Here is the story as reported by Jenny Burns with the Nashville Business Journal:
” The number of apartment units under construction in greater Nashville has nearly doubled since last year, topping 4,500 units.
“That’s significant,” says Brad Cather, president of the Greater Nashville Apartment Association, which tracks apartment construction. “It remains to be seen whether all the units come on board. Right now, it appears the market is going to sustain this.”
Apartment developers say certain pockets could be getting too much inventory, but overall they say tough mortgage standards and foreclosures should continue to send people back to renting or force them to continue renting.
The Hendersonville/Gallatin area has 974 units in the pipeline, Murfreesboro has 824 units under construction and Franklin has 696 units being built.
Apartment developer Kevin Geddes, president of Geddes & Co., says he looked at Gallatin for his new project, but decided there was too much inventory coming online there, and chose Spring Hill.
“Gallatin and Murfreesboro are good markets, but I would be cautious about adding new inventory,” Geddes says. “I think Nashville’s gotten so much interest lately (for apartment investment), that people are coming from all over the area to build here.”
Nashville was ranked fourth in the nation in February for apartment investment by M/PF YieldStar, a Dallas-area rental research firm.
Last year, Nashville set a market record for the number of apartment deals. That pace has dropped off, with four fewer deals so far this year.
The national apartment spotlight being turned on Nashville has increased interest here, says Michael McNally, senior project manager for mixed-use development at Southern Land Co.
McNally says Southern Land’s new apartment community, Dwell at McEwen, will be the first new apartments in Franklin in 10 years.
Crescent Resources‘ Franklin Crest will be next on the way with 438 apartments near Carothers Parkway and McEwen Drive.
“Supply and demand has been out of whack given that there has been no new supply in Franklin,” McNally says.
Dwell is part of the developer’s 1 million-square-foot McEwen retail and office project that aims to bring an urban feel to Cool Springs. Rents range from $950 to $2,000 a month and leasing starts in September.
Geddes is building his new apartment community in Spring Hill, called Port Royal. No new apartment complexes are under construction in Spring Hill, but several are planned.
Geddes says it’s a good market because it’s hard to get apartment projects passed there, especially after the city removed apartment uses from one of its zonings.
The different look of his project will help it stand out too, he says. Port Royal is built in a townhome style, so renters don’t have neighbors above or below them.
“We’ve taken more leases than we even have units available for. The tenants who’ve come here have said (they) didn’t know there was anything like this coming,” Geddes says.
Condominium projects that may become apartments have added to the construction totals. About 273 units at the Lenox Village town center may be apartments or condos.
Developer David McGowan says market conditions will dictate the outcome once the units are finished by the end of the year. He intends to sell them eventually but may rent them out for a few years.
McGowan says removal of downpayment assistance in recent federal legislation will eliminate 33 percent of the market’s first time buyers from being able to buy. As a builder, he says that could hurt business, but that it will help drive apartment rentals.
Projects such as Bristol Development‘s Vista Germantown were also originally planned as condos but changed to apartments because of the market.
Apartment occupancy has fallen slightly to 93.2 percent from 94.1 percent last year. The average rent has increased 2.6 percent, to $755 from $736.
In Mount Juliet, apartment developer John Rochford says rents are up and concessions are down. He’s building the 294-unit Deerfield at Providence. Barriers to entry in that market, like in Franklin, have left little land zoned for multi-family.
MLP Investments built the Aventura at Providence, and are replicating it at Indian Lake Village in Hendersonville.
Despite the high number of units coming to the area, Bryan Aston, vice president of development at MLP Investments, says the appeal of walking to the shops and eateries at Indian Lake will help drive demand. Their calling the new project the Aventura at Indian Lake Village.”