Skyline Team member from Bradley Company’s Fort Wayne Office, Megan Wilson, attributes Skyline’s immediate success to, “our amazing residents and their trust in Skyline Tower and our management team with their residential needs. Secondly, the on-site management team shows care for all who walk in the door and it shows in the rapport that the team has with the residents.” Skyline Tower is proud to be an outstanding high-end apartment complex which meets the needs of residents with the highest quality amenities. Skyline is located in the heart of downtown Fort Wayne, Indiana, offering the utmost standard of living and convenience. These apartments offer unparalleled views of the city, endless opportunities for entertainment, as well as a private rooftop park. Vice President of Multi-Housing, Rod Ludwig says,
“Skyline Tower is a great example of how the public and private sector can partner together to achieve something that benefits the entire community. The fact that the property is now 100% occupied shows that there is great demand for urban living where residents desire to be close to both work and play. It’s exciting to see the downtown area come alive as we see more of these type of developments come into the downtown area.”
These high end apartments give residents the feel of a sophisticated oasis in the midst of the city. Meeting the needs of residents and providing the highest quality living, it comes as no surprise that Skyline has reached capacity. “I believe that we can attribute the success of Skyline Tower to several factors, but primarily its location! Skyline Tower is centrally located in downtown Fort Wayne, it is within walking distance to several restaurants, parks, bars, etc. With the demand rapidly growing for housing downtown, we are fortunate to be in the heart of our city. Great Lakes Capital did a fantastic job in the construction of Skyline Tower, making it so beautiful that the apartments practically sell themselves! I feel lucky to work at such an amazing new development!” – Aimee Fyfe, Skyline Tower Team.
The current multi-housing market expedited the success of Skyline Tower as the demand for units is high, especially in downtown areas. Read more below on the state of the multi-housing market nationally, and locally in Fort Wayne, and what this means for developers.
2019 Multifamily Housing Market Thus Far
In quarter two of 2019 vacancy rates for multifamily properties remained flat nationally at 4.7%. This marks the first decline in national vacancies for the first time since 2016. According to Reis Findings, “Inventory growth remained constrained in the second quarter, with 41,000 units coming online, but the bulk is expected to arrive in the second half of 2019.” At this point, Reis expects 2019 to be the year that sees the highest figure of new completions recorded in the last 20 years.
In the second quarter of 2019, rent growth came in at 1.2% and 1.3% respectively for asking and effective rent growth. This number, while higher than the previous quarter, is still lower than the average quarterly growth as experienced in 2018. However, this is not a surprise. 2015 seems to be the year that multifamily fundamentals peaked, and ever since have lost some momentum. However, a slow-down in fundamentals does not necessarily equate to a negative performance. Despite the fact that rent growth has slowed in comparison to 2015, it is still posting relatively strong numbers.
As far as apartments, Reis predicts that supply growth will hit its cyclical peak in 2019, and then slow down steadily over the course of the next two years. With a strong demand expected to last anywhere from five to ten more years, vacancy increases in apartments should dwindle between 2020 and 2021. This could even mean accelerated rent growth.
2019 also marks the year that the homeownership rate has fallen to its lowest level since 2017. 64.1% of Americans own their homes as of the second quarter. This represents the second straight decrease, falling from 64.3% to 64.2%, now to 64.1%.
2019 National Multifamily Housing Trends
Job growth in 2019 is predicted to remain healthy following 2018. Although, growth will be slower than in years prior due to the low rate of unemployment resulting in more job openings than candidates. However, as the market tightens, wages can be expected to increase, which in turn heightens demand for household formations. Current lifestyle preferences along with demographics will continue to support multifamily housing along with the 2017 Tax Cuts and Jobs Act, which act to incentivize renting over homeownership. Year-over-year rent growth for multifamily housing remains at 3.6% and is not expected to slow down in 2019.
With such a high volume of units being brought to market, supply is predicted to outpace absorption through 2019, however, not substantially. Vacancy rates are expected to only increase up to 5.1%. Due to the slow growth of vacancy rates, rent growth is anticipated to remain higher than the historical average, reaching approximately 3.0% – 4.0%.
Fort Wayne, Indiana Multifamily Housing Trends
Recent research has estimated the national buyer to seller ratio in multi-housing to be three buyers to every one seller. So what does this mean for developers considering building in the area? Developers should expect to see a high return on investment as multifamily housing units can’t be bought soon enough. Over the next five years it is predicted that Indiana counties could potentially support the construction of almost 16,000 new multifamily housing units. According to Tom Deitche, Managing Director here at Bradley Company,
“The downtown market has a strong demand for apartment housing and continues to grow as a result of the many new economic development projects that have been implemented. The Landing Renovation, Riverfront Project, Hampton Inn, and Steam Park are just a few projects that are attracting people to live downtown where everything is happening.”
The scarcity of quality housing is a key factor driving potential new employees and Fort Wayne residents from the area. Deitche also says, “Despite a significant number of new apartment developments, Skyline Tower included, the demand continues to stay strong. I feel the demand will stay strong for several more years until supply catches up with demand. It then should equalize and stay stable for the next decade or so.” Skyline Tower meets the needs of business professionals seeking to move to the downtown area.
What Does This Mean for Developers?
Nationally, the demand for multifamily housing is estimated to continue growing. With so many people turning to renting and such high employment rates, now is the time to invest. As for Fort Wayne in particular, the demand for multifamily units cannot be met quickly enough. As a strong business center with a booming downtown, people are drawn to the area to ultimately be turned away by a lack of quality housing. The downtown Fort Wayne area is the perfect mix of work and play, making it the perfect location for young adults. As seen with Skyline Tower, when the housing is there, the people are there.