Apartments ‘significantly short in supply’

ST. GEORGE – Finding an apartment in St. George these days isn’t easy. A general lack of available multifamily housing, high rents and other factors play into the issue, according to a recent report.

Demand for apartments is high, yet supply is low. According to a report from real estate firm NAI Excel, vacancy for apartments and other forms of multifamily housing in St. George is less than 0.1 percent. Units are filled as soon as they become available.

The area hasn’t seen any new major multifamily developments built since 2006, according to the study.

We haven’t had the supply and demand has been quite strong,” said Neil Walter, NAI Excel’s managing director.

There are a number of reasons multifamily housing development has not kept up with the demand, and some of those factors are found in the NAI report. These factors include the rise in construction cost and land values, along with impact fees that are high in comparison to those found along the Wasatch Front, Walter said.

Monthly rental rates have also gone up. In 2010, the average rent for a two bedroom, two bath apartment was $690. Today the average is $848.

Image courtesy of NAI Excel, St. George News
Image courtesy of NAI Excel, St. George News

And like any other type of investor, developers aren’t going to invest in a potential multifamily development if they don’t feel money can be made, Walker said.

The Great Recession also played a part in stalling housing projects across the board, St. George Mayor Jon Pike said. While other sectors, such as industrial and commercial development, have been on the rise in St. George in the wake of the recession, multifamily housing is just now beginning to show some recovery in the market.

“I think we’re seeing a market catching up from the recession,” Pike said.

Incoming projects

Signs that the market is catching up include the 244-unit Grayhawk Apartments project near the Dinosaur Discovery Site off River Side Drive, Pike said, as well as two mixed-use projects proposed for downtown St. George in the area of Tabernacle Street and 200 West and St. George Boulevard and Main Street.

A rendering of the mixed-use development proposed for downtown St. George at Main Street and St. George Boulevard | Image courtesy of Peg Development, St. George News
A rendering of the mixed-use development proposed for downtown St. George at Main Street and St. George Boulevard | Image courtesy of Peg Development, St. George News

“If it comes to fruition – and I think most of it will – that should really help us a lot with our (housing) market,” Pike said.

Along with a general need for affordable rentals, there is also a need for affordable, subsidized housing. In its Aug. 5 meeting the St. George City Council approved a general plan amendment making way for a smaller complex to be built by the Grayhawk Apartments.

Called the RiverWalk Village, the complex will offer a total of 55 units.

Additional housing, at least on some level, may also become available as Dixie State University continues to add new student housing, Pike said.

The Campus View Suites, a 352-bed student housing complex on the Dixie State Campus along 100 South, is nearing completion and is already filling up with residents for the 2016-17 academic year.

Students currently renting regular apartments may be able to take advantage of the new housing, Pike said, thus opening up some apartments to the public.

Not in my backyard

In addition to the potential cost surrounding the development of a multifamily complex, another factor developers pay attention to is how their projects are received by the public, Walter said.

Apartments in St. George, Utah, Aug. 9, 2016 | Photo by Mori Kessler, St. George News
Apartments in St. George, Utah, Aug. 9, 2016 | Photo by Mori Kessler, St. George News

Time and again, when a developer presents a project in a planning commission or city council meeting it tends to draw out those opposed to it.

Often, opponents say they are not opposed to the project itself – just the fact that it’s next door.

“The ‘Not In My Backyard” dynamic is a very powerful dynamic in the community and it’s discouraged some development projects that may have otherwise been built,” Walter said.

A lot of homeowners seem to associate apartments with crime and bringing individuals into the neighborhood who will only cause trouble.

“That’s an unfair characterization, I think,” Walter said.

The community needs to take hold of the issue or else it may remain hard for people to find entry-level housing – something apartments provide.

Most of us lived in apartments at one point,” Walter said. “Most of the time people who are struggling to find affordable apartments are most often people like us.”

While projects like Grayhawk and those proposed for downtown St. George may ease the apartment crunch somewhat, it is an issue the city will likely have to deal with for many years to come, Walter said.

“Increased student housing construction may relieve some of the pressure on nearby traditional multifamily housing properties,” according to the NAI Excel report. “Even so, multifamily remains significantly short in supply.”

Email: mkessler@stgnews.com

Twitter: @MoriKessler

Copyright St. George News, SaintGeorgeUtah.com LLC, 2016, all rights reserved.

 

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9 Comments

  • ladybugavenger August 16, 2016 at 8:10 am

    My rent increased from $635 to $830 in 4 1/2 years. Oh no! I’m not paying the $830 starting Sept 1st. I’m out of here in 2 days. My apartment will be ready to rent shortly thereafter, if you can afford it you can apply for it. There are cheaper places for rent off of valley view.

    Good luck everyone and I hope your wages go up and are comparable to the rent increases. I have found that not to be true in my case but maybe you all have better jobs. #buyahouse

    • sagemoon August 16, 2016 at 11:16 am

      Are you moving from the area, Ladybug?

      • ladybugavenger August 16, 2016 at 1:02 pm

        Yes sagemoon. I’m moving out of the state. 1,000+ miles east. Take care. #dangtweekers

  • Brian August 16, 2016 at 9:58 am

    This problem is going to get much worse in the next 6 – 12 months as the economy tanks again. This time I think it will be far worse than the “Great Recession” (which we have had zero recovery from due to the governments idiotic policies). The local (micro-economic) impact on housing specifically won’t be as drastic, because we haven’t had the same rampant speculation that we had before, but the national (macro-economic) impact will be much, much worse, and that will affect us significantly here. Citizens are getting pillaged at every level, and that will only increase. They’ll get even more creative with “fees” and taxes and outright theft (civil asset forfeiture, which is pure unconstitutional evil) will get even more out of control. Watch for bail-ins and negative interest rates (you deposit $100 into your bank and only $99.90 makes it, then the next month it goes down to $99.80, etc). Free haircuts for everyone.

  • RealMcCoy August 16, 2016 at 11:00 am

    “We haven’t had the supply (INSERT COMMA HERE) and demand has been quite strong,” said Neil Walter, NAI Excel’s managing director.

    There, I fixed that sentence for you.

  • Jessica August 16, 2016 at 12:25 pm

    St. George is a wonderful place to live, if you can afford it. We are renters and we would love to buy, but it seems like the construction market is focused on building affordable starter homes in the low 100s. I would love to see a whole lot more townhouses. We don’t want all the frills that show up in the Parade of Homes, just a small, cozy place to live that is affordable. Many of our neighbors with young children have come and gone as the wages in this area don’t seem to be sufficient relative to the cost of living.

  • Jessica August 16, 2016 at 12:26 pm

    Oops, I mean to say “the construction market is NOT focused on building affordable starter homes”. The construction market is building the dream homes of retirees from up north who use this as their winter get-away.

  • 556poor August 16, 2016 at 4:25 pm

    Every time I’ve seen an apartment building go in to any town I’ve lived in the crime and tagging has gone up significantly. I say keep them elsewhere and out of our town we have more than enough.

    • NotSoFast August 18, 2016 at 9:12 pm

      The truth you speak 556poor, isn’t something that folks want to hear. Developers can’t make money building section 8 type housing in town. And normally, the tax base won’t be there for the city. Tax paying residents will say, hell no not here, put it out of town a little ways. Like over it the so-in so neighborhood out yonder.
      I need my projected appreciation to retire. I also agree with 556poor that Slum type housing bring expected problems. It would be cheaper in the long run for a city to give landlords a $200 stimulus/ month or reducing the property tax another 40% if they lowering the rent from $800 to 600.

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