Young professionals, empty-nesters and other people shying away from the commitments of home ownership are opening up a market for luxury apartments, and they are often willing to pony up more than some monthly mortgage payments for the convenience of renting.
Developers are stepping up to meet the demand.
“More and more, people are renting by choice instead of renting by necessity,” said Brad Mowbray, senior vice president and managing director of High Associates Ltd.’s residential division.
They include Generation Y, whose members like being able to pick up and go, and baby boomers who no longer want the hassle of home ownership as they grow older.
That means more apartments with solid countertops, stainless steel appliances and, for the trendy urban dweller, brick walls and exposed pipes. These complexes might also offer amenities like recreation rooms, underground parking and gyms, as well as pet-friendly features like grooming areas.
These facilities are cropping up throughout central Pennsylvania, especially in cities, where developers can take advantage of long-vacant buildings that are ripe for development into stylish lofts, said Chuck Heller, a senior associate with Landmark Commercial Realty.
Take, for example, Keystone Color Works in York. The building, constructed in 1873, was the longtime home of a wallpaper color manufacturer. Now, it houses 29 loft-style apartments with exposed brick walls, granite countertops and a shared rooftop deck overlooking the Codorus Creek.
Keystone Color Works developer Seth Predix told the Central Penn Business Journal in June that converting the building was “basic economics”: other business owners have been investing in these kinds of apartments in downtown York in recent years, so it made sense for him to do the same.
Upscale apartments are also showing up in Harrisburg, Lancaster and other downtown hubs in areas that have traditionally seen more industrial and business uses than they have residential.
These urban units are largely marketed toward young professionals who want to live, work and play in cities, Heller said. This crowd has largely become disillusioned with the dream of home ownership after seeing their parents lose equity in their homes.
The recently opened Wheelhouse apartments in the college town of Carlisle, for example, are being marketed specifically toward young professionals and law students, as well as military couples who come to the area for the U.S. Army War College, its developers told the Central Penn Business Journal in September.
“They’re filling up as quickly as they’re being built.”
– Chuck Heller, Landmark Commercial Realty
That’s not to say historic urban buildings are the only places high-end apartment developers are looking to make their mark. Several suburban complexes have also come to fruition in recent years as people look to take advantage of the region’s tight rental market.
One such facility is The Reserve at Greenfield, an 82-apartment complex High Associates is building in Lancaster County. High chose the 10-acre site because of its easy access to highways and proximity to the businesses and amenities at the Greenfield Corporate Center, Mowbray said.
High also recently introduced 42 upscale units at its nearby Bentley Ridge community and is planning a 258-apartment luxury facility at The Crossings at Conestoga Creek in Manheim Township.
“Apartment communities are benefiting from ‘de-suburbanization.’ It’s a reverse of the sprawl of the 1980s,” Mowbray said. “People want to be close to amenities, to their jobs, and have a high quality of life.”
Constructing these large-scale complexes from the ground up, however, is becoming increasingly pricey for developers as land, legal and construction costs skyrocket, Heller said.
The result is that many apartments, even ones without luxury amenities, are costing as much as a mortgage payment.
Still, demand for rentals, upscale or otherwise, is continuing to grow. Home ownership is at its lowest rate since 1965, and about 35 percent of American households are renter-occupied.
The fact that more than a third of those renters make more than $55,000 per year bodes well for the luxury market.
“They’re filling up as quickly as they’re being built,” Heller said.