published Sunday, March 31st, 2013

Rental surge keeps market hot

The 100-unit Walnut Commons complex downtown will offer studio and one- and two-bedroom apartments priced at $750 to $1,200 per month.
The 100-unit Walnut Commons complex downtown will offer studio and one- and two-bedroom apartments priced at $750 to $1,200 per month.
Photo by Contributed Photo /Chattanooga Times Free Press.

The apartment business is booming in Chattanooga.

The real estate services firm Rock Apartment Advisors looked at 53 complexes here last summer and found that 96.9 percent of units were full. That’s about as strong as it gets in the Southeast.

Of those 53 complexes, 31 were fuller than they were a year earlier. Sixteen were emptier. The rest had no change.

“Chattanooga is one of the hottest markets,” said David Wilson, the firm’s primary adviser. “It’s outperforming a lot of markets.”

Experts say a couple of factors sent people to apartments. For one, the economy’s recovery since the recession has been slow. Also, mortgage-lending standards are tighter than they used to be, making it more difficult for potential home buyers to get the money they need.

And even beyond those problems, experts say that some Americans feel nervous about owning property after the bottom fell out of the real estate market six years ago.

Across the country, 65.4 percent of Americans own homes. The Census Bureau says the rate hasn’t been that low since 1997.

But a decline in homeownership is good for apartment complexes. Becky Brooks, manager of the Waterford Place apartment complex and a former Chattanooga Apartment Association president, said she can tell the market is strong because few complexes are offering incentives upon the signing of a lease. Potential renters don’t need any convincing.

The recent rental surge has also led to new development projects, especially downtown. A Virginia-based company called Ivy Lane Advisors announced in February that it plans to build 102 units in complexes on East Main Street and Madison Street.

Chattanooga developer John Clark, meanwhile, is leading construction of a 100-unit complex downtown called Walnut Commons. Construction is expected to wrap up later this year, and it will feature studio, one-bedroom and two-bedroom apartments priced at $750 to $1,200 a month.

“The market is certainly ready,” Clark said.

Contact staff writer Tyler Jett at tjett@timesfreepress.com or 423-757-6476.

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