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Columbus Apartment Rental Market Getting More Expensive

Home Forums General Columbus Discussion Columbus Apartment Rental Market Getting More Expensive

Viewing 15 posts - 76 through 90 (of 150 total)
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  • #1044466

    If you look at MSA similar in size, say about 1.5M to 2.5M that have decent growth you get Columbus (2,300), Austin (11,500), Denver (9,600), Charlotte (5,500), and even Indianapolis (3,900).

    Where do you get your unit numbers?

    #1044468

    jbcmh81
    Participant

    The article above doesn’t make much sense or at least draws a conclusion without the needed information. Affordability is a measure of what one can obtain within their financial means. The article talks about how expensive rents are but doesn’t actually provide any info about affordability like the headline suggest because it doesn’t discuss income.

    Here is a website that looks at among other things housing affordability.

    http://datatools.metrotrends.org/charts/metrodata/rankMap_files/BurdenMap_files/BurdenMap.cfm

    They look at median rent and housing prices as compared to median household income. Using those metric do actually show that Columbus is affordable, ranking 22nd. However there isn’t much difference from some of the places you highlighted for example rent in Denver was .2% more of median income than Columbus and Minneapolis was actually more affordable.

    The problem in Columbus is they simply aren’t building enough. I know local folks see the construction and think things are booming but from a macro perspective Columbus is well behind the curve. Looking at the top 50 markets the average number of apartment units set to be delivered this year is about 5,000. Columbus is less than half of that with about 2,300.

    If you look at MSA similar in size, say about 1.5M to 2.5M that have decent growth you get Columbus (2,300), Austin (11,500), Denver (9,600), Charlotte (5,500), and even Indianapolis (3,900).

    Columbus doesn’t attract larger national developers who can develop larger amounts of units and is confined to local guys who know the market well. We had a spike in 2013 where Columbus delivered over 4,000 units and is now regressing back to the historical average. Keep in mind were in a national trend where people are renting more and living in more urban locations. So were not building large amounts of cheaper homes out in the suburbs. Without that supply affordability is going to decrease.

    So as we only build a decent amount of luxury units at some point those prices might soften but the vast majority of rents are going to continue to increase. So for example say you have class A rents at $1600 and class B rents at $1200. As you get more class A product and vacancy increases they might drop prices to $1500 but since you can’t build class B and we don’t have a lot of Class A converting to class B they’ll continue to raise rents from $1200 to say $1400.

    So while it gets less affordable this will translate into urban areas going up value which overall I think is a good thing.

    Just curious, IC, where are you getting the total unit numbers for these cities? Also, are these all urban units, for the whole city, county, metro, what? I know you have mentioned this discrepancy before, but from what I can tell, units under construction in Columbus have ramped up rapidly in recent years from less than 400 in 2011 to more than 5x that this year. Come 2015, that number will rise to around 4,000, or 10x what it was 4 year prior. This only counts units being constructed within I-270, with probably 80% of them within or just adjacent to the 1950 urban core. While Columbus may or may not be having the same total units as other cities (some of which are growing much faster and are not a direct comparison anyway), the very fast rise in construction at least points to an effort to more keep pace with demand.

    #1044469

    ^ Wondering the same, JB. We had just short of 6,000 units permitted last year. Already we’ve had almost 3,500 units permitted in 2014. BTW, these, and likely IC’s, numbers are for the CSA.

    Also he neglected the fact those MSAs are growing faster than Columbus. Denver 51,000+ per year. Charlotte, 39,000+. Indianapolis, 22,000+. Austin, 55,000+. Columbus, 21,000+.

    #1044470

    jbcmh81
    Participant

    Okay, I just ran some numbers. The Census does a count on housing permits issued by month for cities, counties and metros. I looked at major Midwest metros as well as Columbus’ peer cities and compared. Altogether, I compared 22 cities with Columbus.

    First, the top 10 cities by total units for multi-unit housing through August.
    Online Graphing<br /> graph and chart
    Columbus ranks #5 highest.

    Second, the top 10 core counties for total units for multi-unit housing through August. I used the city names in place of county names so it’d be clear where the counties were.
    Online Graphing<br /> graph and charts
    Columbus ranks #6.

    Next, the top 10 metros for total units for multi-unit house through August.
    Online Graphing<br /> Create a chart

    So I don’t think Columbus is doing badly at all versus its peer group.

    #1044472

    jbcmh81
    Participant

    Another thing of interest is that, out of all the multi-unit construction going on in the entire metro, Columbus had the most going on its city proper. For 2014, year to date.
    Online Graphing<br /> chart

    Some might argue that that only means that Columbus has larger city limits and encompasses more of that construction, but even if that were true, it also means that spreading sprawl is probably pretty low at this point relative to what it used to be. Cleveland, which was recently reported to have had the fastest-growing sprawl in Ohio since 2010, had just 13.16% of multi-unit construction within its city limits. Cincinnati was marginally higher at 29.66%.

    #1044475

    You look at Columbus data like it’s your job; perhaps it is. Do you see Columbus’ growth rate increasing this year and going forward? Right now we’re just over +1% per year.

    What role do you think the DNC, women’s final four, Stone Brewing, Amazon, NHL ASG etc. have in tipping Columbus over the edge? To get those national developers here? To having growth rates like a Nashville, Denver, Charlotte?

    Columbus just has this feeling that it’s about to explode.

    #1044476

    jbcmh81
    Participant

    You look at Columbus data like it’s your job; perhaps it is. Do you see Columbus’ growth rate increasing this year and going forward? Right now we’re just over +1% per year.

    What role do you think the DNC, women’s final four, Stone Brewing, Amazon, NHL ASG etc. have in tipping Columbus over the edge? To get those national developers here? To having growth rates like a Nashville, Denver, Charlotte?

    Columbus just has this feeling that it’s about to explode.

    Not my job, exactly, but I’ve been putting data together for about as long as I can remember, so it might as well be at this point.

    Columbus’ growth is already increasing.
    Here’s a chart for average annual growth since the 1800s. http://www.chartgo.com/linkshare.do?id=111bf275aa The 2010s are the highest in history, easily.

    By percent, it’s a bit different. http://www.chartgo.com/linkshare.do?id=bf210376aa At the very least, the average annual % growth so far this decade is the fastest since the 1960s.

    I think there are a lot of things pushing Columbus towards the tipping point of an actual boom, which I don’t think has quite started yet, but I agree, I don’t think we’re far off from a major growth spurt.

    #1044492
    Walker Evans
    Walker Evans
    Keymaster

    Another thing of interest is that, out of all the multi-unit construction going on in the entire metro, Columbus had the most going on its city proper.

    Great charts and illustrations!

    You forgot to factor in one important fact though:

    InnerCore does not like Columbus.

    #1044498

    InnerCore
    Participant

    Before I start my response I want to just state by saying this isn’t a city A better than city B issue. “Problems” are not merely negative. Your business could have the “problem” that it has a lot of demand and current can’t produce enough to meet that demand. That is a problem many business would like to have. Understanding the issue helps to identify the solution so said problem. I get it that all Walker wants to hear is cheerleading and sees pointing out problems that can be addressed as hatred for Columbus. In my post I cited actual data to show that Columbus is affordable, just didn’t cheerlead and say it was more affordable than cities it’s not.

    With that said, I work for national developer/owner of multifamily property. As a result, I constantly look at the metrics of pretty much all the cities to decide where others are investing/developing to make a better more informed decision on where we should be investing/developing. If I hate Columbus then so do pretty much all the national investor/developers. Although I think the issue is simply a matter of economics as are most.

    A lot of my information comes from either CoStar, Axiometrics and Reis. These are all reserach companies that cater to the multifamily industry. The have researchers that look into every market, compile that data and then sell it to companies like ours. For all of the markets that we are in we pay about $15k a month to access this information.

    #1044499

    jbcmh81
    Participant

    <div class=”d4p-bbt-quote-title”>jbcmh81 wrote:</div>
    Another thing of interest is that, out of all the multi-unit construction going on in the entire metro, Columbus had the most going on its city proper.

    Great charts and illustrations!

    You forgot to factor in one important fact though:

    InnerCore does not like Columbus.

    Based on past interactions, I think it’s more about unreasonable expectations and comparisons. IC treats Columbus like it should be a Sun Belt boomtown, but it’s not… at least it doesn’t yet have those full characteristics. Even so, the claim about it being significantly behind in housing construction is just not true. I still have no idea where his numbers came from. My numbers above were not just for total permits, but for total number of individual units. Austin, for example, is nowhere near the 11,000+ units this year that he claimed, even at the metro level. Austin is higher than Columbus, of course, but that’s probably due to the fact that Austin is growing significantly faster.

    #1044511
    Walker Evans
    Walker Evans
    Keymaster

    I get it that all Walker wants to hear is cheerleading and sees pointing out problems that can be addressed as hatred for Columbus.

    Not true. Chronic cheerleading is just as bad as chronic complaining. Columbus has problems, challenges and issues to overcome that most people are pretty realistic about, and we have some solid discussions about here on CU.

    Just pointing out that it’s really hard to take seriously the comments of someone who has done nothing but post negatively 100% of the time. Perhaps you see your permanently negative viewpoint as a counterbalance to any article that contains any positive news about Columbus, but it comes across as some big-time Debbie-Downerism.

    #1044512

    InnerCore
    Participant

    Just curious, IC, where are you getting the total unit numbers for these cities? Also, are these all urban units, for the whole city, county, metro, what? I know you have mentioned this discrepancy before, but from what I can tell, units under construction in Columbus have ramped up rapidly in recent years from less than 400 in 2011 to more than 5x that this year. Come 2015, that number will rise to around 4,000, or 10x what it was 4 year prior. This only counts units being constructed within I-270, with probably 80% of them within or just adjacent to the 1950 urban core. While Columbus may or may not be having the same total units as other cities (some of which are growing much faster and are not a direct comparison anyway), the very fast rise in construction at least points to an effort to more keep pace with demand.

    The numbers are for the MSA. Columbus delivered 1,400 units in 2011, 1,200 units 2012, 4,200 in 2013 and then deliveries dropped to an estimated level of 2,300 in 2014. It peaked and has already leveled off.

    I want to make this point clear as people seem to take everything in a negative manner. Columbus is a very STEADY market. Because most national developers/investors consider it a tertiary market they don’t rush in to capitalize on the next trend. As a result, as Columbus grows it builds just enough for that growth as you have primarily local guys who know the market well making those decisions.

    Contrast that with a market like Austin where they have more growth. Instead of building proportionally more just to satisfy that growth all the national guys are going to rush in to get piece of the action. So for exmaple Columbus grew by about 20,000 people a year over the last 3 years. Austin grew by 50,000 people a year over the last three years. So Austin’s growth is a little more than double. But you can see the difference in deliveries swung a lot more than double for Austin. While they delivered 6,200 last year compared to Columbus 4,200 instead of cooling off like Columbus and decreasing they shot up to 11,500.

    Thats because 1 – 2 years ago not only were local guys developing but all the hype nationally is about millenials moving to place like Austin. So they were looking at only 6,200 deliveries last year and everyone rushed in. Meanwhile the local guys in Columbus saw the 4,200 units last year and pulled back.

    #1044527

    InnerCore
    Participant

    Based on past interactions, I think it’s more about unreasonable expectations and comparisons. IC treats Columbus like it should be a Sun Belt boomtown, but it’s not… at least it doesn’t yet have those full characteristics. Even so, the claim about it being significantly behind in housing construction is just not true. I still have no idea where his numbers came from. My numbers above were not just for total permits, but for total number of individual units. Austin, for example, is nowhere near the 11,000+ units this year that he claimed, even at the metro level. Austin is higher than Columbus, of course, but that’s probably due to the fact that Austin is growing significantly faster.

    I can’t post actual reports being that you have to pay for them but here is a screen shot:

    Units by UMdev[/url], on Flickr

    Permits don’t easily translate into the number of actual units delivered. You could get a permit and never build or build years later. Again Columbus is a market where there are few local developers building and are more sensitive to new supply. Pick most developers and they probably have multiple projects. They can’t afford to build at the expense of the other guy when they are the other guy.

    I get it that you want to cherry pick all the information that you think is positive. Again this isn’t saying something is “bad” about Columbus. I’m just point out that for the people who think we’re building a lot and that is going to lead to rent decreasing that isn’t the case.

    #1044528

    jbcmh81
    Participant

    Before I start my response I want to just state by saying this isn’t a city A better than city B issue. “Problems” are not merely negative. Your business could have the “problem” that it has a lot of demand and current can’t produce enough to meet that demand. That is a problem many business would like to have. Understanding the issue helps to identify the solution so said problem. I get it that all Walker wants to hear is cheerleading and sees pointing out problems that can be addressed as hatred for Columbus. In my post I cited actual data to show that Columbus is affordable, just didn’t cheerlead and say it was more affordable than cities it’s not.

    With that said, I work for national developer/owner of multifamily property. As a result, I constantly look at the metrics of pretty much all the cities to decide where others are investing/developing to make a better more informed decision on where we should be investing/developing. If I hate Columbus then so do pretty much all the national investor/developers. Although I think the issue is simply a matter of economics as are most.

    A lot of my information comes from either CoStar, Axiometrics and Reis. These are all reserach companies that cater to the multifamily industry. The have researchers that look into every market, compile that data and then sell it to companies like ours. For all of the markets that we are in we pay about $15k a month to access this information.

    I’m not really all that interested in debating how national investors see Columbus because, honestly, the city has done just fine without them if they’re actually absent in the way you’re saying. National investors could potentially bring in larger-scale projects, but they’re clearly not that important to overall ground conditions.

    Second, what is the difference between the research companies you’re quoting and the census construction permit counts?

    #1044545

    InnerCore
    Participant

    I’m not really all that interested in debating how national investors see Columbus because, honestly, the city has done just fine without them if they’re actually absent in the way you’re saying. National investors could potentially bring in larger-scale projects, but they’re clearly not that important to overall ground conditions.

    Where did I say the city wasn’t doing fine. Last time I check pretty much most cities are doing fine. You compile a lot of information that shows where Columbus is out performing other cities. If the metrics are higher than other cities you highlight it, if they are lower than you say who cares Columbus is doing fine. Also just because something is fine today doesn’t mean it will be fine years from now. 20 years ago a lot of rust belt cities could have made decisions when they were doing fine that would have greatly impacted them years later.

    As a side not one of the primary reasons national investors/developers aren’t here is our lack of rail. I would say the primary factors are 1. coastal cities 2. Texas because of insane job growth and 3. TOD. Build rail and it would change Columbus from a tertiary market to being on par with Denver, Charlotte, etc. from an investment/development perspective.

    I’m just provide the background information on why things are the way they are. The title of this thread is “Columbus Apartment Rental Market Getting More Expensive”. I’m not the “Debbie Downer that pointed this out or created the thread. I think everyone can understand the concept of supply and demand. I’m simply pointing out that for the people who think we are building more supply than demand and therefore prices are going down that ISN’T the case and the background information as to why. As pointed out before this can be a good thing as it will drive up the prices/value of many other areas like OTE that were neglected because of cheap (subsidized) suburban supply.

    Second, what is the difference between the research companies you’re quoting and the census construction permit counts?

    Apply for a permit is sort of like putting a deposit on a product in the future. It helps to gauge future demand but isn’t exact because that order may or may not be fulfilled. So like I’ve been pointing out with few developers with smaller resources they tend to pull back faster and adjust to the market quicker. If you have 3 developers with 4 projects each in the pipeline and some in similar areas and you start to reach equilibrium then they tend to pull back or push the completion dates out further as the oversupply will likely directly impact their other projects. However if you have 20 developers some with 2 or 3 projects spread out and a lot with just one project they tend to all move forward because getting lower rents on one project is better than no rents on no project.

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