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2012 has proven to be a pivotal year for apartment development in Columbus. Approximately 3,000 new rental units in two dozen new developments have either been announced recently or are already under construction, primarily located in the central part of the city.
And nearly 400 of those new residents will soon call Neighborhood Launch home, as the Gay Street residential community begins construction on the first of three new buildings within the next few weeks.
“I think by the end of the July we should be on site and digging,” said Jeff Edwards, President of Edwards Companies. “We’ll start with the apartment building to the east first, which should take roughly 11 to 12 months to complete.”
The first apartment building will face Long Street between Sixth Street and Normandy Street. Edwards anticipates that the second apartment building, located on Long between Normandy and Fifth, would start within 60-90 days of the finish of the first building.
A new five-story condo building to be located at the corner of Sixth Street and Gay Street could also soon begin construction.
“We want to start construction on that before the end of year,” said Edwards. “We’ve had a capacity issue due to a lot of things being log jammed with the economy and within the real estate business.”
The new condo building is slightly larger than originally announced, adding eight more units for a total of 33. The units are primarily one bedroom, as those have been selling the best for the previous phases of Neighborhood Launch.
“We have two more condos close to contract at Bishops Walk, which would leave us with only six remaining units there,” said Edwards. “And we’ve already had at least 15 reservations made for the new five-story condo building.”
After the new condo building is completed, the next phase of Neighborhood Launch would be the development of a second Bishop’s Walk building that would mirror the first and extend down Gay Street. Once fully completed, Neighborhood Launch will house approximately 700 Downtown residents.
“The will end up being a pretty active area,” said Edwards. “The apartments we’re building are denser, and we’ll also soon see the opening of The Grass Skirt tiki bar and the Hills Market Downtown grocery store, as well as the new long term plans that CCAD announced.”
More information can be found online at www.NeighborhoodLaunch.com.
I think it will be interesting to see what this apartment developement and the many others being built will do to the market for condos. Currently sales are very slow and even this article mentions that the less expensive one bedrooms are the most popular units at neighborhood launch. Maybe over the next two years, with condos currently on the market gradually being purchased the supply of affordable condos less than $225,000 will start to shrink.
Less supply of condos on the market combined with these new high rent apartments should raise the value of existing condos which have taken a terrible hit over the last four years. I notice in about every article relating to new apartment developments, the long term goal is to convert the new apartments into condos. That will never happen unless current condo sales increase.
It’s certainly an issue worth of discussion right now. The red hot apartment market is being jumped by just about every developer able to finance and build right now. I imagine that the coveted “young professional” market that is seeking those rentals close to the heart of the city may gradually look to buy and own down the road, especially if the mortgage is attractive enough and the difficulty around selling becomes less of an issue.
Either way, between Neighborhood Launch, The new CCAD Dorms, The Abigail, the proposed Discovery District Commons and The Atlas Building, this quadrant of Downtown is really going to continue to pick up steam quickly in the next few years.
One positive note for downtown condominiums. The Neighborhood Launch 1 bedroom resales have actually increased in value since their original sale prices. My own appraisal just came back higher than the pre-crash 2008 price. So the location, location, location mantra is true.
Even if the ratio of new build apartments to condos is a bit skewed towards rentals at the moment, the addition of residents in the core business district helps address the eternal dilema of ‘chick or egg’. The more people that live in the area, the more businesses have an incentive to move it to support them. The more business that move into an area, the more desirable the area will be to live. Its a win-win vs. the current situation, which is (shudder) surface parking lots.
One problem down the road for some young professionals / future buyers will be interest rates. At some point the rates are going to go back up. I’m certainly no expert but we’ve averaged 7% in recent history (in better economic times).
The difference between a $225K condo in the current market versus a higher 5 – 7% rate market can be an extra $200- 300 / month (I used a 5% down model). On top of that, the base prices of the condo would likely increase as well; especially, if the neighborhood increases in desirability and value.
Hopefully for those looking to buy in the fairly near future, rates don’t increase sharply. Nothing would suck more knowing that had you bought a few months prior, you could have saved a couple hundred a month.
Lol… I sound like a fear monger. Not trying to be. :-)
@Walker – Since you mentioned it, any news on Discovery District Commons?
@DubDave – Good point on interest rates. Though I’d argue that an extra $200-$300 per month is exactly the kind of increase we’ve seen in the apartment rental market over the past few years and it’s not prevented the rental vacancy rate from slipping at all.
@dodson – Nothing recently. I’ve been regularly checking in with the folks behind it, but haven’t heard anything new.
In 2009-2010 during the Obama housing tax credit, it appeared, the housing market could not get worse and the interest rates could not possibly get lower. Since then interest rates have headed far south of 5% and condos currently on the market in downtown Columbus have a list price tens of thousands less than what the buyers originally paid, yet they sit on the market easily six months to a year without selling.
Qualified buyers are the only thing still in very short supply.
@dodson – Not out for permit yet. Demolition/site prep should be starting soon.
@Walker
Very true.
@CbusMittFan
Completely agree with you on qualified buyers. And you’re right… no one knows how the housing market will fair.
I think the problem current condos face is that the existing “qualified buyers” in the condo market (Generally, YPs and empty nesters) are opting to rent (Due to the increase in rental options and/or career mobility), or they’re taking advantage of the low interest rates and either staying put/refinancing or they’re purchasing a single family home because the prices on those can match the prices of condos.
With the supply of single family homes still high, condos can’t compete on price. And with apartment living offering the same amenities, experience, and lifestyle as condos (Often in the same location plus easier career mobility and lower monthly payments), there’s little benefit to buying a condo right now.
Rents need to rise and single family homes need to sell before condos can be that middle ground / 3rd option people use to see them as.
Looks like more condos are getting ready to go up on Gay Street!
http://issuu.com/neighborhoodlaunch/docs/nl-newsletter-fallwinter-2012
I know the church next door is getting a facelift but what is going to happen to the 3 story building to the east connected to the church? Does Edwards Properties have plans for this building or will it be torn down?