Are downtown apartment occupancy rapidly trending down?

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
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GRID
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Are downtown apartment occupancy rapidly trending down?

Post by GRID » Thu Dec 06, 2018 12:59 pm

https://cityscenekc.com/downtown-dazzle ... -saturday/

That article states that One and Two light are only around 80% occupied and some of other new properties are pretty low. This could be a main reason for Three Light taking so long to get off the ground.

With the lack of downtown jobs (especially tech type jobs that appeal to younger people) you have to think downtown is reaching that saturation point of those willing to pay more to live downtown AND commute to suburban jobs.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by flyingember » Thu Dec 06, 2018 1:16 pm

Realize that this article isn't covering more affordable options. Everything on that list is high end.

This means there's a need for more units at a lower cost per square foot.

I bet they would all be fully occupied if they cut their leasing rates.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by normalthings » Thu Dec 06, 2018 1:25 pm

20% vacancy at One and Two Light means they would be able to sell 10% of units (~60 total?) and have plenty of left over units to rent.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by FangKC » Thu Dec 06, 2018 1:34 pm

I think more important are overall downtown rental occupancy rates, and not those of specific buildings.

I do agree that downtown needs to grow the job base to sustain occupancy rates. That is going to be hard unless more commercial space is built.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by KCDowntown » Thu Dec 06, 2018 1:35 pm

I remembered that there was another article in CitySceneKC earlier this year that mentioned the occupancy rate at the Union. I looked it up and on 6/27/2018 they had 100 units rented. As of today's article 172 units (42% of 410) are rented. That is 72 units rented in 22 weeks or 3.2 a week. At this pace it will take almost a year and a half more to fill up the building assuming no one leaves when their lease is up. I don't know enough about this industry to know whether that's good or bad, but it seems a little slower than I'd expect.

There's also about 325 units that are just opened or about to hit the market (Arterra, The Grand).

Here are some projects that are under construction or about to be under construction.
2nd & Delaware (276)
City Club (283)
Galarie (425)
RMw2 (116)
1800 Walnut (134)
Mark Twain Tower (202)

Some others in the pipeline
Ashland @ the River Market (87)
Flashcube (208)
Muehlbach Apts (117)
Midland Building (100)
Three Light (300)

IMO, we definitely need more office projects and amenities downtown if we are going to keep this up. Getting the streetcar extension going would be a huge benefit.

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Last edited by KCDowntown on Thu Dec 06, 2018 1:47 pm, edited 2 times in total.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by brewcrew1000 » Thu Dec 06, 2018 1:46 pm

I'd be interested in seeing what the Occupancy Rate of the Crossroads Westside Apartments you can see from 35 are.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by KCDowntown » Thu Dec 06, 2018 1:48 pm

Today's CityscapeKC article has it at 55.7%.
brewcrew1000 wrote:
Thu Dec 06, 2018 1:46 pm
I'd be interested in seeing what the Occupancy Rate of the Crossroads Westside Apartments you can see from 35 are.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by grecobs » Thu Dec 06, 2018 1:54 pm

These numbers seem really low to me too. My mom ran a mgmt company on the plaza with 750~ units across midtown/Plaza. They often sat at 100% leased but usually ranged between 90-95%.

New York occupancy rates are usually 95%+. Obviously KC is not NYC but still think these numbers are low...

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Re: Are downtown apartment occupancy rapidly trending down?

Post by beautyfromashes » Thu Dec 06, 2018 2:08 pm

grecobs wrote:
Thu Dec 06, 2018 1:54 pm
These numbers seem really low to me too. My mom ran a mgmt company on the plaza with 750~ units across midtown/Plaza. They often sat at 100% leased but usually ranged between 90-95%.
It’s a lot harder to fill a new building than an established one that has been filled for years/decades.

Here is my ideal:
Kay Barnes- Attracted people to DT with entertainment.
Funk- pass
James- Rapid advancement of residents to the core.
Next mayor- Brought new commerce with high paying jobs back to DT.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by moderne » Thu Dec 06, 2018 2:14 pm

Union Hill founders was established and filled for years and now is well below 75% occupancy. Rents here are substantially lower than new units coming on line in the DT loop and Crossroads. The 2 bed 2 bath above and below me have been vacant for over 8 months now. My electric bill/heating is going to be much higher as they keep empty units at 60 degrees. Miss the insulation occupied units provide.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by brewcrew1000 » Thu Dec 06, 2018 2:44 pm

GRID wrote:
Thu Dec 06, 2018 12:59 pm
https://cityscenekc.com/downtown-dazzle ... -saturday/

With the lack of downtown jobs (especially tech type jobs that appeal to younger people) you have to think downtown is reaching that saturation point of those willing to pay more to live downtown AND commute to suburban jobs.
I don't think its downtown jobs only, you also have to look at the suburbs and the increased competition from the suburbs. Its not like KCMO is the only place building apartments attractive to young people. Lenexa City Center, Overland Park and other suburbs are building just as nice of apartments and they offer lots of the same amenities, have easy/hassle free parking, they are also relatively car break-in/crime free.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by KCPowercat » Thu Dec 06, 2018 2:57 pm

I feel like downtown is just now hitting it's cool kid stride. I don't feel like the occupancy of the top of the market towers is cause for much of s concern.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by GRID » Thu Dec 06, 2018 3:09 pm

brewcrew1000 wrote:
Thu Dec 06, 2018 2:44 pm
GRID wrote:
Thu Dec 06, 2018 12:59 pm
https://cityscenekc.com/downtown-dazzle ... -saturday/

With the lack of downtown jobs (especially tech type jobs that appeal to younger people) you have to think downtown is reaching that saturation point of those willing to pay more to live downtown AND commute to suburban jobs.
I don't think its downtown jobs only, you also have to look at the suburbs and the increased competition from the suburbs. Its not like KCMO is the only place building apartments attractive to young people. Lenexa City Center, Overland Park and other suburbs are building just as nice of apartments and they offer lots of the same amenities, have easy/hassle free parking, they are also relatively car break-in/crime free.
Right, but that's also my point. If you work at some office park in OP, then chances are you are going to want to live in a place like City Center or any of the other many places. Why would you pay more to live downtown, pay for parking and drive everyday to Overland Park or Lenexa (or other area suburbs like the Cerner campuses) when you can live 5-10 minutes away in a nice apartment community. I think even the most die hard people that really want to live in the city will grow tired of the lifestyle and cost of living downtown and commuting.

Downtown KC has far too few jobs for the size of the metro. KC has more suburban office parks than cities twice its size. And to make things worse, a large portion of the jobs that are downtown are government type jobs which typically have much older more suburban demographic. Downtown KC is totally lacking a large number of tech type jobs.

If Cerner was building 4 million sq feet (even 500k would do wonders) downtown, then you would see this apartment construction continue to boom.

I have always said that KC's urban apartment boom will come to a premature halt once the city catches up from basically having nothing at all. I think downtown KC may be hitting that magic number of who is currently working downtown along with those willing to commute. That pent up demand to live downtown has been met, but that growth was not sustainable once that market demand was met. And KC was so late to the downtown true luxury housing market that it sort of missed a large portion of the baby boomers moving to downtowns like Denver, MSP, Austin etc.

Downtown KC has absolutely got to get some major companies downtown (or just lots of smaller companies) or the downtown boom is going to slow to a crawl. Most people choose to live in high cost of living urban areas, deal with parking costs etc to avoid commuting. Very few people are going to choose to live downtown when it cost less to live a few miles away in similar apartment with similar amenities or get their own single family home.

FYI, I'm not pissing on KC here. I just really do think that the lack of any real corporate presence downtown is going to really start to slow growth just when things look like they are really doing well with all the new projects going up. I would have thought by now (with all the new residents) that there would be at least some "sizable" office construction going up and at least one major relocation from the suburbs. But as far as where companies want to be, KC is still stuck in 1989.
Last edited by GRID on Thu Dec 06, 2018 3:29 pm, edited 1 time in total.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by GRID » Thu Dec 06, 2018 3:22 pm

This should be going up on the riverfront or east village or east crosssroads etc. (of course in a more urban design).

The KC area already has SO MUCH suburban office space. Most metro areas are building very little suburban office space right now while downtown office towers are going up again in most major cities.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by WSPanic » Thu Dec 06, 2018 3:58 pm

GRID wrote:
Thu Dec 06, 2018 3:09 pm
brewcrew1000 wrote:
Thu Dec 06, 2018 2:44 pm
GRID wrote:
Thu Dec 06, 2018 12:59 pm
https://cityscenekc.com/downtown-dazzle ... -saturday/

With the lack of downtown jobs (especially tech type jobs that appeal to younger people) you have to think downtown is reaching that saturation point of those willing to pay more to live downtown AND commute to suburban jobs.
I don't think its downtown jobs only, you also have to look at the suburbs and the increased competition from the suburbs. Its not like KCMO is the only place building apartments attractive to young people. Lenexa City Center, Overland Park and other suburbs are building just as nice of apartments and they offer lots of the same amenities, have easy/hassle free parking, they are also relatively car break-in/crime free.
Right, but that's also my point. If you work at some office park in OP, then chances are you are going to want to live in a place like City Center or any of the other many places. Why would you pay more to live downtown, pay for parking and drive everyday to Overland Park or Lenexa (or other area suburbs like the Cerner campuses) when you can live 5-10 minutes away in a nice apartment community. I think even the most die hard people that really want to live in the city will grow tired of the lifestyle and cost of living downtown and commuting.

Downtown KC has far too few jobs for the size of the metro. KC has more suburban office parks than cities twice its size. And to make things worse, a large portion of the jobs that are downtown are government type jobs which typically have much older more suburban demographic. Downtown KC is totally lacking a large number of tech type jobs.

If Cerner was building 4 million sq feet (even 500k would do wonders) downtown, then you would see this apartment construction continue to boom.

I have always said that KC's urban apartment boom will come to a premature halt once the city catches up from basically having nothing at all. I think downtown KC may be hitting that magic number of who is currently working downtown along with those willing to commute. That pent up demand to live downtown has been met, but that growth was not sustainable once that market demand was met. And KC was so late to the downtown true luxury housing market that it sort of missed a large portion of the baby boomers moving to downtowns like Denver, MSP, Austin etc.

Downtown KC has absolutely got to get some major companies downtown (or just lots of smaller companies) or the downtown boom is going to slow to a crawl. Most people choose to live in high cost of living urban areas, deal with parking costs etc to avoid commuting. Very few people are going to choose to live downtown when it cost less to live a few miles away in similar apartment with similar amenities or get their own single family home.

FYI, I'm not pissing on KC here. I just really do think that the lack of any real corporate presence downtown is going to really start to slow growth just when things look like they are really doing well with all the new projects going up. I would have thought by now (with all the new residents) that there would be at least some "sizable" office construction going up and at least one major relocation from the suburbs. But as far as where companies want to be, KC is still stuck in 1989.
People change jobs more and more these days. Especially younger people. Living downtown in a central location and driving against traffic to the suburbs has ALWAYS suited me more than trying to find a place to live near where I work.

But overall, yes. We need more new jobs downtown. Totally agree.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by beautyfromashes » Thu Dec 06, 2018 4:30 pm

^ and many two income families work in different parts of the metro. Husband might work at Cerner while wife works at Sprint.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by KC_JAYHAWK » Thu Dec 06, 2018 6:31 pm

I agree with Grid. I work downtown and have for 12 years and it still feels dead most of the day (excluding lunch). There are just no people walking around. In my building, 1KCP, Swiss Re recently moved in which pretty much has maxed out the tower. Still pissed Cerner is not interested in building downtown, but not sure what the City can do without Cerner just jumping the stateline, like Swiss Re did.

At some point Copaken is going to have to take a risk and build a spec building downtown, even if it is only 10-12 stories. Or Cordish?

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Re: Are downtown apartment occupancy rapidly trending down?

Post by gfenn11 » Thu Dec 06, 2018 6:42 pm

All depends on the price point. My somewhat-reasonably priced building on Broadway (not a QH property) has been completely leased out since I moved in two years ago.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by earthling » Thu Dec 06, 2018 6:49 pm

Downtown has been over 95% leased for a good ten+ years but with a new wave of higher end units online would appear there's not enough higher income willing to live downtown at over $2/sqft. Lack of higher income downtown job growth probably a factor but if nearly all units were under $1.50/sqft it would probably still be over 95% leased. Given there aren't many buildings left to convert more likely to offer under $2/sqft, new construction is the path forward and attracting higher income downtown needs to be the target, whether they work downtown or not. Downtown job growth isn't necessarily the solution if it's not above avg income jobs.

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Re: Are downtown apartment occupancy rapidly trending down?

Post by shinatoo » Thu Dec 06, 2018 6:54 pm

$2000 a month gets you a $350k home or a 2 bed 2 bath apartment with one parking spot. I think most people would opt for a house. $350k in KC gets you a pretty sweet place.
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