Favorable conditions in the rental housing market and a shift in how apartments are perceived have led real estate developers to Johnson City.
Hundreds of units in mid- to large-scale complexes will come online in the next couple of years, but developers believe demand will remain high and market saturation will be avoided.
“I can’t speak for other developers, but we like the dynamics of the market,” TDK Construction’s Vice President of Development Ross Bradley said last week. “Johnson City is leading the pack in the Tri-Cities economically, and we like the medical facilities nearby. We feel like that’s a natural stabilizer for the economy.”
Next month, Murfreesboro-based TDK expects to begin leasing the first apartments in The Reserve, a 248-unit complex at the corner of West Oakland Avenue and West Mountainview Road.
The project has cost the company $25 million to build, but Ross said he expects the apartments to fill quickly with new families upgrading their residences and retirees looking to downsize.
“Once they become available, I think we’ll probably see 20 to 25 units a week being rented,” Bradley said. “I think that would be a very strong leasing schedule for us.”
A few miles farther north, off the Boones Creek Exit of Interstate 26, local developers Mitch Cox and Shane Abraham plan to complete the first phase of their own 253-unit townhome development later this spring.
The builders forecast the new neighborhood, built in one of the most affluent areas of the Tri-Cities and in an area projected for rapid retail expansion in the coming years, will be positioned to take advantage of the expected investment and will likely be joined by more residential complexes soon.
National and local trends show the developers’ investments in high-density housing are far from risky ventures.
For more than a decade, national statistics show homeownership is declining among nearly all age groups, and multi-unit dwelling is on the rise.
Since 2009, near the end of the recession and its accompanying housing market crash, U.S. Census Bureau data show permits approved for units of housing in buildings with five or more total units more than doubled in Tennessee, while those for detached single-family homes grew at a more modest rate of 34 percent.
In Washington County, which was relatively insulated from the effects of the recession, the percentage of occupied housing units has risen since 2006, according to Census data.
Over that same period, the split between units occupied by owners and renters has shrunk by 6 percent.
Apartment vacancies have also been shrinking, both nationally and locally, while rents have risen slightly.
A report released in October by real estate research firm Reis Inc. pegged the national apartment vacancy rate at 4.2, its lowest since 2001.
Local statistics show Washington County’s rental vacancy rate at 7.8 in 2012, a drop from 2008’s peak at 9.2.
While rising mortgage rates push people toward apartments, Bradley and other developers believe an aging population will bring more retirees into the rental market.
Between the 2000 and 2010 censuses, Washington County’s 65-and-older population increased more than 25 percent, compared to the 14 percent growth in the 18 to 64 age group.
“I thought younger couples would be our primary base, but we’re seeing quite the opposite,” he said. “Of course, we’re seeing some of those, but we’re also seeing a lot of folks wanting to downsize. They’re looking for hassle-free living, where they don’t have to mow the yard or paint the house, and that’s what we offer them.”