“Generation Rent” pushing demand for Downtown apartments
You’ve probably noticed the constructions sites that have sprung up everywhere you look in downtown, from Cameron Village to St Mary’s, to Hillsborough Street. Having seen past booms that saturated the market with too much office space, too many spec homes and condos that sat empty, some are questioning the wisdom of developers who have jumped into the present apartment building craze. Here is some perspective for the next time this comes up in a conversation with other downtowners…
This time is different!
Developers and the banks behind them are not taking risky bets this time. Developers are focusing only on rental units, catering to ‘Generation Rent’. And Raleigh is part of a national trend, as downtowns have begun growing faster than suburbs for the first time in 100 years!
Rents will not be cheap given downtown land prices, but unit sizes are smaller (lots of one bedrooms), and most important – no downpayment required! After seeing the generation before them loose so much equity in their homes, renting appeals to young professionals who want more freedom and mobility.
Many of the apartment buildings underway (or planned) fall into the 5-6 story category, which keeps building cost per square foot down compared to taller buildings. And they’re also mostly located on the periphery of downtown, where land prices are a bit more reasonable.
The one big exception is the recently announced Skyhouse Apartments, which is 23 stories and located in the heart of Downtown’s Raleigh’s business district. It’s too soon to see if others will follow this lead and bring out more ambitious projects, but it’s worth noting that Charter Square after some time is finally being actively leased.
Late last year this blog included a post on the planned apartment projects in or near downtown Raleigh. So how are these projects coming along six months later?
- Residences at Cameron Village (295 units)
- West Morgan Street Apartments (250 units)
- St. Mary’s Square (145 units)