The economic downturn that has hit the housing market so hard is actually aiding the area’s apartment market.
Apartment complexes are going up throughout the tri-county and a major reason is the financial crisis that has both made people less inclined to invest in homes and has dropped construction prices because fewer new homes are being built.
The economic downturn has created economic opportunities for apartment developers, those opportunities made it the perfect time to build high-end apartment complex.
The largest recent development of this kind are doing well, it looks like that kind of apartment is going good right now.
“That kind of apartment” is an apartment for people who could easily afford homes.
Garrett said his 11-year-old firm develops high-end multi-family units across the country and its research showed a big shortage of such units in Mont?gomery.
“This industry is supply and demand,” he said. “We found there is a very high demand for multifamily housing in Montgomery.”
Part of that demand was created by the housing crisis. Garrett pointed out that most of the tenants who can afford to rent at a place such as Watermark EastChase can qualify to purchase a home.
Right now, they just don’t want to.
Garrett said a typical renter would be the kind of person or family that would buy an entry-level or step-up home to hold for a few years, then sell for a profit. With homes not gaining value as they did before the housing crash, many of those people are electing to rent rather than spend money on a home that might lose value.
“No doubt about it,” Garrett said. “Nationally, we are seeing that in all our properties.
“There is a lot of uncertainty in the market. They are renters by choice, not because they have to.”
It is a trend that makes sense to Kyser, a developer whose residential and commercial properties include some rental units. His units are more in the middle of the market rather than at the high end, but he said it appears more people are renting by choice.
“I would think that is going to be a lot of it,” he said.
While the housing crisis created the demand for the apartments, the banking crisis largely opened the door for Watermark to build in Montgomery.
Kyser said one of the rea?sons for the lack of commercial construction is difficulty in getting bank funding for any tenant-occupied property.
“I don’t know of anybody in Montgomery who could go to a bank and finance that project today,” he said of the Watermark.
That, Garrett said, gave his company an advantage. Watermark’s investors are able to generate enough capital to fund the project without asking commercial banks to carry the full bur?den.
The simple fact that any company is willing and able to commit to a deal gives that company an advantage. There are few, if any, competing offers on the property or contractors.
“We were able to use our equity to fund that project when others could not,” Garrett said.
Both Kyser and Garrett said the Watermark’s location will be among its biggest selling points. It is within sight of huge retail developments at EastChase, has easy access to Interstate 85 and is in popular east Montgomery.
The developers are adding upgrades associated with owner-occupied housing or rental units in larger cities.
Watermark is meeting the company’s expectations so far, Garrett said.
Rentals will begin Jan. 1, although the complex won’t be complete for another six months after that date, and Garrett said the complex already had 128 candidates for the units.
“We have only had our rental office open three weeks,” he said.