The following provides insight into the Downtown South Bend Multi-Housing market:
For years, there had been relatively little market-rate multi-family (urban) housing options available in downtown South Bend. This lack of existing housing reinforced a negative cycle where the absence of market comparables – “comps” – inhibited lenders' ability to analyze real estate developers’ proposals for potential funding. In this absence of better information, the market was stalled.
In 2013, to help bridge the market gap, the City of South Bend engaged Zimmerman Volk Associates (ZVA), a housing market consultant company. ZVA has conducted over 450 market studies since 1988 and their reports are often cited as key milestones in several resurgent downtowns throughout the country. Validated by experience, the ZVA figures are often accepted by lenders as part of the due diligence for development projects in areas that are just beginning the redevelopment process.
The Zimmerman Volk Associates Report for downtown South Bend was published in July of 2013 and identified the market potential for newly introduced market-rate housing units that could be leased or sold in downtown. The ZVA study was part of a broader public policy agenda to support the reinvestment in downtown South Bend. Infrastructure improvements, new incentives and public space programming coincided with a renewed interest by the private sector to invest in downtown South Bend.
Bradley Company is providing an update on the status of rental apartment projects that have been developed or redeveloped in downtown South Bend since the publication of the 2013 ZVA study. Although the ZVA study also includes the analysis of multi-family for-sale and single-family attached for-sale properties, our analysis will focus solely on market rate multi-family for-rent projects.
The map below illustrates the focus area of this market study.
Zimmerman Volk Associates Results
The target residential mix and optimum market position for downtown South Bend projected that at least 500 new dwelling units could be absorbed in less than 5 years. Of the 500 new units, 64.5% of them would be rental apartments. This means 322 new rental apartment units could be absorbed by July of 2018.
Target Residential Mix
In addition, based on ZVA’s capture rate analysis (how fast units will lease/sell), 66 to 98 new rental multi-family units could be absorbed annually between 2013 and 2018 in downtown South Bend. This projects that a total of 330 to 490 new rental multi-family units could be absorbed by July 2018.
Annual Capture of Market Potential
- 4 projects have been completed, adding 146 apartment units since 2013
- As of September 2017, 4 projects are under construction/renovation, expecting to add 229 apartment units in 2018
- By 2019, 375 apartment units will have been created, which is 53 more apartment units than ZVA’s projected number of 322 apartment units
How are these new apartment units performing?
As of September 2017, 136 of the 146 completed units are occupied, representing only a 9% vacancy for new apartment units. Overall, these new developments are performing very well and, thus far, indicate that more people are moving into the downtown core of South Bend. With 229 apartment units expected to be completed from now to the end of 2018, we have more time to see if this trend will continue.
Remembering that the reported capture rate of apartment units could be 330 to 490 units by July 2018, downtown South Bend’s new apartment developments sit just above the bottom threshold at 375 expected units in 2018, with another 312 apartment units planned or proposed. As the reported July 2018 date is still a year away, we will have to see where the market is performing at that time, but as of now, downtown South Bend is proving to be "a place to be."
DTSB Project List
To discuss additional details regarding this study update, please feel free to contact Bradley Company's Senior Market Research Analyst, Steven Heatherly, at firstname.lastname@example.org or (574) 855-5710.
*ZVA = Zimmerman Volk Associates