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A Florida-based developer is building a $14 million, 120-unit luxury apartment complex on East Brainerd Road.
The project, Forest Cove Apartments, ends Housing Trust Group's eight-year hiatus from the Chattanooga building market. The last project the company tackled in the Scenic City was the neighboring Reserve at Creekside, an apartment complex with 192 units.
Forest Cove Apartments will include 48 one-bedroom and 72 two-bedroom apartments. Each apartment will have a Jacuzzi tub, granite countertops, custom cabinets and stainless steel appliances, said Dwayne Walker, project manager.
"There seems to be a shortage of luxury housing within the Chattanooga market," Walker said. "And of course you do have the high-tech jobs at the Volkswagen plant. There is just incredible demand up there right now."
He expects to charge between $900 and $1,100 a month for the new apartments, which will range between 725 and 1,005 square feet.
Construction is under way and the first building and clubhouse should be finished within seven months, Walker said. The entire complex, which will include five three-story buildings as well as a clubhouse and pool, is scheduled to be open by July 2014.
Housing Trust Group is the latest in a long string of developers to jump at the chance to put up new apartments in Chattanooga. More than 1,200 new apartments are in the region's pipeline during the next two years, as developers respond to an undeniably hot rental market.
Downtown Chattanooga apartment rents have jumped by 20 to 30 percent during the last three or four years -- 8 percent in 2012 alone. And apartment owners report that Chattanooga's occupancies are high, consistently around 95 percent.
Between Volkswagen, Alstom, Amazon, BlueCross BlueShield and Unum, Chattanooga has weathered the recession better than many markets. The Volkswagen plant added about 2,500 jobs in 2011, and that sparked several thousand ancillary jobs as well, which helped pull Housing Trust Group back to Chattanooga, Walker said.
"It's not only employees of Volkswagen, it's the spinoff that large economic generators bring to the community in terms of secondary jobs," said Dale Mabee, president of Cornerstone Construction Group.
And there's a trend in the housing market toward smaller living units and higher amenities, he added.
"We have a lot of empty nesters now in retirement, and they're looking to downsize. But they want to maintain their standard of living, so they want to keep the high amenities," he said.
But while the rental market is hot, no one knows whether that momentum will be able to sustain the influx of new apartments going up.
"Unfortunately, it is often the case that we overbuild in some sectors where there is high demand," Mabee said. "I think the jury is still out as to whether that will be sufficient to fill up the apartments. I hope it does."
Contact staff writer Shelly Bradbury at firstname.lastname@example.org or 423-757-6525.