A building blitz in the Columbus-Phenix City apartment market, combined with expected softening of occupancy levels, looks to put pressure on the sector in the coming 18 months, developers say.
Will White, a managing partner with Greystone Properties, a leading apartment development company in Columbus, said there are 12,000 to 13,000 luxury-style units locally with which he competes.
Greystone is now constructing its 15th complex in the market on Riverchase Drive in Phenix City, a 224-unit development that will push the firm's total number of units to nearly 2,500. A portion of the Riverchase complex should open by September, said Greystone district manager Mary Thompson.
"It will span over a year before we get all 224 units open. So they'll come in a couple of buildings at a time," said Thompson, noting there is a waiting list on the development, which will include six non-smoking buildings.
"Cigarette smoke is just a big deal for everyone right now," she said. "And it costs so much to remedy a unit when there's smoke damage in there, especially if the next person coming in doesn't smoke. It can discolor cabinets and walls. And you may have to replace carpet, pad, tack strip. Even then you can't always get it all out."
White, however, pointed to other projects either coming out of the ground or in the planning stages that will add more units and likely nudge occupancy rates lower.
Those include the 263-unit Lakeside Village off U.S. Highway 80 in northeast Columbus, as well as Allen Development Group's Summit Pointe project, with as many as 240 units, off Williams Road.
Lakeside Village development firm, Columbus-based Woodruff Co., also is working on a 280-acre mixed-use development near the intersection of Veterans Parkway and Williams Road. Called "Old Town," it will include 185 apartment units, said Lucy Jones, chief executive officer of Woodruff Property Management Co. Pre-leasing of the Old Town apartments starts this fall, with units expected to be ready next February.
And the possibility of even more apartments off Riverchase Drive has been discussed in real estate circles.
"You put all of that together, and my projection before this occurs is that in about 12 to 18 months, the occupancy rate is going to be about 89 percent," White said. "Currently, it's probably around 93 or 94 percent for A-B type properties. If this happens, it's going to be remarkably difficult."
Jake Flournoy, vice president of Columbus-based Flournoy Development Co., which builds and manages apartment properties in several Southeastern states, agreed that now may be a time for the multifamily sector to take a breather.
"I would imagine that everybody's probably going to make sure that the supply currently out there is able to be absorbed at the rents that they want to achieve before new supply is added to the market," he said.
Flournoy, White and others did receive a welcome shot of optimism a couple of weeks ago when the U.S. Department of the Army issued a list of installations losing combat brigades as part of budget downsizing. Fort Benning's 3,850-soldier 3rd Heavy Brigade Combat Team wasn't targeted for deactivation or relocation.
"We certainly felt like if we had lost the 3rd Brigade that there would be a reason for concern with the apartment market," Flournoy said. "Given the fact that we've kept the brigade, I'm hopeful that's a statement that the Pentagon feels Fort Benning will be a priority for them -- if there is a future realignment, which we know that there will be at some point."
Allen Development Group president Bud Allen also said that the overall Columbus-area apartment market may be nearing saturation. He also believes newer properties are starting to draw renters from older units.
"We expect to pull from other apartment complexes," he said. "Our market is much the same. But the amenities we are offering -- not having to share walls or live on top or underneath somebody -- is not an amenity everybody else will have."
Allen was referring to his Summit Pointe complex being constructed off Williams Road, not far from the Old Town development that has just gotten under way.
Summit Pointe already has 24 traditional apartment units leased, with work now beginning on another 40 units that will be villas, some of which should be ready in about three months.
"These will not be true apartments," Allen said. "They will be detached and no shared walls. Some will be single story and some will be two story, but they'll all have two-car garages."
Summit Pointe will eventually total between 200 and 240 units at full buildout, said Allen, who plans to build as demand dictates.
"I think that our absorption rate ought to be pretty good," he said. "We're hoping to complete something in the neighborhood of eight or 10 per month."