RISKY RENTALS.Byline: Diane Dietz The Register-Guard Developers across Eugene-Springfield are launching big apartment construction projects at a time when market trends indicate that they should leave their bulldozers idle. After a three-year lull in multiunit development, more than a thousand new units are either under construction or in planning. Yet the market is going begging for tenants - unless some economic factors change drastically and soon. "It is a gamble," said Rob Wood of Slayden Construction, which is now building more than 84 units in Eugene and is actively planning 306 more units in the city. "We're trying to address a need that doesn't yet exist, that we hope does in a year. We could be hurting ourselves and everybody else around by overbuilding the market." Wood's Stayton-based company is one of Eugene's biggest apartment builders and owners. The company's new apartments would go in the Danebo area. Meanwhile, Springfield developer Roy Gray is finishing a second major project in east Springfield. And a Portland real estate agent says the final phases of the stalled Chase Village project near Autzen Stadium The stadium is tucked between the Willamette River and Coburg Hills. The uniquely shaped bowl blends in with the wooded Eugene landscape. The shape also allows for unique acoustics, making it one of the loudest stadiums in NCAA Football for its capacity. are likely to rise by fall 2006. Projects are popping back onto the front burner Noun 1. front burner - top priority; "the work was moved to the front burner in order to meet deadlines" precedence, precedency, priority - status established in order of importance or urgency; "... , said Steve Nystrom, principle planner for Eugene. The Planning Department's phones are ringing with zoning inquiries and requests for pre-development conferences, he said. "In recent months we've definitely seen an upswing Upswing An upward turn in a security's price after a period of falling prices. ." Even dogs are welcome Still, it's hard to see any signs in the local apartment marketplace that would warrant the developer's faith, said Dan Puffinburger, an analyst with the Eugene appraisal firm Duncan & Brown. A build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. in apartments in late 1990s led to an oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies of units and an unusually high vacancy rate that topped out at 5.2 percent and has remained unchanged for the past year. With mortgage rates at a 46-year low, local landlords have experienced a steady exodus of the "best-quality tenants" as they stepped up into home ownership, Puffinburger said. Consequently, the few new apartments built in the past two years have been excruciatingly slow to fill, and when tenants do move into the new digs they're most likely to leave a pained landlord in their wake. "The increased home ownership is good for the community. But now the community doesn't need as many apartment units," Puffinburger said. All this is great news for renters. Gone are the days when Eugene-Springfield landlords charged stiff fees even to apply for an apartment. Now they're slashing move-in fees and touting rent reduction incentives. "People are offering concessions universally all over the market. It's very competitive," Puffinburger said. The concessions come as a jaw-dropping surprise to some tenants. Kimberly and Robert Ahern, for instance, called to tell their families when a letter arrived from their landlord with news of a $100 per-month rent reduction. "You know what happened?" Robert asked. "We got our rent lowered." The young couple, who are both contact-lens manufacturing technicians, already felt as if they were in heaven at Roy Gray's Jenna Village, a 237-unit development in East Springfield that opened two years ago. The units are arranged around a clubhouse with an exercise room filled with treadmills, stair steppers and elliptical trainers. In the evening, a half-dozen kids skitter skit·ter v. skit·tered, skit·ter·ing, skit·ters v.intr. 1. To move rapidly along a surface, usually with frequent light contacts or changes of direction; skip or glide quickly: around the central hub on bikes and scooters List of scooter models per manufacturer Aprilia
The townhouse-style units feel spacious with 1,000 square feet, two bedrooms and 1 1/2 bathrooms, the Aherns said. With the rent cut, the Aherns pay $595. The couple figures that they save an additional $50 because the rent includes extended basic cable. The forced-air heat and energy-efficient appliances are penny pinchers. And the icing: The landlord enters the names of all tenants who pay their rent on time into a drawing for $100 gift certificates, the couple said. But the best concession of all for the Aherns is that Jenna Village allows pets, so they can keep Diego, their 2-year-old German Shepherd German shepherd, breed of large, muscular working dog perfected in Germany at the turn of the 20th cent. It stands about 25 in. (64 cm) high at the shoulder and weighs from 60 to 85 lb (27.2–38.5 kg). , and rabbits Dakota and Coachella. Many landlords balk balk the action of a horse when it refuses to obey a command to which it usually responds. See also jibbing. at renting to pet owners because pets - especially dogs - can cause enormous wear and tear and other damage, and be disruptive to other tenants. The Aherns are using the rent rebate to wrench down on their credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. . They say the rent deal is so good they've shelved plans to buy a house. "We just decided, at this point of time, we're happy here. We figured we'll take advantage and save some money," Robert Ahern said. All this because Jenna Village Manager Bryce Wilberger couldn't fill the 2-year-old complex without making concessions. Thirty percent of the units were vacant earlier this year. When he dropped the rent to $595 a month, the vacancy rate fell to 21 percent. It's what the market dictates, he said. "We moved it, and it's been proven right so far." So why are developers risking a housing glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. and a further depression in rents by planning at least 1,053 more apartments in Eugene-Springfield? Build now, save later Part of the answer has to be the low cost of money. Right now, developers can borrow construction money and pay just a couple of percentage points in interest. But it's more complex than that. The great interest rates were around for a year without spurring a local apartment building boom. What's happening right now is a prickling prick·le n. 1. A small sharp point, spine, or thorn. 2. A tingling or pricking sensation. v. prick·led, prick·ling, prick·les v.tr. 1. worry about what's ahead, said Bill Conerly, a Lake Oswego Lake Os·we·go A city of northwest Oregon, a residential suburb of Portland. Population: 35,800. economist and consultant. An uptick Uptick A transaction occurring at price above its previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. in mortgage rates last month made some people jump. "They think rising interest rates are right around the corner and breathing up the back of their neck." They may be right. Federal Reserve policy-makers signaled last week their aim of inching the constellation of interest rates up maybe in June but more certainly in August. That's spurring some developers into action. "I would much rather have cheap money and run a relatively small vacancy risk than wait until I had no vacancy For No Vacancy (band), see . No Vacancy is a standard sign in motels indicating there are no rooms available for rent at the moment. In many places the word "No" in the sign is made of a neon light bulb and can be turned on (to indicate "no vacancy") or turned off (to risk and expensive money," said developer Kent Jennings, who has 70 units in the works. Slayden's Rob Wood said the anticipated uptick in borrowing costs is part of the equation. Developers don't secure their permanent financing Permanent financing Long-term financing using either debt or equity. permanent financing The long-term financing that supports a long-term asset. until their projects are done - meaning projects under way today might miss the cheapest rates. "We wish we'd started (ours) a year ago," he said. Feeling for gold Several of the developers are increasing the chance that their projects will succeed in an overcrowded o·ver·crowd v. o·ver·crowd·ed, o·ver·crowd·ing, o·ver·crowds v.tr. To cause to be excessively crowded: a system of consolidation that only overcrowded the classrooms. market by focusing on an underserved niche. They figure that new, high quality three-bedroom units are in demand. Puffinburger's latest numbers concur CONCUR - ["CONCUR, A Language for Continuous Concurrent Processes", R.M. Salter et al, Comp Langs 5(3):163-189 (1981)]. : The price for three-bedroom units rose 3.7 percent when rents for other-sized apartments generally declined or stayed the same. Developers are "doing analysis based on construction cost per square foot and rent per square foot and trying to figure out where to get the biggest bang for the buck," Puffinburger said. "You throw an extra bedroom on and it doesn't usually cost very much. If you get another $100 (in rent), maybe that works for their model." Wood said his company talked to landlords in nearby complexes and found that they were turning families away for lack of large units. Slayden's Barger Crossing project will include a dozen three-bedroom units. "We're going after that," Wood said. Gray is appealing to families by offering on-site recreation such as jogging trails, lighted basketball courts and other parklike elements. Jennings' 30-unit development on Cal Young Road in Eugene is slated to have a dozen two-bedroom units that include a separate "media room" because that's what people want. He's appealing to the market of families in transition, moving to town or building a house or displaced from their houses for other reasons. "People who have a lot of stuff and are used to single-family amenities," he said. And as local developers charge ahead, they're looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. subtler signs that they've made the right decision. Slayden analysts have detected a drop in vacancies in certain neighborhoods, Wood said. If Slayden thinks the market is ripe for more construction, that's reason enough for Jennings to take heart. "They're the big boys," he said. "They're playing with real money. They know our market, and if they didn't think it would be successful, they wouldn't do it." Besides, big risks can reap big rewards. "Time to get out of the ground - or to purchase properties - is when things are slow and people are wringing wring v. wrung , wring·ing, wrings v.tr. 1. To twist, squeeze, or compress, especially so as to extract liquid. Often used with out. 2. their hands and saying `Oh gosh: Should we or shouldn't we?' '' Jennings said. "That's the time more money is made." EMPTY APARTMENTS The vacancy rate for Eugene-Springfield apartments stands at 5.3 percent. Here's the rate for various neighborhoods. Downtown Eugene: 9 percent Ferry Street Ferry Street (Chinese: 渡船街) is a street between Ferry Point and Mong Kok Tsui in Kowloon, Hong Kong. The street was on the shore of old reclamation before the new West Kowloon reclamation in 1990s. Bridge: 4.1 percent South Eugene: 10.8 percent West Eugene: 3.6 percent Centennial/Autzen: 5.2 percent Goodpasture Island Road: 4.1 percent Gateway: 4.5 percent All Springfield: 7.2 percent - Duncan & Brown Apartment Report BUILDUP build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. New apartment projects, at various stages of planning and construction, on the horizon in Eugene-Springfield Roy Gray project in Springfield: 237 units at 30th and Main streets. Ready to rent: First phase, May 15 Slayden Construction/Barger Crossing: 84 units next to Barger Crossing shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into in West Eugene. Ready to rent: Early 2005 Maia Village LLC/Realbest: 96 units at 2125 Marcola Road, Springfield. Ready to rent: Early 2005 Jennings Development: 40 units off Lone Oak Lone Oak can refer to:
Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. . Ready to rent: May 2005 St. Vincent DePaul Society/Meili Builders: 60 low-rent units off River Road in Santa Clara. Ready to rent: June 2005 Slayden Construction/Candlelight Partners: 306 units south of Royal Avenue in Danebo. Ready to rent: Early 2006 Jennings Development: 30 units at Cal Young and Norkenzie roads in Eugene. Ready to rent: Summer 2006 Chase Village: 200 units off Martin Luther King Jr. Boulevard, Eugene. Ready to rent: Fall 2006 CAPTION(S): Kimberly and Robert Ahern were surprised to find their rent reduced by $100. Their apartment complex allows dogs, an unusual amenity. |
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