published Thursday, May 1st, 2014

Chattanooga ranks seventh in nation for fastest-growing rents, ahead of even NYC

  • photo
    Miguel Gonzalez, left, throws bricks up to Diego Gonzalez at the Forest on Frazier apartment complex.
    Photo by Dan Henry.
    enlarge photo

Poll
Has your rent been raised in the past year?

CHATTANOOGA RENTS

Average rents for all apartments and properties, 2008-2013:

2008 -- $649

2009 -- $653

2010 -- $703

2011 -- $755

2012 -- $799

2013 -- $788

Source: Rock Apartment Advisors

Cities with fastest-growing rents, 2007 to 2012:

1. McKinney, Texas -- up 43 percent

2. El Paso, Texas -- up 34 percent

3. Washington, D.C. -- up 33 percent

4. Brownsville, Texas -- up 29 percent

5. Fort Collins, Colo. -- up 28 percent

6. San Francisco, Calif. -- up 28 percent

7. Chattanooga, Tenn. -- up 25 percent

Cities with fastest-dropping rents:

1. Port St. Lucie City, Fla. -- down 17 percent

2. Sunrise Manor, Nev. -- down 15 percent

3. Lancaster City, Calif. -- down 13 percent

4. Spring Valley, Nev. -- down 12 percent

5. Paradise, Nev. --- down 11 percent

6. Cape Coral City, Fla. -- down 10 percent

7. Peoria City, Ariz. -- down 5 percent

Source: NerdWallet

  • photo
    Construction continued Tuesday at the Forest on Frazier apartment complex in North Chattanooga. A new study shows that strong demand and short supply are pushing up rents at a fast pace in Chattanooga.
    Photo by Dan Henry.
    enlarge photo

At least once a month during the three years James Davis lived in his East Brainerd apartment complex, a moving truck would roll in in the middle of the night and a family would quietly pack up and head out under cover of darkness.

"They realized they couldn't afford things anymore," Davis said.

Davis watched them go, year after year, as his own rent jumped from $519 to $619 to $690.

"It was going up faster than my rate of pay was going up, until it got to where I was struggling to pay the rent and the bills," he said. "I had to economize. Get rid of cable. Not eat out as much."

When the apartment complex asked for $690 for the one-bedroom unit, Davis moved out. Now he's living in a two-bedroom place in North Georgia -- with one-and-a-half baths and a backyard -- for $500 a month.

And he's not the only renter in Chattanooga facing rising costs -- the Scenic City now sports some of the nation's fastest-growing rents. Of 200 cities tracked between 2007 and 2012, Chattanooga ranks seventh for fastest-rising median rents, with rents increasing 26 percent during the five-year period, according to online finance adviser NerdWallet.

That means that, on the whole, rents in Chattanooga are going up faster than rents in New York City. Rents went up 22 percent in the Big Apple during the same period.

"Chattanooga is attracting companies and attracting workers," said Divya Raghavan, senior analyst at NerdWallet. "It's both a good thing and a bad thing. Economic growth is a good thing -- but it could be pricing out long-term residents, the people who already live in Chattanooga. Rent is also rising for them, so that could be negative."

Most Chattanooga apartment complexes are full. The city's average occupancy rate is about 95 percent, according to Rock Apartment Advisors, a Birmingham, Ala., company that tracks Chattanooga's apartment market. No apartment properties in Chattanooga are less than 80 percent full, and only five are less than 90 percent full, the firm found.

Justin Uffinger, associate at Rock Apartment Advisors, said Chattanooga's consistently high occupancy rates coupled with the city's growing popularity among young workers are what's driving rents up. The company's annual survey found that Chattanooga's average rent jumped by 21 percent between 2008 and 2013, spurred in large part by big employers like Volkswagen and Amazon coming to town.

And Uffinger doesn't expect the prices to drop anytime soon.

"It's the people you're attracting to your market," he said. "You have all these incubators downtown that are attracting all these young technology companies. Between age 25 and 30, those are your prime young renters, the ones who are willing to pay more to live in the hip and up-and-coming areas."

Another factor that's pulling up rents in Chattanooga is all the new apartment complexes going up, he added. As of mid-2013, about 1,500 new rental units were in the pipeline for Chattanooga -- either planned or under construction.

Those new units by nature will rent at the highest rates, but the influx of new, high-priced units also can cause prices to rise across the board as the increased competition spurs older complexes to either close down or spruce up, Uffinger said.

Management company Papa Properties owns five downtown apartment buildings, and property manager Jeff Bailey said rents have gone up at all of them. He said the company's rents range between $600 and $900 a month, and rents increase about 5 percent every year. Rent at some properties has gone up as much as 15 percent in a year, he estimated.

"But we've justified it by doing new appliances, tile, hardwood floors, cabinets," he said. "We've changed a lot."

And people are willing to pay, Bailey added. He consistently keeps a waiting list of 10 to 20 people looking for downtown apartments.

"I've had tons of people coming in, and they want to live downtown," he said.

Yet developers have been hesitant to build new apartments downtown, put off by high land prices and an existing stock of buildings that can't easily be transformed into apartments.

"People are building in Ooltewah because it's cheaper to find land over there than downtown," Uffinger said. "There are a lot of people who want to build downtown right now but it's hard to make sense of it. There are a lot of old office buildings that you'd have to completely convert."

Downtown nonprofit River City Co. recognizes the divide between demand and feasibility and hopes to start bridging it by converting the historic Ross Hotel on Georgia Avenue into about 20 middle-class apartments. The organization believes Chattanooga needs at least 900 new downtown rental units, and has highlighted 22 buildings downtown that could accommodate apartments.

River City leaders hope the redevelopment of the Ross Hotel could open the floodgates for downtown housing. Until now, only a handful of projects have broken ground, including a development at the corner of Main and Market streets that will include 63 units and another on Vine Street that will include 31 beds for college students.

River City is also shopping for a developer for the empty lot in the 700 block of Market Street, hoping to build a five-story building with as many as 77 units, President and CEO Kim White said.

"Add that, the Main and Market building and the Ross Hotel, and that's a lot of inventory," she said, "for a place that hasn't had any."

Contact staff writer Shelly Bradbury at 423-757-6525 or sbradbury@timesfreepress.com.

about Shelly Bradbury...

Shelly Bradbury covers police and crime in Chattanooga and Hamilton County for the Times Free Press. She's been with the paper since 2012, working first as an intern and then as a business reporter. She is from Houghton, New York, and graduated from Huntington University in Huntington, Indiana, with a bachelor’s degree in journalism and minor in management. Before moving to Tennessee, Shelly previously interned with The Goshen News, The Sandusky Register and The Mint ...

videos »         

photos »         

e-edition »

advertisement
advertisement
400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.