9.1 HRSR 05-01-2017 - Laserfiche WebLink

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RECOMMENDATIONS AND CONCLUSIONS General Occupancy Rental Housing Our competitive inventory identified that the vacancy rates for all types of general occupancy rental product is below market equilibrium indicating pent -up demand for rental housing. The few newer products that have entered the market in the past few years have all performed well. Coachman Apartments which began marketing in 2015 has absorbed all units before occupancy date. Due to the age and positioning of the remaining existing rental supply (pre - 1990 construction), a significant portion of units are priced at or below guidelines for affordable housing, which indirectly satisfies demand from households that income - qualify for financially assisted housing. However, the growing renter base is seeking newer rental properties with additional and updated amenities that are not offered in older developments. Although ownership housing in older homes in Elk River is generally affordable for first -time home buyers, some are choosing to rent due to fears of past housing market performance. Maxfield Research and Consulting LLC calculated demand for 265 market rate and 133 affordable rental housing units in Elk River through 2025. New general- occupancy rental housing can be developed immediately and will continue to be in demand throughout this decade. • Market Rate Rental —The existing market rate rental supply in Elk River has a mix of ages and household types represented. A new rental project will also have a diverse resident profile, including young to mid -age professionals as well as singles and couples across the age span. Because there is demand for 265 units; new market rate product will likely be developed across multiple buildings and developments. We recommend new middle- market to upper - middle market rental project(s) with roughly that will continue to attract a diverse resident profile; including young to mid -age professionals as well as singles and couples across all ages. To appeal to wide target market, we suggest a market rate apartment project with a unit mix consisting of one - bedroom units, one - bedroom plus den units, two - bedroom units, and a few two - bedroom plus den or three - bedroom units. Monthly rents (in 2015 dollars) should range from $950 for a one - bedroom unit to $1,450 for a three - bedroom unit. Average rents in Elk River are roughly $1.04 per square foot, thus we recommend that monthly rents at a new development should charge on average $1.15 per square foot to be financially feasible. Monthly rents can be trended up by 2.0% annually prior to occupancy to account for inflation depending on overall market conditions. New market rate rental units should be designed with contemporary amenities that include open floor plans, higher ceilings, in -unit washer and dryer, full appliance package, central air - conditioning, and garage parking. MAXFIELD RESEARCH & CONSULTING, LLC 105