Apartment construction helps drive residential construction

Oct. 27, 2013 @ 03:33 PM

Off West Chapel Hill Street across from the Durham police headquarters, the frame of a new apartment complex is nearing completion.

The 338-unit complex known as “605 West” is targeted for graduate students and young professionals, and is expected to have units starting at a rate of $880 per month. That’s the expected rate for an individual lease in a two-bedroom apartment.
The frame and roof of the complex are expected to be completed in December, and the entire project is on-track to finish in the summer of next year.
“We think our amenities and our location are going to help us reach a high-occupancy rate as well,” said Susan Jennings a spokeswoman for EdR, the Memphis, Tenn.,-based real estate investment trust that’s leading the project development and is the majority owner of the complex.
Apartment development like EdR’s complex has continued to help drive new residential construction activity in Durham.
In the third quarter, building permits were filed for 1,770 new residential units in the city and county. The total was up 72 percent compared with the same period last year, according to Durham City-County Building and Inspections data.
The total estimated cost of construction of all residential units was $151.3 million, according to the data. That’s up from the $108.9 million seen in the same period last year.  And in the city in the third quarter, more than 60 percent of the estimated residential construction cost in the city was from apartment projects.
“The (apartment) market continues to be hot,” said Ted Conner, vice president for economic development and community sustainability of the Greater Durham Chamber of Commerce. “(Apartment) vacancies got extremely low. There’s money in that sector to support it. It’s pretty active right now. I don’t think we’re going to continue to see that frenetic, high level of activity, but right now it’s still very active.”
Engle Addington, an analyst for the Charlotte-based apartment research firm Real Data, said the apartment construction boom started about two years ago in the Triangle. However, she said Durham County currently accounts for less than a third of the current activity in the Triangle. Brier Creek is “very active,” she said.
The firm reported that there were 10,076 apartment units under construction in Durham, Orange and Wake counties in July. Durham County alone had 2,836 units under construction.
Real Data’s report cited strong demand for apartments across the Triangle in the month, and said average rents continued to grow. However, it also reported that vacancy rates were expected to increase, but growth in rents was expected to slow.
Triangle-wide, the average rent in July of this year was $913, according to the firm. That’s up from January’s $868 per month, and July of last year’s $864. Durham County’s average vacancy rate was 5.8 percent, and the average rent was $908.
Conner said the new apartment construction he’s seeing is middle-to-upper end. But Conner said he expects the added supply to help renters rent-wise.
“As shoppers have more opportunity to look at more options that tends to give the (renter) a little bit more shopping power,” he said. “I’m not going to say how much, but some.”