Out of the apartment-construction business for about five years, Don Kenney has formed a company called Metro Development that will build several apartment complexes around central Ohio. Kenney’s Village Communities condominium-development company, meanwhile, is slowing the pace of its activity in favor of tapping what is now a strong rental market.
In December 2007, Metro Development began work on Winchester Park, a 344-unit apartment complex at the Rt. 33-Hamilton Road interchange. A second phase is under way there, and construction has begun on the Residences at Edgewater Place on the East Side and the Residences at Riverpointe Place in Westerville.
With the tough lending standards being imposed by banks and the general downturn in home-ownership, it’s time to put the pedal down on apartment construction, said Tre Giller, who runs Metro Development as well as Village Communities.
“Last year, we saw the market changing substantially,” Giller said.
“The residential market clearly, in our estimation, wasn’t going to get any better, and we started identifying apartment sites. Our hypothesis proved to be true.”
Giller said that Kenney’s Ardent Property Management has leased more than 80 percent of the 128 units in the first phase of Winchester Park. The phase under construction will double that total number of units. Winchester Park is adjacent to a new shopping center anchored by a Giant Eagle supermarket.
Metro Development is seeking zoning approval for two more complexes and is negotiating to buy land for additional sites, although the company wouldn’t say where.
Giller said the company plans to build 800 to 1,000 units within five years.
Meanwhile, Village Communities is sitting on sites such as Olentangy Crossings in Lewis Center where it had planned to build condominiums.
“We have ready, willing and what used to be able purchasers,” Giller said. “With the credit crunch and credit tightening up, people who would have qualified to purchase a year ago are finding themselves not qualified to purchase now.”
Apartment consultant Ken Danter said that’s helped spark a flight back to apartments. Vacancies have dropped to 5 percent in central Ohio after being in double digits for part of the decade. The demand has resulted in a reduction in incentives offered by apartment owners.
“The market for apartments had been bad for two or three years during the housing surge,” Danter said. “It suffered vacancies in the 15 percent range and more. The first recovery was to try to get back to high rent levels) while we burned off all the concessions. Now we’re seeing some increases.”
Winchester Park two-bedroom, one-bathroom units are available for $695 to $715. Metro Development’s apartments include clubhouses with swimming pools, movie theaters and a game area with pool table, garages and outdoor sand volleyball court.
Ardent is leasing at Edgewater Place and will begin leasing at Riverpointe Place in December, Giller said.
Giller thinks investors will show increased interest in the new apartments, which are available for purchase. Kenney traditionally sells the apartments his companies builds.
Giller said 60 percent of the first phase of Winchester Park is in contract to buyers.
“We get all kinds of people looking for long-term wealth building and a passive investment,” Giller said.
Author: Mike Pramik, Columbus Dispatch
