Yet another apartment project has been proposed for Raleighs Glenwood South district.
Grubb Properties wants to build a 203-unit luxury complex across from the 42nd Street Oyster Bar restaurant on half a block bounded by Jones, West and Harrington streets. Grubb filed documents with the city last month for the project.
We think its one of the best sites, certainly in the Triangle market, and one of the top sites that were working on in the entire Southeast, said Todd Williams, Grubbs senior vice president of investments.
Grubb expects construction to begin by the third quarter.
The company has a contract to buy the property from a group of developers who in 2008 proposed building a hotel and office tower on the site. That project was shelved when the recession hit.
J. Cross Williams Jr., one of the partners in the group that owns the land, said the decision to sell stemmed mostly from the fact that, in the wake of the recession, apartments have become the best use for the site.
I just dont know the apartment business and didnt think it was a good thing for me to get into, Cross Williams said.
The Triangle apartment market has been roaring of late. The apartment vacancy rate hit a 12-year low in September, according to data from Karnes Research and the Triangle Apartment Association, with rents increasing 4 percent between September 2011 and September 2012.
That has led to wave of new construction, particularly in the downtown area. There are now 1,200 units under construction in downtown Raleigh, according to Karnes and TAA, and several new projects are scheduled to open this spring in the Glenwood South area.
Grubb itself has begun leasing a 339-unit apartment project, Sterling Town Center, that it is building near Triangle Town Center in North Raleigh. The company is also a co-owner, along with Federal Capital Partners, of the Sterling Forest apartments on Six Forks Road in North Raleigh.
The Glenwood South project will be built under Grubbs new Link brand of apartments, which is geared toward younger renters who are looking to live in urban settings that are near both jobs and entertainment and cultural amenities. The first Link complex recently opened in Richmond, Va.
Todd Williams said the Link branded complexes will feature smaller units with high-end finishes similar to what you would find in a condominium unit. The Glenwood South project will include 162 one-bedroom and 41 two-bedroom units.
The big question for Grubb, and other apartment developers, is whether the Triangle can absorb all the units that will come on the market over the next 18 months. Grubb believes it can, in part because of what it sees as a fundamental shift in the overall demand curve for apartments.
Obviously, any new supply always gives us concern, Todd Williams said. But I think we have to keep in mind that we are in a very different demand era for apartment product than we have been in really 30 or 40 years.
The lack of new construction over the past three to four years has created pent-up demand, he said, while the falling homeownership rate is an indication that younger generations view renting differently than their parents or grandparents did.
Theyre choosing to rent. Its a lifestyle choice, not an investment decision, necessarily, Todd Williams said. Thats not to say that theyll always be renters, but certainly a great number of them are choosing this lifestyle because it affords them flexibility, proximity to jobs and amenities.