Central Ohio Builders Stay Bullish On City's Rental Housing
A new report on Columbus' residential real estate shows builders are bullish on the city's apartment market. Nearly two-thirds of residential building permits during the last quarter of 2013 were issued for apartments or condominiums. So far few signs of an apartment bubble. Downtown is a good place to begin this story. In ten years, 2,800 apartment units have been added downtown. Even iconic buildings such as the former Seneca Hotel at Grant and Broad and the Leveque Tower across from city hall now feature apartments and condos. Jordan Marshall, an apartment broker for the firm Marcus and Millichap in the Arena District, says so far, demand and supply for downtown apartments remains roughly in balance.
"It's starting to slow down because of vacancy," says Marshall. "But, we're not seeing the tell-tale signs where a bubble is about to pop or anything like that, whether it be, you know, skyrocketing rents and then all of sudden they stop and then drop. We're at the point where they're starting to level off. And we are seeing more apartments coming onto the market."
Perhaps the best evidence of continued downtown construction can be found at Town and High streets. Columbus Commons has more than 300 units ready for occupancy. In all, 1,400 additional apartment units are either under construction or planned downtown. Marc Conte of Capital Crossroads, a downtown advocacy organization, is looking for early signs of oversupply. "If we find that there is too many units getting built or coming on line we'll see two different things happen. We'll see rents stabilize and then we may see a couple of these rental projects turn into 'for sale' condominiums," says Conte. While vacancy rates for apartments and condos have crept up to above 5% across the city, Marshall says rents for units downtown and in surrounding urban core neighborhoods, like the Short North, are either stable or in some cases still rising. "Rents have continued to go up. I mean there are some one-bedroom lofts for you know $1,700 per month in that area and that's an astronomical amount to be achieved," says Marshall. But, demand for rental units is not limited to the city's core. New Albany, Dublin, and Hilliard added a combined 1,100 rentals last year and more projects are currently under construction. Marshall says suburban demand for rentals is often fueled by young families. "One of my friends always kind of jokes that they moved out to the suburbs recently because they had a kid and they said whenever somebody moves in next door and says hey I have a kid they are like how old is it? Five? You know, because then they're looking for the school district and that's what those areas provide," says Marshall. Central Ohio's job growth is fueling demand for rental units. And broker Richard Lattro says as long as the area job market outpaces both the state and the U.S. as it does currently, there's just a slight chance of an apartment bubble. "Yeah, I think it's more of just a leveling off rather than a bursting of the bubble," says Lattro. Last year 4,300 apartments opened in Columbus and its suburbs. 2,300 more are expected to be ready for renters this year.