Housing starts were reported last week and they’ve surged almost entirely on multi-family housing, or so says the Wall Street Journal. And according to yet another business news source, CNBC, the gain is attributable to things like Dodd Frank. Requirements to buy a home are strict. So, even though homeownership is the goal for the majority, when you can’t buy, what are you going to do? You’re going to rent, because you have to live somewhere.
There are about 5800 +/- apartment units in Alpharetta and the above report bodes well for their owners and management companies. It also bodes well for Avalon, whose luxury apartments at The Haven rent out in a range of $1500 to $5700 monthly. It has been said that these luxury apartments are being rented to millennial types but also baby boomer types who want to be mobile in retirement and therefore are choosing to rent.
The Haven represents a new sub-set of housing for Alpharetta that is part of the newest development trend known as multi-use development; a combination of hotel, retail, for-rent residential, for-sale residential and office space, or some combination thereof. It’s not exactly a new concept. And it’s wide popularity baffles me. From an aesthetic and square footage viewpoint, if you want walkability and the look of town squares and historic looking architecture, you could always move into an area of town that is undergoing re-vitalization, like Old Fourth Ward, or west Atlanta or Kirkwood where new and old residential fits in among real historic buildings that are enjoying refurbishment and intriguing modern uses. Their authenticity stands in stark contrast to the mixed-use mini-cities with faux finishes.
And what is going to happen when lenders finally ease up on mortgage qualifications, or when millennials have saved up enough money and have enough work experience to qualify for a mortgage? Like all trends, the trend toward multi-family housing in mixed use developments and elsewhere will eventually run out. And what will you have? In Alpharetta you’ll have apartments blocking the front of City Hall.
But the most troubling thing I see with mixed-use developments is that occupancy rates are seldom equal for single-family homes, multi-family homes, office spaces and retail spaces. You will almost always have a low rate of occupancy somewhere in a mixed use development. And because these developments are so interconnected and interdependent, when one part goes vacant, it affects all the other parts, and not in a good way. Multi-use developments are shared space so one problem becomes everyone’s problem.
Unless major construction issues, either above ground or underground, turn up at the Avalon property, it will probably enjoy good occupancy rates in general for awhile yet – thanks to expert management by North American Properties and the potential of a convention center being built there. But, Alpharetta has at least 4 other mixed use developments in the wings, or at least places that are being touted as mixed use. Chances are good that this is overweighted and will bring issues down the road unless Alpharetta residents sit up and take notice. With a Mayor, who happens to be a real estate attorney by profession, and a Council who seems to follow his lead down at City Hall, Alpharetta might be proving itself overly friendly to development interests and if so, will face density, traffic, and ultimately blight on a scale not seen in its history.