Apartment Growth

[Tulsasaurus Rex]

Sally Berglund, 72, widowed and retired, wasn't satisfied with the senior living apartment she then called her home. But the gradual creation of Crowne Village at Elm Ridge intrigued her.
"I watched this go up when I would go visit my daughter," she said. "When I saw the for lease sign, I thought I'd go in."
Berglund said she hadn't planned to go into a new apartment, but she became intrigued with the idea of being in a place with no bad history along with amenities such as the business center, the vegetable gardens and the mixers on the first Thursday of each month.

With her signature on the lease, Berglund became the first tenant of the 900 building at the complex, 3301 N. Elm Ave., situated in the rear of the development by a dog-walking area.

"I love it back here," she said. "It's quiet and pleasant, and I get to watch the birds and the dogs."

Thanks to motivated tenants like Berglund — and thousands of others — apartment builders have roared back into Tulsa after years of weak development. More properties are either being built or are scheduled for construction.

According to a survey from CB Richard Ellis, five major properties totaling 1,341 units will be finished this year, and four more totaling 1,050 units are slated to be done in 2016.

That total comes after a busy 2014 that featured five properties totaling 1,201 units.

Looking south

Brian Donahue, an apartment specialist with CBRE, said the recent apartment construction doesn't just reverse the slowdown in construction experienced during the recession.
"The level of apartment construction is up from what we've usually seen from over the last decade," he said.
Much of the development is happening in the south part of the metro area. Atria, a 289-unit luxury development property just wrapping up construction, is going in at 86th Street and Mingo Road. Those apartments will be joined by the 288-unit The Springs at Woodland South at 75th Street and Mingo.
Glenpool's 348-unit Grandview Heights west of the intersection of West 126th Street and U.S. 75 should be finished this year, with Bixby's 375-unit Chateau Villa at the southeast corner of 121st Street and Memorial Drive to come the next. Broken Arrow has two in the works — the 236-unit Icon at Broken Arrow at East Florence Street and South Elm Place and the 277-unit Reserve at Aspen Creek east of Warren Theater.

Not every development, however, fits that pattern. The 380-unit Creekside is under construction near 51st Street and 145th East Avenue, and three apartment developments are coming to downtown Tulsa — the 36-unit Coliseum Apartments at 635 S. Elgin Ave., the 162-unit Edge at East Village, formerly known as Hartford Commons, at 215 S. Greenwood Ave.; and the 200-unit The View at the southeast corner of Archer Street and Elgin Avenue.

Donahue said that while the Tulsa area's 93.5 percent occupancy rate lags a bit behind the national average of 95 percent, the area's stable economy and low construction costs are starting to bring in developers from other areas.

"It's better to build a class A property than to buy one," he said. "Plus, they can build it and sell it for more."

The developers

One of these new entrants is Trinity Multifamily Property Management, based in Fort Smith, Arkansas. It's developing The Reserve at Aspen Creek. John Baxter, principal with Trinity, said Broken Arrow was an attractive location for new construction.

The company hopes to break ground in the summer once plans and permits are approved by the city of Broken Arrow.

"Occupancy rates are good there," he said. "That's one of our indicators for where we build."

Most of the planned construction, however, is coming from local players. Scott Case of Tulsa-based Case & Associates was one of the few developers that continued to build during the recession. Case said that was due to careful planning.

Case built one or two apartment units per year over the last decade and hasn't wavered from that pace through the lean times or the recovery. The company's sole project under development in the Tulsa area is The Icon.

"We've got a loyal group of contractors that work with us, so we've been able to stay laser-focused on our pricing and construction costs," he said. "As a result of that, we don't have to charge high rent to get a return on our investment."

Ed Leinbach, head of Tulsa-based The Leinbach Co., resumed building expansions and new properties in 2012, including Crowne Village at Elm Ridge. He said Tulsa has become a prime place for development, even with the recent oil slump.

"We're less dependent on oil than we used to be, and we hope to ride through this current sag in oil prices," he said.

Market's future

New properties generally command higher monthly rent than older properties, especially since most feature such amenities as keyless entry, business centers and common rooms.

That's resulted in an increase in average rental price. In the last CBRE apartment survey in February, the average apartment rent rate went up 6.4 percent in 2014, reaching $547 for a single-bedroom unit and $671 for a two-bedroom.

Donahue, however, doesn't think the new construction is the culprit.

"Rents are higher on new properties, but it may slow rent increases on older properties," he said.

"And sometimes we have apartment complexes fall off the survey because they're too dilapidated to include anymore."

Donahue also doesn't believe last year's rent jump is sustainable and thinks increases should slow in 2015. He also believes Tulsa can absorb roughly 1,000 new units per year based on the demand.

While that's a lower figure than the 1,341 units to be built this year, he isn't worried — especially since occupancy rose 1.5 percent last year.

"The market could remain strong for quite some time," he said.

Case said his company's new properties are filling up to an average of 94 percent, but it is starting to be affected by other construction.

"What we're seeing now is that our leaseups on new properties used to be three to four months," he said. "Now it could be six to seven months."

Leinbach said his real concern isn't the presence of competitors but the performance of Tulsa itself.

"There's always a danger of becoming overbuilt when a market becomes vibrant," he said. "The real key is what happens to the city as a whole. Does Tulsa continue to grow? If so, it'll absorb a number of units per year. If oil stays at $50 per barrel over the next few years, we may become overbuilt."

Baxter said more builders can be a sign for concern and a sign for encouragement. But he believes the real way to find success is to find where the tenants will come from.

"You do get a little worried if too much is going on, but my philosophy on that is location, location, location," he said. "At least for now, there's a sizable market for new properties. And, at least in the case of Berglund, it's an enthusiastic one.

"Me, I'm permanent here until they take me out in a pine box," she said.

http://m.tulsaworld.com/business/realestate/after-years-of-delay-many-new-apartments-are-slated-for/article_ea39fbc6-4386-5d2f-a874-a89316cf32e7.html?mode=jqm

So in 2014, '15, and '16 we will have added 3,592 apartments to the metro area.  But those 23 tricky units at 310 E. First Street remain just too darn clever to figure out.