Time may be up for some housing developers

A report from the Times Free Press in Tennessee. “The median rent quoted for a typical two-bedroom apartment in Chattanooga jumped 9.9% in the past year as housing prices continued to outstrip the gains in income. But with an abundance of apartment units coming on the Chattanooga market, especially downtown, those quoted higher rates may be offset with generous signing bonuses as landlords try to fill empty units.”

“‘There are lot of higher rates quoted for investors, but there are also as many discounts and sign-up bonuses for new tenants as I have ever seen,’ said John Wise, one of the biggest developers of apartments in and around downtown. ‘I’ve been doing this for 13 years and it’s been a good ride, but I’m afraid the party is over and there are going to be some tough times for some developers.’”

“With the record number of new apartments added in and around downtown in recent years, some projects like the proposed apartments in the First Tennessee Bank building have been delayed while other complexes such as the Market City Center and the former Clemons Apartments have been converted, at least in part, to hotel rooms.”

“‘The Chattanooga real estate market is very hot,’ Marco Santarell of Norado Real Estate Investment said in a report on the local market earlier this year. ‘Homes are selling so fast that some stay on the market only a few hours. The booming economy has made it more difficult for Hamilton County residents to find a home. This shows that the Chattanooga market will remain competitive for both buyers and investors in 2019.’”

“Such market analysis spurred outside investors from Atlanta, Memphis, Birmingham and Knoxville to build hundreds of new apartments in the downtown area. But many of those new developments are now offering price breaks or incentives to help draw residents. ‘There are a lot of incentives to get people to move in right now,’ Wise said. ‘We’ve got a lot of capacity to absorb in the next few years.’”

From Bisnow New York. “Landlord groups have vowed to take the fight against the state’s new rent regulation laws to federal court. But that act of defiance has done little to lift the mood across the industry. ‘General despair is the word … I’m not seeing anyone coming up with any brilliant ideas,’ said Alvin Schein, a partner at law firm Seiden & Schein. ‘[The rent reform package] shut all the doors around it. There are no back doors.’”

“‘I don’t see anything in this law that I could see that makes sense for me … the whole business model has just evaporated up in smoke,’ said Nelson Management Group President Robert Nelson, who said the past few weeks have been ‘hell.’”

“Durst Organization Vice President for Public Affairs Jordan Barowitz said the company’s main concern is buildings that have recently opened and that were built with the 421a tax abatement. Durst’s apartment building in Queens, 10 Hallets Point, which started leasing earlier this year, is the one building in the Durst portfolio that will be affected, Barowitz said. ‘Those buildings are in a tight spot,’ he said.”

From Curbed San Francisco in California. “The Landing, a new high-end apartment complex in Potrero Hill at 1395 22nd Street, wants prospective renters to know that the neighborhood comes without a few 21st-century San Francisco problems. A mailer for the new building—one of which writer Tara Ramroop tweeted last week—asks the public in Mad Libs fashion, ‘Tired of stepping in (blank), on (blank), and over (blank) outside your door? […] A neighborhood apart means that some of the city’s most unsightly (and smelly) sidewalk issues aren’t a problem in Dogpatch.’”

“It goes on to promise streets that are ‘blissfully debris-free.’ (Note that although the building bills itself as being in Dogpatch, it’s located in Potrero Hill.) Although the fill-in-the-blanks marketing means that the building skirts clear of explicitly saying ‘no poop, no needles, no homeless persons,’ the mailer doesn’t leave much to the imagination.”

“The Landing, a 263-unit apartment complex designed by SF’s Perry Architects, opened in May, promising residents ‘life at the next level.’ An April press release promotes the building’s exclusivity. The complex also boasts a singular SF perk: the right to rent your apartment short-term on Airbnb while out of town.”

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