Apartment Market Poised for Building Surge
Tuesday, August 20th, 2013
By: Steve Goldman, CCIM
Image courtesy of Amberleigh Bluff
By Sarah Powell; Knoxville-Knox County MPC News
A recent uptick in residential subdivisions and homebuilding permits shows local housing market recovery slowly gaining momentum. One segment of the market, though, is poised for a building boom: apartments.
Since the mortgage crisis of 2008 and subsequent economic recession, all residential property segments reported a downturn in new supply, including apartments. Housing starts locally and across the nation ground to a near standstill, with new investment kept at bay through 2010.
In the years preceding the recession, Knox County added 620 apartment units annually. Post-recession recovery has averaged 504 apartment building permits each year. Activity in the last three years includes Wellesley Park at Deane Hill in west Knoxville, Amberleigh Bluff southwest, and The Landings in the center city.
The bigger story, though, is not is what was built during the downturn, but what could be built—and where it might be built—during the recovery. If all apartment projects currently on the drawing board make it to construction, Knoxville will see an increase of more than 2,000 units in the next two years. Among those slated for construction are The Standard at Knoxville on the former Neels Produce site in Fort Sanders, a yet-to-be-named development in the former White Lily Food Company building downtown, the Medical Arts Building, also downtown, and Greystone Vista and The Preserve at Hardin Valley in the Pellissippi Parkway area.
More than 800 new apartment units are proposed in two projects in south Knoxville: The Bridges at Riverside on the former Baptist Hospital site and the South Knoxville Waterfront apartments near the Island Home neighborhood. Historically, south city accounts for only a small share of investment, about four percent on average.
The potential surge in Knoxville’s apartment inventory is driven by growing demand for housing choices that go beyond single-dwelling homes on large suburban lots. Baby Boomers are reaching their empty-nest years and looking to downsize. As Jeff Welch, director of the Knoxville Regional Transportation Planning Organization, said, “With our four children grown and out of our five-bedroom home, my wife and I are looking forward to downsizing to a smaller living space in the next two years. The change will free up time and other resources to do more of the things we enjoy.”
Boomers are joined in the housing market by young Millennials who are coming of age with differing views on housing. They prefer a mix of options within walking distance to shops, offices, and transit, according to a survey by the Urban Land Institute’s Terwilliger Center for Housing.
As proposed, the developments at the former Baptist Hospital site and in dowtown’s Medical Arts Building and White Lily property will fit those needs. Sara Martin, a member of the Millennial generation, summed it up, “Downtown living is great. My morning commute is a leisurely walk or, if it’s raining, a quick bus ride. I can run errands on my lunch break and meet friends at the pub after work. I feel like I have everything I need in just a few city blocks!”
Posted 08-07-2013. Written by Sarah Powell.
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