Check out the following article from Columbus Business First's Stacy Kess, featuring LC RiverSouth (High Street):
RENTING LUXURY APARTMENTS THE ANSWER FOR YOUNG PROS, EMPTY-NESTERS
Views and locations to die for, plus fitness centers, clubs and restaurants. Sounds nice, but at $2,900 a month – an amount higher than most mortgages, which leave the owner with an asset – what’s drawing so many to luxury apartment living?
In downtown Columbus and the most desired suburban areas, apartments are being snapped up by young professionals and empty-nesters as fast as they can be built.
“I think what we’ve seen over the last couple of years – obviously it started in 2008 with the housing market dive – people are becoming more and more comfortable with renting,” said Russell Boiarsky, Lifestyle Communities marketing manager. “There’s this comfort level with ‘I don’t need to own as much anymore, but I can still get the things I want out of life without owning things’ – and that’s translating into the apartment communities.”
Freedom from a mortgage
LC is one of several development companies building and leasing luxury apartments with amenities that create an experience homeowners can’t necessarily get through their neighborhood or condo. The rentals are in the most desirable areas of the city or built to create a comfortable community experience, Boiarsky said. For Lifestyle, that includes The Goat Bar, a bar and restaurant built into several of its communities, and classes at its fitness centers.
Boiarsky said when LC built its downtown Annex RiverSouth properties near the riverfront, they were initially intended to be condos for purchase. The housing crash in 2008 put a damper on the plans for a 2009 opening as condos, but opened an opportunity for the units to be rented instead.
The move worked. Full occupancy didn’t take long to achieve and the waiting list for an open unit grew long.
Just five years later, LC is in the midst of building more properties downtown near Rich and High streets. The properties are intended to give a downtown experience with the German Village and Short North just a quick trip along High Street for residents.
The new property, LC RiverSouth High Street, includes eight floors of flats and tops off with two floors as luxury townhomes – all for rent.
Even those whose job it is to sell are seeing the value of life in the desirable areas without the ties of a mortgage.
“I know some Realtors who have moved downtown because they want to enjoy German Village, the Short North and walk places, just enjoy a different environment,” said title agent Bonnie Lustnauer with Talon title agency. “Once they have kids, they’re going to move.”
National data back that up. A 2013 Harvard University study found 72 percent of renters aspired to own a home in the future.
Lustnauer’s husband, Milt Lustnauer, president of the Columbus Realtors trade group, said he sees many young professional couples choosing to rent and moving to homeownership when they’re ready for a family.
Conversely, Lustnauer sees post-child-rearing couples heading back to rentals after the kids head off to college.
The rentals, he said, are being marketed to well-paid 25- to 35-year-olds, but appeal to baby boomers, too.
“It’s not a long-term commitment,” Lustnauer said. “The younger generation, I’m finding they’re thinking, ‘I don’t have enough money saved up right now, but I’m making pretty good income.’ ”
Freedom to move
With sometimes massive student loans to pay off and a fledgling savings account, a mortgage may not even be an option for many young people. Almost two-thirds of U.S. 25- to 29-year-old renters and more than half of those in their early 30s are renting their homes. That translates into more than 70.7 million renters under the age of 30, the National Multifamily Housing Council found.
“Their next alternative is to rent,” Lustnauer said. “And 25 to 35 years old, and if they’re single, their lifestyle could change.”
The empty-nesters are in the opposite boat.
“Peoples have sold their house – their higher-priced homes – and they sold them for a really good price, but they can’t find anything to buy right now,” Lustnauer said.
In the last decade, 11 percent of former homeowners in their 50s and 60s with a history of long occupancy in their homes have switched to renting, according to the Harvard study.
The empty-nesters see the value of renting, said John Royer, president of Kohr Royer Griffith Rentals Inc., a property management and commercial development company.
“They want it for the same reason (as young professionals,” he said. “They don’t want to be tied down as long and are looking for the right home to buy (in warmer climates.)”
For the luxury properties, it’s coming down to flexibility.
“Renting a higher-priced apartment is because you don’t want to be tied down for five or 10 or 20 years,” Royer said.
In fact, the 2012 U.S. Census showed nearly 4.4 million renters had moved from a different state within the last year.
It’s unclear how many high-priced luxury rentals or upscale apartments now are the city or suburbs – the number is not tracked – but Boiarsky said he doesn’t see the trend slowing down.
“We thought for this year we’d see over-saturation with supply for the demand,” he said. “But what we’re seeing is people are holding off in that home purchase in favor of renting.”
Larger cities such as New York and San Francisco long have been geared more toward renters than home purchases, as young professionals are priced out of the purchase market and rentals offer some of the most urban locations.
“(The renters) have chosen to live downtown,” Boiarsky said. “They’re comfortable renting. We continue to see that trend rising (in Columbus).”
He said the rental market is responding to what people want.
“You’ll have some true luxury apartments,” he said. “That’s where it will take this style of apartment living to the next level. (Property companies) are starting to really dial in on what people really want. It’s not just a place to live anymore. It’s a community with a lot of great features.”
He said in that respect, LC and other downtown rentals capitalize on their urban appeal. And in the suburbs, communities are trying to tap into that appeal by creating walkable neighborhoods.
He said the details matter. LC’s Hilliard properties have parallel street parking, street-front entrances, green space and The Goat Bar, all amenities incorporated into the complexes based on research of what creates the best communities and what renters say they want, he said.
“It makes you want to go out and use (the neighborhood),” he said. “It makes people comfortable using it.”