Friday, June 22, 2018
Business

Pricey, posh, tiny apartments rule Tampa Bay's big-money rental boom

ST. PETERSBURG — When Adrienne Hatch wanted a new apartment, she saw no other option than downtown, where she'd be close to the running clubs and nightlife hideaways of the city's youngest, buzziest blocks.

So last month, the 28-year-old dietitian moved into a stylish flat in downtown's newest apartment tower, Modera Prime 235. The trade-off? It cost $1,330, double her last rent, for a one-bedroom matchbox spanning 700 square feet.

"I knew I wasn't going to be in a McMansion. . . . but it's definitely enough space for me," she said. "That price was a lot, like, 'Oh my goodness, I'm going to have to watch my budget.' But I've enjoyed every penny I've paid for it so far."

Developers are racing to build more than 8,000 new apartments across Tampa Bay, sparking one of the biggest building surges since the housing bust. But to win big rents from millennials, the biggest generation in American history, they're building in a way that looks nothing like the suburban booms of years past.

The emerging apartment complexes are more closely connected to city centers and packed with metropolitan perks, but they're also surprisingly pricey and getting smaller. While the median new American home swelled last year to a record-breaking 2,384 square feet, Census data show, the nation's median new rentals have narrowed to 1,043 square feet, the smallest since 2002.

"The younger generation, under 35, they don't want to own homes. They don't want a yard. … They watched what happened (during the recession), watched their parents lose their houses," said John Stone, a managing director of multifamily housing for Colliers International, a real estate brokerage. "They have a different taste, a different value system. . . . These kids are more than happy to pay $1,200 in rent to walk out their door and immediately go to their favorite bar, their favorite restaurant."

That shift in spending has led developers — both here and in cities across the country — to sell less of a place to live than a lifestyle: an urban energy, an opening for adventure, white picket fence be damned. Amid fierce competition, developers are making big bets on a million-dollar question: Just who are today's renters, and what exactly do they want?

• • •

Unlike the cookie-cutter subdivisions of the housing bubble, the dozen or so apartment complexes emerging in Tampa Bay's downtowns differ wildly in scope and design.

There are squat, scattered complexes, like St. Petersburg's Beacon 430, where four stories of porcelain-white apartments span a city block. And there are dense, sleek skyscrapers, like Tampa's 36-story Residences at the Riverwalk, where renters wanting to visit the David A. Straz Jr. Center for the Performing Arts will have an easy walk, even in heels.

Built on expensive land near urban cores, most apartments yield tiny footprints seemingly out of balance with their high price tags. At Modera Prime 235, St. Petersburg's newest complex (for a few months, at least), apartments average 800 square feet, and a tight-fitting studio rents for $1,195 — $300 more than Tampa Bay's average apartment rent.

What the rentals lack in size, they make up for in locale and luxury amenities. There are two-story gyms and yoga rooms; cabana-lined sun decks and fire pits; game rooms and concierges; wine bars and urban gardens, nearly all of them awash in Wi-Fi.

There are modern perks for the committed urbanite, like private bike storage and electric-car chargers, and touches for renters with an eye for the refined. Plans for the Hermitage, an eight-story St. Petersburg complex named after the Russian arts museum, call for an art gallery and a special-function penthouse with paintings and Fabergé eggs.

To reach renters where they live, no complex is built without its own Facebook, and most portray themselves as partners in renters' dreamy cultured lifestyles. The motto for Crescent Bayshore, a glossy complex on Tampa's Bayshore Boulevard, where rents range from $1,440 to $4,075: "It's not just where you live. It's how."

The incredible shrinking apartment will work, developers are betting, largely because their target market is in no rush to settle down. About 30 percent of Americans between 18 and 34 are married, down from 47 percent in 1983, Census data show, and only 29 percent live with children, down from 39 percent three decades ago.

But local apartment watchers have seen a surprising level of demand from that generation's parents as well, with spurned homeowners, with empty-nesters trading in long walks behind a lawnmower for weekend walks to dinner and cocktails.

The housing bust "changed a lot of people's perspective on home ownership. … They're thinking it's certainly not the piggy bank it was, and they feel like there's less incentive to tie one's self down," said Byron Moger, a multifamily executive director for commercial real estate brokerage Cushman & Wakefield. "They're paying a little more, but the lifestyle is better for them and the trade-off is worth it. … It's as much about lifestyle as economics."

• • •

The apartment boom has tickled urban boosters like Tampa Mayor Bob "The Builder" Buckhorn, who said, when work began in February on the 23-story SkyHouse Channelside, "I want more. I want it faster." All those hip, young urbanites walking to date night or hitting the bars bolster not just local businesses, he argues, but the town's charm, vim and "swagger."

But while local apartment occupancy is around 95 percent, no one seems to have a good idea on how much is too much. Tampa Bay's "surprising" speed of apartment development is "accelerating faster than is perhaps ideal," market analysts at MPF Research said last quarter, pointing to a still-rocky job market and stiff competition from big investors renting out neighborhood homes.

That hasn't slowed developers gambling big on sustained long-term demand. Cleveland-based developers the NRP Group had not even signed the first lease for Beacon 430 this month when it was announced they'd struck a deal to build another luxury apartment complex right across the street.

"The amount of projects at this point is just astonishing," said Anthony Close, a 20-year-old University of Florida student who started a blog last year, St. Pete Rising, to follow the flood of new construction in his hometown. "There is just so much going on that I lose track of which projects are what."

Some analysts argue that the new apartments are quenching pent-up demand after a years-long construction slowdown, and some new downtown complexes help fill a big need for affordable housing. Harbour's Edge offers seniors $732-a-month apartments alongside computer training and nutrition classes. Campbell Landings, which sets aside 15 percent of its apartments for extremely low-income tenants, offers classes on English as a second language and financial counseling.

But the new low-income options are far outnumbered by those with lofty price ranges, adding to what U.S. Housing Secretary Shaun Donovan called "the worst rental affordability crisis that this country has ever known." Tampa Bay renters are now spending more of their income toward rent than at almost any point in the past 30 years, a Zillow index found. Rents here in June, real estate data site Trulia said, climbed 4.6 percent over the last year, a jump even higher than Portland or New York.

Whether developers will find enough matches when their doors swing open remains anyone's guess; so, too, what happens if their growing renters are lured back to suburbia. But for now, they're optimistic about the demand from renters like Hatch, who find a growing sense of freedom in a shrinking space.

"Being right here, I can go anywhere, I can walk anywhere. I don't have to feel like I'm stuck," Hatch said. "It's not ginormous, but I have everything I need here, and . . . it definitely feels like home."

Contact Drew Harwell at (727) 893-8252 or [email protected] Follow @drewharwell.

   
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