'Renters by choice' fuel apartment building boom
6:00 AM, Feb 5, 2016
6:20 AM, Feb 5, 2016
BLUE ASH – For more than 20 years, Ed McCullough was a happy homeowner with a sprawling backyard and roomy house in Anderson Township.
But in more recent years, as the housing market shifted, 50-year-old McCullough says the trappings of homeownership became far less appealing.
“What if the housing market crashes again?" he said. "You’re stuck.”
This month, McCullough will be among the first wave of tenants to move into the newly built 49 Hundred luxury apartment complex in Blue Ash.
The upscale community, where rents range from $1,150 to $2,200, is among a host of new apartment developments targeting a growing group of “renters by choice,” says Kelly Johnson, vice president of operations at Hills Properties, the developer behind 49 Hundred.
“In the past, many people perceived renters as someone who couldn’t afford to buy a home, but that’s just not the case anymore,” Johnson said. “Every day, we see people who are selling their home, or downsizing and they’re looking for luxury living in an apartment community.”
It’s a trend that’s been playing out nationally since the recession, said Shawn Bond, director of University of Cincinnati’s Real Estate Center. Even though home values have begun to recover, Bond said some former homeowners are still leery of a repeat tank in values.
“They can afford to buy, but they’re choosing not to either because they’re not sure where their job is going to take them, or because it’s a lifestyle choice,” Bond added. “By renting, they have the lifestyle they’re looking for.”
While the higher-end finishes -- such as granite countertops and roomy floor plans -- are a big draw, it’s the luxury of no-strings-attached living that’s most appealing to McCullough, he said.
“I really like the flexibility of renting, because once my daughter is off to college there’s always the chance I could move south – someplace warmer,” he said. “If you buy something, you could be committed for a while.”
Evolving Trends Fueling New Construction
For Blue Ash-based Hills Properties, which owns and manages apartment communities in Ohio, Indiana, Kentucky and Texas, 49 Hundred is the firm’s first foray into higher-end apartment community development.
“We started talking about this four to five years ago when we saw the national trends under way,” said Rusty Lykes, vice president of property management at Hills.
“For years we had done traditional garden-style apartment communities in the suburbs," he said. "But it was time begin asking, 'How are we going to meet the evolving market place?’ So we decided to start in our backyard.”
The community is among a pipeline of more than 3,000 newly developed apartment units expected to come on line by the end of 2017, according to data from the Cincinnati office of CB Richard Ellis.
As demand has climbed, so have average rental rates. Rents across the region have increased between 3.5 percent and 4 percent, climbing from an average of $718 in 2011 to $804 in 2014, according to CBRE.
By all measures, the team at Hills timed the market just right, Lykes said.
Of the 67 apartments opening this month at 49 Hundred, 63 are leased with the expectation that all will be filled by March, Lykes said.
Average incomes from renters at 49 Hundred is around $80,000, he added.
“In the past, you saw a lot of apartment absorption came from renter households, but that’s not what’s happening today,” Lykes said. “We’re seeing (renters) from several areas – those who are downsizing and those who just want the option of more flexibility to travel or relocate when they need to.”
Apartments at 49 Hundred range in size from 750 square feet to 1,450 square feet and include one-bedroom, two-bedrooms and two-bedrooms with a den.
Construction is underway on the community’s next phase: A 185-space underground parking garage and another 125 apartments. That phase is expected to be complete by spring of 2017.
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