The Cost of Rent: How the apartment market in St. Joseph County is changing
ST JOSEPH COUNTY —
If you live in St. Joseph County, you might have noticed a lot of construction projects in the area.
Developers are building more than seventeen apartment complexes and condos in South Bend and Mishawaka alone. That means around 700 units coming online by the end of the year.
"There's been a lot of interested and excitement that just hasn't been downtown," says Bill Schalliol, executive director of economic development for the county.
Projects like Smart Streets, Ignition Park and the Chase Tower are making the area pretty attractive.
"There's been tremendous growth in South Bend and the St. Joseph County area in the last several years, and we don't see a reason for that stopping," says Michael Zink, senior vice president for Bradley Company. "In fact, with the renewed energy in the economy of the past several months here, we see this being a real opportunity for us."
That opportunity is an opportunity for growth. Of the 700 or so apartments being built in the county, a few hundred of those are being developed by Bradley Company, including GrandView Flats and Townhomes, and Studebaker Lofts.
Zink says the face of the apartment market is changing.
"Most properties nowadays are what they call 'amenities rich,'" he says.
People want more of a homelike feel with garages, granite counter tops and wood flooring.
"It's to satisfy people," Zink adds.
Apartments are graded on a letter scale. Communities like Grandview Flats are considered A properties.
"Once you've built three new A properties, your previous A properties become more affordable," Zink says.
That's because there's more competition for the same number of renters.
"You'll see rents go down or you'll see a bunch of freebies come up," says James Cunningham, COO of Marquette Management, who owns Main Street Village in Granger. "'Hey stay with us, you'll get a free garage for the term or your lease,' or 'you get two months free if you sign a 14-month lease.' There will be much more incentives going around from a lot of different communities."
But, what's good for the goose isn't necessarily good for the gander.
"The losers, if there are losers in this, is the impact to the existing apartment owners," Cunningham says. "It impacts the ability of an individual owner to be as profitable as it was before, when there was less competition."
If individual owners aren't profitable, renters will start to see a difference.
"Everything doesn't feel as crisp," Cunningham says.
Cunningham says apartment properties have certain fixed costs. Mortgage payments, taxes and payroll can't be ignored. He says maintenance is one of the first things to go.
"You can fix anything with three things: drywall screw, duct tape and caulk. As long as you have those three things, you can fix almost anything temporarily. Truthfully, that's all you really ever need," Cunningham says. "They'll start worrying a lot less about aesthetically the way it looks."
"A perfect example of that in the bigger picture is, as people moved out to Granger and the suburbs, what did that do to the inner cities? There's a lot of inner city neighborhoods that have fallen into decline," adds Schalliol.
Schalliol says that means some neighborhoods and apartment complexes require more fire and police runs.
"It's great to have new, but we've got to make sure that the old gets maintained," he says.
Cunningham added that the rental market is cyclical, and he's seen this issue before in lots of cities.
"It could take a year to 18 months to recover to get back to the rent levels that you were before those units came online," he said.