Apartment construction market could be on upswing
Nashville Business Journal - by Linda Bryant Nashville Business Journal
Sumner County has something that's hard to find - undeveloped land close to Nashville that is already zoned for apartment dwellings.
After several years of lackluster growth in the apartment sector, developers are testing the market for new complexes in the Sumner towns of Hendersonville and Gallatin.
Meanwhile, National Apartment Association and CEL & Associates Inc. have tapped the Nashville area as a growth market, citing its potential to draw new residents and seasonal dwellers over the next 25 years. The signs point to more complexes on the horizon.
The latest Sumner apartment project approved is Southeastern Building Corp.'s Anderson Grove, a 100-unit apartment development in Hendersonville's Maples subdivision.
David Luckey, president of Southeast Building, says he's owned the Anderson Grove land for nine years but only recently decided to go forward with the apartments.
"I wanted to wait until it was a good time in the economic cycle," Luckey says. "The occupancy rates are pretty high and we felt like we could get out ahead of the curve before others come to market."
Construction will start in April and finish in late 2007. The new apartment community will be gated and is designed to appeal to upwardly mobile young professionals.
Since 2000, the Gallatin City Planning Department has approved the construction of 3,525 multifamily residential units - just 931 have been built.
In January, Gallatin's Baker's Crossing, a mixed-use project zoned for up to 400 multifamily units, was approved. The developer of that project, Hendersonville's Halo Properties, is looking at putting apartments in the mix.
Another proposed development, Vastland Development's Waterford Crossing, could bring apartments and townhomes to the Walton Ferry peninsula in Hendersonville. Greensboro Village and Kennesaw Farms, two long-approved phased developments in Gallatin, are planned to include apartments.
"Right now the rents haven't caught up with the building costs, and that creates a situation where it's hard to justify building a lot of apartments," says Kirby Davis, president of First Management Services and president of the Greater Nashville Apartment Association.
David Watkins, chairman of the board for the Washington, D.C-based National Apartment Association, says rents only go up when demand for apartments does.
"Some of what you are seeing is a housing market that was out of control for the past five years," Watkins says. "It's coming to a screeching halt and things are beginning to balance out."
Nashville is well positioned for steady apartment growth because of its strong economy, ability to draw new residents and accessibility to colleges and universities. In addition, it has emerged as a desirable city for businesses to relocate, Watkins says.
Davis agrees, adding that as home and condo sales continue to slow, demand for apartments will rise. He expects most will be built in surrounding counties.
"People would love to build apartments in Green Hills but you can't afford to buy land there," Davis adds. "If a couple of these new (apartment) developments do well, then you'll probably see more."
lbryant@bizjournals.com, 615-846-4258
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