- Associated Press - Sunday, March 1, 2015

LINCOLN, Neb. (AP) - Explosive growth in student-oriented housing has overshadowed an apartment building boom throughout Lincoln.

Complexes are being built or have recently opened in all corners of the city, and building permits for multi-family projects are reaching levels not seen in decades.

Apartment developers applied for 957 building permits last year — the most in a single year since 1998, according to figures from the city Building and Safety Department.

But city planner Brandon Garrett said apartment building permits, especially for downtown units, often get coded wrong in the Building and Safety Department’s system. Garrett combed through all the building permits filed in 2014 and says that by his count there were permits for 1,012 multi-family units. The percentage of total building permits that were designated multi-family — 54 percent — was also at its highest level in quite some time, Garrett said.

In part, what’s happening in Lincoln mirrors a national trend. According to the National Association of Realtors, more than 220,000 new apartment units were added in the U.S. last year. It’s estimated that number will grow to more than 250,000 this year.

But Lincoln also has some things going on that make it attractive to apartment developers, the Lincoln Journal Star (https://bit.ly/1zLflns ) reports.

“The Lincoln area has some great apartment demand drivers in place, as both job and population growth are outpacing the national average, boosting household formation,” said Christopher Kulig, a real estate economist with CoStar Group.

Kulig said the apartment vacancy rate in Lincoln dropped to 2.8 percent last year from 3.2 percent the year before, as the number of units filled by renters outpaced the number of new units by about 100. Lincoln’s apartment vacancy rate is well below the national average of 4.8 percent.

Lincoln’s low vacancy rate was one of the factors that drew Lance Swank’s company here.

Swank, chief operating officer of Sterling Group of Mishawaka, Indiana, said the company for years focused its apartment development in the Great Lakes region, only branching out a few years ago after business slowed there.

A national market study identified a number of markets with promise, mostly in the Southeast, West and Midwest, he said.

“Lincoln came up clearly as a great opportunity,” Swank said.

In addition to the low vacancy rate, other factors that made Lincoln stand out are the stable economy, rising income levels and property taxes that are “not the lowest but certainly not the highest.”

Sterling partnered with Braxton Development of Bozeman, Montana, on the 220-unit Aventine complex at 33rd Street and Wilderness Hills Boulevard, which is southeast of the Wilderness Hills shopping center at 27th and Yankee Hill Road.

The complex’s first two buildings are complete and residents started moving in this month. Swank said the entire 13-building complex will be completed by May.

He said there has been steady traffic so far among people interested in leasing apartments that range from $735 a month for the smallest one-bedroom, one-bathroom unit, to $1,555 a month for the largest three-bedroom, two-bath unit.

Who is renting those units? Swank provides this list:

(asterisk) Millennials with good-paying jobs;

(asterisk) “A lot” of empty nesters who have moved somewhere warmer part time but still want a dedicated Lincoln residence;

(asterisk) Corporate executives without families;

(asterisk) People in Lincoln on short-term work assignments or those likely to be transferred somewhere else after a couple of years;

(asterisk) Newly married couples who don’t have children.

“We’re happy so far,” Swank said.

Craig Smith is happy, too.

Smith, one of the owners of Speedway Properties, said he’s had good interest so far in the Arena Lofts in the Haymarket.

The Arena Lofts, at Eighth and Q streets, is one of the few non-student-oriented apartment developments downtown.

Smith said the 66-unit development, which is opening March 1, is about half leased.

So far, it’s a mix of young professionals who work for tech companies downtown and both in-town and out-of-town business owners who want a place to stay downtown for business purposes and social events such as football and basketball games.

While Smith and Swank are optimistic about the apartment boom, at least one local developer is worried that the city is becoming overbuilt.

Dave Noecker, chief operating officer of Commercial Investment Properties, said leasing at the Lincoln company’s newest apartment complex, The Flats at 84, has been “a little disconcerting.”

“At The Flats, we haven’t absorbed as fast as we projected,” Noecker said, talking about the rate at which the units have been leased.

The complex near 84th and Old Cheney Road is in a part of the city that has seen more apartment building than anywhere except for downtown.

A new complex opened near 84th and Nebraska 2 in 2013, a 220-unit complex is under construction near 91st and Pine Lake Road and a 147-unit complex is planned along Nebraska 2 between 70th and 84th.

There also are apartments going up near the Highlands Golf Course, near 14th and Pine Lake Road and along North 84th Street, Noecker said.

“We’re feeling the effects of absorbing those units,” he said.

And not just at The Flats, but at the 18 other apartment complexes CIP owns or manages in Lincoln.

“There’s too many units coming online in this size of a market,” Noecker said, estimating that somewhere between 1,000 and 1,400 units will hit the market this year.

And that doesn’t even count projects still under development.

Already this year, two new complexes with more than 330 units combined have filed building permits. There also is a plan to build a 120-unit complex on five acres of property at the southeast corner of Highlands Golf Course. And at least two other already-built complexes have plans to expand by more than 100 units each.

That should ensure that apartment building doesn’t drop off much in 2015.

But Noecker said he thinks the boom already is over.

“The market that we knew 12 months ago — it’s on the downswing,” he said.


Information from: Lincoln Journal Star, https://www.journalstar.com

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