diversity of options for those who are looking to rent in an urban environment, from the working class to the moderate, to the upscale. I'm more worried that we try to build too many big money developments like Henslers's and Tony G's. While that area of the market may be under served, it would be the easiest to over build.

Elliston 23, on the other hand....MOAR.

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What is the current vacancy rate in the apartments we already have? Seems like Adelicia and some in the gulch have struggled in the past. So I can def see the concern. But maybe having more choices and availability would help push more people to move to the core. I know I am wanting to move there within the next few years because I currently am in the suburbs (Mt. Juliet) and I hate being this far from the city.

The Adelicia did not struggle at all.

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The misconception that many people have in Nashville is the majority of people do not know which projects are apartments and which are condos and some folks think they are one in the same. If you have not kept up with all the projects I can understand the confusion.

The Adelicia is not an apartment building. This was an upscale Condo project. There were no apartments built in the core to speak of in the last ten years or so with the exception of the Velocity which started construction as condos. The vacancy rate for the condos in the core at this time is very low.

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Here are some multi-family housing statistics for 2012 through October.  As big as our current boom is relative to what we've seen in the past, it really isn't anything special relative to what other cities have going on right now as well, so if we can't absorb these apartments, it would be pretty pitiful.  In terms of the percentage of total permits that were multi-family, Nashville has the lowest percentage of any city on this list except for Phoenix.

 

Name____________________________________Total_____>5 units__# struct__Units/str_% multifam
New York-Northern New Jersey-Long Isl___22100_____14636_____602_______24________66.23%
Dallas-Fort Worth-Arlington,* TX________29183_____13626_____313_______44________46.69%
Houston-Sugar Land-Baytown,* TX_________35810_____11391_____303_______38________31.81%
Los Angeles-Long Beach-Santa Ana,*______14230_____9617______341_______28________67.58%
Austin-Round Rock-San Marcos,* TX_______15982_____8829______371_______24________55.24%
Washington-Arlington-Alexandria,*_______17583_____7955______141_______56________45.24%
Seattle-Tacoma-Bellevue,* WA____________14582_____7248______128_______57________49.71%
Miami-Fort Lauderdale-Pompano Beach,*___10517_____6138______283_______22________58.36%
San Francisco-Oakland-Fremont,* CA______8126______5294______106_______50________65.15%
Denver-Aurora-Broomfield,* CO___________10026_____5092______79________64________50.79%
Raleigh-Cary,* NC_______________________10156_____4698______139_______34________46.26%
Charlotte-Gastonia-Rock Hill,* NC-SC____10253_____4509______138_______33________43.98%
Atlanta-Sandy Springs-Marietta,* GA_____12178_____4258______134_______32________34.96%
Minneapolis-St. Paul-Bloomington,*______8790______4090______52________79________46.53%
Tampa-St. Petersburg-Clearwater,* FL____8348______3360______103_______33________40.25%
Boston-Cambridge-Quincy,* MA-NH_________7089______3282______154_______21________46.30%
San Jose-Sunnyvale-Santa Clara,* CA_____4554______3222______56________58________70.75%
Orlando-Kissimmee-Sanford,* FL__________9277______3179______151_______21________34.27%
San Diego-Carlsbad-San Marcos,* CA______5333______3102______121_______26________58.17%
San Antonio-New Braunfels,* TX__________7368______2828______160_______18________38.38%
Columbus,* OH___________________________5347______2709______141_______19________50.66%
Chicago-Joliet-Naperville,* IL-IN-WI____7636______2527______102_______25________33.09%
Portland-Vancouver-Hillsboro,* OR-WA____6601______2526______116_______22________38.27%
Philadelphia-Camden-Wilmington,*________7470______2503______130_______19________33.51%
Jacksonville,* FL_______________________6104______2267______78________29________37.14%
Nashville-Davidson--Murfreesboro-Fran___6732______2120______70________30________31.49%
Phoenix-Mesa-Glendale,* AZ______________12553_____2031______135_______15________16.18%
Baltimore-Towson,* MD___________________5013______1689______45________38________33.69%
Virginia Beach-Norfolk-Newport News,*___4761______1664______89________19________34.95%
Durham-Chapel Hill,* NC_________________2972______1621______51________32________54.54%

Edited by BnaBreaker

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if we can't absorb these apartments, it would be pretty pitiful. In terms of the percentage of total permits that were multi-family, Nashville has the lowest percentage of any city on this list except for Phoenix.

 

Thanks for this data even though it makes me feel sad for Nashville.

 

Frankly I think a lot of the problem is the local developers (and banks) not understanding the urban market and just being comfortable with single family suburban housing and strip malls on a sea of asphalt. I recall reading something recently where they were talking about the site of 11 North and saying that the local people didn't think anyone would want to live there (!), but out of towners saw it as a prime location (and given the rents and occupancy, not to mention the fact it just sold for $52,000,000.00, the out of towners were right).

 

How much of the current development is driven by large out of town companies with deep pockets who mean business and aren't going to fool around, like the apartments being built at the old car dealership on 8th (Stonehenge, who also built 11 No and Note 16), and the Demonbreun Lofts (Faison).

 

On the other hand the lot next to 5th & Main was bought by locals who said they intend to just hold onto it as a speculative investment, maybe flip it in a couple of years, as though they can't be bothered to build apartments on it now, though such a development would clearly be successful and would help the area.

 

I used to hear that Nashville had a very obtuse and difficult approval process that made it hard for out of town companies to build anything major here without enlisting the help of local firms, and I've read that the Dean administration has greatly streamlined this process. So maybe part of the problem is that local developers haven 't faced competition from some of the companies who are now moving into the market. We'll see in the next few years how our urban landscape is transformed by these interlopers!

Edited by Neigeville

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Interesting chart BNA, except the total number of units announced for Nashville exceeds the number in the chart by over 45%.

 

I don't put a whole lot of stock in those national stats as they really don't reflect the apartments in the core... and they don't reflect momentum. I live in Chattanooga, and we have a lot of apartments u/c in the core (around 1000), but overall we probably don't show up on the radar. I would rather have everything built downtown.

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Interesting chart BNA, except the total number of units announced for Nashville exceeds the number in the chart by over 45%.

 

I don't put a whole lot of stock in those national stats as they really don't reflect the apartments in the core... and they don't reflect momentum. I live in Chattanooga, and we have a lot of apartments u/c in the core (around 1000), but overall we probably don't show up on the radar. I would rather have everything built downtown.

Well, I see your point about the low numbers, but if that is the case then I have to imagine that it is also the case for most, if not all other cities.  Also, you're right that these numbers reflect the stats for an entire metro, and it would definitely be interesting to see numbers for each urban core alone, but still, I figure that it's a fairly good indicator. 

 

Also, just to be clear, I'm not tossing these stats out here to be a negative nancy trying to poo-poo our success or trying to say that we shouldn't be excited about what is taking place in the city right now.  Being 26th in the nation in multifamily growth when we are 36th in metro population is something to applaud.  I'm just saying that as big a boom as we think we're having right now, it is also being experienced on as big, if not larger a scale in many other metros, so we should perhaps pump the breaks a little on the thinking that Nashville is starting to whiz by other cities in terms of urban development. 

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