Developers to drop 1,000 new rental units on market

Competition for Springfield rental tenants will heat up next spring and summer, the biggest months for targeting renters. A combination of low interest rates, Springfield's high student population and out-of-towners relocating here are inspiring construction of new apartment complexes, developers say.

The majority of rental unit growth is occurring in south and southwest Springfield, where nearly 1,000 new rental units worth about $50 million will be completed by the end of 2003.

But such new development may leave existing complexes struggling, warns Gary Wilson, president of the Greater Springfield Apartment and Housing Association. Although Springfield's rental market is solid, with a 9 percent vacancy rate compared to 10.4 percent nationally, Wilson said a large influx of rentals could easily change that.

"There is always a concern if too many rentals hit the market at one time, it's going to affect the overall market," he said. "But because Springfield is a fairly growing community, we can absorb them. It just takes a while."

Sam Coryell Sr., who has been in the rental market since 1988, knows the impact his developments may have. Yet he feels the demand is there.

"If you ask me who we are hurting here, if anybody, with our new units, I'd say we are hurting the older units," Coryell said. "But in a way, this is really good. A rising tide raises all ships. I really think the competition is wonderful."

Coryell and his son Sam Coryell Jr. have about 350 units on the drawing board for next year. The Coryells already have built about 500 units between five complexes including Lakewood Village, which opened this year in south Springfield, and are planning two more complexes: Highland Park and Sherwood Village, north of Strawberry Fields at Kansas Expressway and Sunshine Street. Add in Howard Bailey's Tall Grass Apartments and Paul White's and Jeff Kramer's Quail Creek Village both in excess of 100 units and the competition is expected to be fierce.

"It should be very interesting in 2003 ... to see if we can absorb all of them," Wilson said. "We won't know until they start coming on line."

But it's not just apartments that will gain the attention of renters next year. Rental units in the form of townhouses and single-family homes will be in the mix as well.

Zimmerman Properties is constructing another multifamily development with special financing provided by the Missouri Housing Development Commission. Rosewood Estates, in the 600-1100 blocks of East Sunset Street, is similar to Zimmerman Properties' Cedarwood Terraces townhouses in north Springfield, said James McDonald, development associate with Zimmerman Properties.

"There is a definite niche in the market as far as young working families looking for a home setting that can't quite afford the original down payment for a purchase," he said. "It's basically your apartment lifestyle, but in a single-family residential setting."

McDonald said 32 homes, leasing for $400 to $535, will be constructed by March 2003.

About 120 townhouses will be available for rent in the 300 block of East Erie Street when Trent Cowherd is finished building his $7 million development. It is unnamed at this point.

Expected to fill the new rentals are Springfield's student and youth populations, coupled with a slow, but steady, stream of retirees and newcomers, developers say. Coryell estimated that half of his renters are younger than 30 years old and 30 percent are students. But the retirees also fill a significant role, he said.

"We're getting people who come in here from California. They are retirees," he said. "They come here, but they've lived in condos, so they want that level."

Cowherd already is delving into the condominium sale business. He sold 10 condos in Chesterfield Village, and is building 16 more to create a condo complex called Chesterfield Courts. They are selling for less than $125,000, he said.

"It's a form of housing elsewhere in the country," Cowherd said. "I think in Springfield, as the land prices are going up, we will have to start competing in the condo market."

Such varied housing options is good for the Springfield community, Wilson said. "That is growth. We want to see the variety of all different types of housing."

Whether condominiums are accepted in other areas of Springfield remains to be seen.

Springfield saw excessive growth in the rental market during the mid-1990s when about 5,000 new units dropped on the scene, causing the vacancy rate to climb to 12 percent in 1997, Wilson said. But that's a natural cycle for apartment development.

"Every so many years it happens," Wilson said. "It cycles, because (developers) start thinking We're absorbing the units, let's build some more.' That's just part of the cycle."

Interest rates at 6 percent and less are aiding this surge.

"It's cheap money," Coryell said. "When money is cheap more people are going to take advantage of it."