The Commercial Appeal
Annual study of Downtown shows occupancy up, population rising
Downtown apartment occupancy has nudged up to 95 percent as growing demand for rental housing outstrips completion of new units.
The surging rate reflects the impact of continued population increases Downtown at a time when the supply of apartments hasn’t grown proportionately, due to a lag in completion of large new projects.
Apartment occupancy had been hovering around 92 to 93 percent through 2012 after dipping to 90 percent in 2009, coming out of the recession.
Results of the most recent survey, compiled in May, were presented Thursday as part of “Downtown Memphis Metrics: 2013,” an annu- al snapshot of Downtown trends and demographics.
“We’ve seen that come up five (points) since 2009,” said the Downtown Memphis Commission’s urban planner, Lorie Chapman. “Downtown occupancy in terms of apartments is doing very well, very strong.” The survey covered 6,300 units at 58 properties.
The Downtown commission, formerly known as the Center City Commission, was created in the 1970s to help rebuild the city’s urban core following the mass exodus of people and businesses to the suburbs in previous decades. Its primary mission is attracting people to live, work and spend leisure time Downtown.
The apartment occupancy figures can be traced to a slowdown in apartment building coming out of the recession, a situation that would be remedied in part by projects currently in the pipeline.
These include conversion of the historic Hotel Chisca into apartments and a new apartment community, South Junction, proposed for the South End area. Together, they would bring about 350 new units to the market.
Downtown Memphis Commission president Paul Morris said Downtown apartment rents have averaged around $1 a month a square foot, a relatively modest price that gives developers less incentive to build new units.
However, the market shows some strength, as witnessed by recent sales activity on the 500-unit Riverset development on Mud Island and 361-unit Fielder Square, overlooking AutoZone Park, Morris said.
“The hope is more and more people want to live Downtown, and more and more apartments will come online.”
The Downtown metrics report pegged Downtown population at 23,800 residents, a 5 percent increase since 2010, and counted 58,000 employees and 12,800 students.
It said the 38103 ZIP code area generated $241 million in retail sales in 2012, of which Chapman said about $150 million was food and beverage sales, including bar and restaurant business. Retail sales hadn’t quite returned to prerecession levels, which peaked at $254 million in 2007.
Tennessee Department of Revenue research showed sales tax collections in 38103 totaled about $80.1 million, up from $77.8 million a year earlier.
The report, citing data from Research360 and Claritas, said average household income Downtown was estimated at $58,745 in 2013, above the Memphis average of $54,745 but below Shelby County’s $67,650.
The report highlighted the most challenging area facing the Downtown commission: vacant office space. After falling to 14.7 percent in the first quarter of 2012, vacancies climbed to 17.9 percent by the first quarter of 2013 and were still climbing with the departure in May of Pinnacle Airlines Corp.’s corporate headquarters, which moved from One Commerce Square to Minneapolis.