At what point does DT become overbuilt with respect to Apartments

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
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Highlander
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At what point does DT become overbuilt with respect to Apartments

Post by Highlander »

The amount of apartments under construction in DT KC right now is just mind boggling. Several conversions and good sized new builds. Can the market really absorb the stock that is being created? I was encouraged by One Light's success but there's several near similar size projects going on at the same time now.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by earthling »

The City goal is to get downtown to 35K-40K residents if I recall. It's approaching mid-20's now. Long way to go.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by kboish »

One light was fully leased in 3 months from opening. From an industry standpoint that is pretty much instantaneous. Apartments will keep going up until the absorption rate is longer than 1 year. With the number of units coming online at once in the next 12-18 months, it is certainly possible we may be approaching that point...but as with most things we won't know until it happens.

In my opinion I don't think we're over built yet though. We've got to remember though- there was 5-6 year period that NOTHING was built anywhere. Also, KC was way behind in the buildup of DT compared to other metros- so there was a latent demand there for housing downtown anyway. Add into that the coming of age of millennials (ie moving out of parents house) and the downsizing of boomers and it is likely this level of apartment building will continue for at least another 3-4 years. Huge pent-up demand. I'd see a national recession slowing our building more than actual demand limitations.

This level of building has been happening in many cities. We just missed the boat the last time it happened and so we just aren't used to this sort of thing here in KC (we are still behind).

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Re: At what point does DT become overbuilt with respect to Apartments

Post by GRID »

kboish wrote:One light was fully leased in 3 months from opening. From an industry standpoint that is pretty much instantaneous. Apartments will keep going up until the absorption rate is longer than 1 year. With the number of units coming online at once in the next 12-18 months, it is certainly possible we may be approaching that point...but as with most things we won't know until it happens.

In my opinion I don't think we're over built yet though. We've got to remember though- there was 5-6 year period that NOTHING was built anywhere. Also, KC was way behind in the buildup of DT compared to other metros- so there was a latent demand there for housing downtown anyway. Add into that the coming of age of millennials (ie moving out of parents house) and the downsizing of boomers and it is likely this level of apartment building will continue for at least another 3-4 years. Huge pent-up demand. I'd see a national recession slowing our building more than actual demand limitations.

This level of building has been happening in many cities. We just missed the boat the last time it happened and so we just aren't used to this sort of thing here in KC (we are still behind).
There is a lot going on....for Kansas City. I'm a little surprised to see so much action in Downtown myself. However, like you said, what KC is dong now is average at best and KC got a very late start and missed many years while other cities were building, so i think KC is just now even developing a market for urban downtown housing. I always said that once they get that first cordish tower up and people see what "new construction" urban high rise living is like many more should follow and that's what will happen. The biggest problem facing KC is that there are so few jobs downtown and there is not even a hint of more jobs or office space coming downtown for many many years. That is what will eventually catch up to the downtown housing boom and cause it to slow while other cities will continue at their current pace. Most cities have nearly as much office space under construction now as residential.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by loftguy »

More than half of downtown residents work outside of downtown. A favorite quote, "I may work in Lenexa, but I'm sure the ef not going to live there..."

Here's an observation/informed opinion: At this very moment, there are easily more than 1,000 people looking seriously for a place to live downtown. They NEED to move in the next 10-40 days, and most of them are not finding openings.
There are many more who are considering a move in a more relaxed manner, for something to move into over the next 4-6 months.
Many thousands are considering a move to downtown KC, if they can find housing that fits their needs and expectations.

I'm not concerned that we are overbuilding. I'm concerned that we are building too much for the same upper third of the marketplace and not enough diversity in options for even that segment.

We need 5,000 apartments now, which would rent for less than $1,000 per month. Not low/moderate income, but for market rate renters

We also need a couple thousand townhouses, or zero-lot line options which are for purchase or rent. A patio and a patch of dirt in the back or front.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by kboish »

loftguy wrote: I'm not concerned that we are overbuilding. I'm concerned that we are building too much for the same upper third of the marketplace and not enough diversity in options for even that segment.

We need 5,000 apartments now, which would rent for less than $1,000 per month. Not low/moderate income, but for market rate renters

We also need a couple thousand townhouses, or zero-lot line options which are for purchase or rent. A patio and a patch of dirt in the back or front.
Yes to all of this. (btw, I've heard there are some townhomes in the work for Xroads...)

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Re: At what point does DT become overbuilt with respect to Apartments

Post by earthling »

loftguy wrote: We need 5,000 apartments now, which would rent for less than $1,000 per month. Not low/moderate income, but for market rate renters.
It may be harder to find market rate well under $1.50 sq/ft after streetcar opens, especially w/in walking distance of _free_ streetcar. This is the opportunity Midtown has - downtown overflow. While I'd rather see downtown get to 35K+ residents first, I could see developers targeting $1-$1.25/sqft with more market rate Midtown apts (whether building upgrades/conversion or new builds). And as Midtown builds up, might justify more bus frequency for SW Tfway, Bway and Gilham bus lines to downtown. Mainstreet MAX frequency already decent except Sundays.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by DaveKCMO »

kboish wrote:Yes to all of this. (btw, I've heard there are some townhomes in the work for Xroads...)
where?

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Re: At what point does DT become overbuilt with respect to Apartments

Post by flyingember »

loftguy wrote:We also need a couple thousand townhouses, or zero-lot line options which are for purchase or rent. A patio and a patch of dirt in the back or front.
there's space for around 100 between empty lots in Columbus park and the west side. That's a decent starting point

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Re: At what point does DT become overbuilt with respect to Apartments

Post by beautyfromashes »

If the goal is selling residents in living downtown and selling the cost by becoming car less, there will need to be many more jobs available within walking distance or on the streetcar/public transit lines.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by taxi »

In Columbus Park, I have been getting more inquiries for loft rentals than I have in 14 years of doing this. Almost all are looking for something around $1,000 a month.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by Eon Blue »

loftguy wrote:More than half of downtown residents work outside of downtown. A favorite quote, "I may work in Lenexa, but I'm sure the ef not going to live there..."

Here's an observation/informed opinion: At this very moment, there are easily more than 1,000 people looking seriously for a place to live downtown. They NEED to move in the next 10-40 days, and most of them are not finding openings.
There are many more who are considering a move in a more relaxed manner, for something to move into over the next 4-6 months.
Many thousands are considering a move to downtown KC, if they can find housing that fits their needs and expectations.

I'm not concerned that we are overbuilding. I'm concerned that we are building too much for the same upper third of the marketplace and not enough diversity in options for even that segment.

We need 5,000 apartments now, which would rent for less than $1,000 per month. Not low/moderate income, but for market rate renters

We also need a couple thousand townhouses, or zero-lot line options which are for purchase or rent. A patio and a patch of dirt in the back or front.
What can the city do, if anything, to encourage developers to fill out the middle third?

What market conditions need to happen for developers to do this on their own?

As mentioned previously, we aren't lacking for open parcels in downtown. Westside, Columbus Park, Longfellow and Beacon Hill are obvious candidates.

If the "keep those people away" light industrial zoning was removed from Paseo West, it seems like that area could be carpeted with townhomes and rowhouses. (IIRC, it was...once upon a time.)

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Re: At what point does DT become overbuilt with respect to Apartments

Post by loftguy »

Eon Blue wrote:
If the "keep those people away" light industrial zoning was removed from Paseo West, it seems like that area could be carpeted with townhomes and rowhouses. (IIRC, it was...once upon a time.)
To put it bluntly, I'm concerned that many have ceded Paseo West to the homeless. Not everyone. Many involved in the HUD Choice Neighborhoods planning are working against this concept, but there are significant powers that see this as the 'solution' for cleaning up downtown.....

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Re: At what point does DT become overbuilt with respect to Apartments

Post by brewcrew1000 »

If there is this much building going on, are we pulling new people from other metros to fill the need or is this taking away residents away from one part of the metro and putting them downtown. Wonder what part of the metro suffers the most when there is a huge increase in urban housing? Or is it more complex, like are the people in small rural towns 100-250 miles away moving families into the suburbs and then some of the younger people in the suburbs moving into the cities? Same goes for for any city around the country.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by flyingember »

brewcrew1000 wrote:Or is it more complex, like are the people in small rural towns 100-250 miles away moving families into the suburbs and then some of the younger people in the suburbs moving into the cities? Same goes for for any city around the country.
Rural areas have been depopulating and moving to urban areas for over 130 years.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by loftguy »

People moving downtown in a generally descending order:
-post grad 20-30 year olds...suburban raised and choosing urban option
-regional relocations from 200 mile radius
-urban dwellers relocating from other major metro areas
-empty nesters - from suburb and exurb

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Re: At what point does DT become overbuilt with respect to Apartments

Post by DaveKCMO »

loftguy wrote:People moving downtown in a generally descending order:
-post grad 20-30 year olds...suburban raised and choosing urban option
-regional relocations from 200 mile radius
-urban dwellers relocating from other major metro areas
-empty nesters - from suburb and exurb
would you say that owner-occupied units changes this order at all?

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Re: At what point does DT become overbuilt with respect to Apartments

Post by maison rustique »

We are an older couple who want to move downtown--want to buy a condo or townhouse. But for some reason, the developers seem to think that all of these need to be "luxury" and have so many building amenities that the maintenance fees are way too high. We don't care about a pool. We don't care about a gym. We just want a nice-sized, well-kept, safe place to live. We can't be the only ones. If you build it, we will come.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by earthling »

You might check Plaza area condos. West Plaza area has apt conversions that are modernized but with relatively low maintenance fees. S of Plaza Library area has some apt conversions that aren't quite as nice but is a nice area and low fees. Central Plaza likely to be more luxury with higher fees. Be careful with buildings that have recently converted as the developers intentionally sell units with low dues to get people in. It takes a few years after owners have full control for the appropriate level of maintenance fees to be figured out.

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Re: At what point does DT become overbuilt with respect to Apartments

Post by brewcrew1000 »

maison rustique wrote:We are an older couple who want to move downtown--want to buy a condo or townhouse. But for some reason, the developers seem to think that all of these need to be "luxury" and have so many building amenities that the maintenance fees are way too high. We don't care about a pool. We don't care about a gym. We just want a nice-sized, well-kept, safe place to live. We can't be the only ones. If you build it, we will come.
This is the same problem NYC has, middle and lower priced market rate apartments get swallowed up as soon as they hit the market but there is a somewhat gluttony of luxury apartments on the market in NYC.

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