“We suddenly had this influx of millennials hitting the apartment market and at the same time had the baby boomers downsizing from the suburbs and moving in closer to, if not to, downtown,” said Loren DeFilippo, director of Ohio research for real estate firm Colliers.
After talking about the idea for a while, Dan Meixner said he and his wife moved to an apartment in the Delco Lofts after their daughters graduated from college in 2017.
“I don’t miss taking care of a lawn. I don’t miss shoveling snow. We’ve enjoyed festivals, we’ve enjoyed 2nd Street Market and walking over to the Levitt Pavilion. There’s so much downtown to offer. There isn’t a time when we say ‘Boy, we wish there was something to do,’” said Meixner, president of Chaminade Julienne.
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About 1,000 to 1,200 new apartment units should come available this year, said Dave Lockard, CBRE senior vice president. That surge, which has been growing in the past years, is supposed to level off in the coming years as the new apartments meet demand.
The real estate firm is so far predicting a little under 500 new apartments in the Dayton area in 2020 and about 320 in 2021.
Cities like Oakwood and Centerville are about to get their first new apartments in years.
Hills Properties faced pushback from some Oakwood residents over traffic and density but an amended 84-condo project, now called Element Oakwood, was approved and is under construction across from the Old River Sports Complex. People should start moving in this October, according to Hills.
Hills Properties and Beavercreek-based Mills Development are also building a 312-unit apartment complex Allure, behind the Cross Pointe Shopping Center. Renters have moved in the first and second floor of the first building and the next six buildings will be completed in phases about every other month.
Centerville now has its first new apartments in 20 years and more are on the way.
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The 360-unit Gateway Lofts are in development across the street and a 300-unit apartment complex, Cornerstone Apartments, could break ground before the end of the year at Cornerstone of Centerville.
Will Kirk, project manager with Hallmark Campus Communities, which is building Gateway Lofts, said the first renters will likely start moving in late October and they are currently working with interested renters. About 40 to 50 units will come available at a time and Kirk said he anticipates they will go quickly as each phase comes available.
“I wouldn’t be surprised if they are pretty much leased up as we open,” Kirk said.
Lockard said the new construction is at a high enough price where it isn’t necessarily competing with the existing older properties.
“There were a lot of new building in the ’60s and ’70s and early ’80s. If you think about it, that’s a lot of 30 and 40 and 50 year old properties,” Lockard said.
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Even with the new construction, apartments in Dayton and the surrounding suburbs are mostly occupied. Just under 95 percent of apartments in the Dayton area were occupied as of 2018. When broken down by parts of the region, northern, southern and eastern suburbs all had between 94 and 95 percent occupancy rates for apartments.
“We’re only adding about 1 percent or 1.5 percent to inventory in Dayton. So we’re a long way from overbuilding,” Lockard said.
Downtown Dayton had the biggest surge in occupancy in recent years. In 2014, CBRE’s survey found 84.3 percent were occupied and now 95.5 percent are occupied. The average rent for downtown is also climbing as more high-end apartments come available. From 2017 to 2018, CBRE reported the average rent in greater downtown increased 10.7 percent.
Alan Lindy, president of Lindy Property, owns several of the larger apartment complexes that were in downtown before the construction boom, having bought JP Flats and Dayton Towers over the last year and for nine years owned St. Clair Lofts.
Lindy said the longer running apartment complexes that he owns aren’t harmed by a surge of new apartment communities starting to rent in downtown Dayton. The same improving economy that drew the new developers is also what drew Lindy to buy and renovate Dayton apartments and know his company will get a return on its investment.
“For me, it just helps Dayton to have new investment and to have new people coming in who are comfortable paying the premium rent you need for new construction. I’m sure we’ll lose some residents to it, but in the long run it will be good for Dayton,” Lindy said.
In 2018, the average monthly rent in the Dayton area for a two-bedroom apartment was $971. In the Greater Downtown area, the average rent was $1,367 for the same apartment, according to CBRE.
Dayton area renters are likely to see higher rents for years to come because of the number of housing units that were destroyed in the region following Memorial Day tornadoes, said Lloyd Cobble, vice president of Oberer Management Services and president of the Greater Dayton Apartment Association. Annual increases are likely to top 3 percent at most area apartments as occupancy rates reach record highs.
“Occupancy is going to be at an all time high here soon because of the tornado. It’s got people looking for apartments so the market is going to get very, very tight,” Cobble said.
The health of the apartment construction market is part of the story of the health of the economy.
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The number of building permits filed for new construction of homes — both single family homes and multi-family buildings — is one of the indicators used to measure what’s to come for the local economy.
There were about 1,500 single family and multi-family permits issued in 2007 in the Dayton metro area, that number fell by half in the heart of the recession, and was back up to about 1,200 for 2018, according to CBRE.
These permits mean people are about to spend money on not just building the buildings but also on buying stuff to put in their homes. It takes faith in the economy to start building apartments because their success depends on there being people willing to rent or buy once they are built, which can take more than a year, builders said.
Builders are reluctant to start these projects unless they feel like there are good times ahead.
“So when those start rising in numbers — that there’s more building permits per month, month after month — that’s a sign that we should expect economic growth. And apartments are part of that,” said Interim Raj Soin College of Business Dean and Economics Professor Tom Traynor.
Reporter Holly Shively contributed to this story.