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Rental
housing, that old housing standby of recent college grads
and young professionals, is making a comeback with Middle
Tennessee developers, in the latest sign of Nashville's shifting
real estate market.
Three local developers, including two with histories as condo
builders, are pitching four apartment projects this fall in
fast-growing neighborhoods near the city center. With swimming
pools, fitness centers and rents on the high end for Nashville's
market, these buildings are aimed squarely at the downtown
professionals who have been a prime target of the city's high-rises.
The apartments could serve as the leading edge of a budding
trend in local development, especially as condo loans tighten
up for developers and potential buyers alike.
"Developers tend to be very practical," said Kirby
Davis, the president of First Management Services, a Nashville
apartment firm. "They build what they can, not what they
can dream about."
The projects are planned for three neighborhoods that have
been hot with condo development in recent years: Germantown,
East Nashville and Midtown.
They also come amid a general boom in rental housing. As of
this summer, 17 apartment projects were under construction
in Middle Tennessee, only three of them government-subsidized.
These projects include the 410-unit Wellington Farms project
in Hendersonville, the 504-unit Westbury Farms complex in
Murfreesboro and the 438-unit Franklin Crest development in
Franklin.
All together, more than 4,000 non-subsidized units are being
built, as developers attempt to capitalize on an expected
surge of demand as foreclosures, tighter mortgage rules and
a slower economy combine to dampen home sales.
But, rental growth has been modest. The average rent for a
Nashville apartment has edged up about 2 percent to 4 percent
over the past two years, according to the Greater Nashville
Apartment Association. Rents are not expected to rise sharply
again until job growth and wages pick up.
"What we're seeing is more growth in occupancy than growth
in rents," said Bill Freeman, a principal at the Nashville
apartment firm Freeman Webb.
Upscale draws planned. The developers of Nashville's latest
urban apartments hope to work around the slowing economy by
building projects that are as upscale as those found in suburbs
such as Cool Springs and Brentwood, but in locations that
are viewed as more desirable by young professionals.
The two biggest projects will have swimming pools, and at
least three will have fitness centers.Plans also call for
private parking, street-level retail and, in the case of one
building, a Zen courtyard with an outdoor fireplace.
Rents in the cheapest of the group, the 800 Main project in
East Nashville, are projected to start at about $850 for a
577-square-foot flat. That's about $100 more than the price
of an average Nashville apartment, regardless of size.
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"We don't feel like that's an outrageous amount for
rent," said Adam Leibowitz, the head of 800 Main's
developer, Double A Development. "We feel like there's
demand in East Nashville for this type of product."
Developers believe demand for housing in the city is growing,
as gas prices remain above $3.50 per gallon and the population
of people under 30 years of age increases. Developers
have tried to place their projects near downtown workplaces
and commercial districts.
A project called 1700 Midtown, which is already under
construction, will stand two blocks from the main entrance
to Baptist Hospital. A pair planned in Germantown, called
Vista Germantown and 4th & Jefferson, are to be built
across the Bicentennial Capitol Mall from the State Capitol.
In East Nashville, 800 Main will be built two blocks from
the Five Points intersection.
Unmet Need Downtown
The closest kin to these projects are the few apartment
buildings that have opened downtown since the mid-1990s,
a group that includes the Stahlman on Union Street and
the Cumberland on Church Street. In Germantown, Midtown
and East Nashville, apartment construction has been rare
since the 1960s. Recently, these areas have been focal
points for condominium development.
Over the past two years, the attention of developers in
these areas has shifted toward apartment construction.
The change stems in part from a realization that condo
deals are tougher to finance and in part from a belief
that there is unmet demand for rental housing.
"Clearly I would say it's somewhere next to impossible
to finance a condominium today just because of the uncertainty
in the market," said Charles Carlisle, the chief
executive of Bristol Development, which is building 1700
Midtown and Vista Germantown. "But it's not just
because of that."
But even these apartment deals face challenges. Bristol
has already started construction on 1700 Midtown, but
it has not yet finalized financing for Vista Germantown.
Double A also is trying to tie down financing, as is Core
Development, which is planning the 4th & Jefferson
project. In the meantime, developers are trying to get
their projects through the planning and zoning process
as fast as possible.
The two Germantown projects have already cleared the Metro
Historic Zoning Commission. Double A, meanwhile, has sent
its project to the Planning Commission.
"Our goal is to get the site work done by the spring,"
Leibowitz said. "We're interested in getting our
project started before everyone else."
Chas Sisk can be reached at 615-259-8283
or csisk@tennessean.com.
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