Posted: 3:47 pm Mon, January 16, 2012
By Burl?Gilyard
Tags: Abe Appert, Dunbar Development Corp., Frank Dunbar, Gina Dingman, Steve Schachtman
Wide-open space awaits the next phase of construction at Hoigaard Village. The 220-unit Camerata building is the backdrop to where the 100-unit Adagio building is expected to break ground this year. (Staff photo: Bill Klotz)
In St. Louis Park, what may be a bad sign for studio apartment aficionados could be a good sign for the economy.
Dunbar Development Corp. is proposing eliminating studios from the next phase of the 416-unit Hoigaard Village in St. Louis Park it?s developing.
Citing ?market conditions,? Dunbar asked the city?s permission Jan. 9 to eliminate 10 studio apartments from its planned 100-unit Adagio apartment complex, replacing them with one-bedroom units.
Steve Schachtman, a principal with St. Louis Park-based Steven-Scott Management, said he thinks increased confidence in the economy could be diminishing demand for studios. ??I think the lifestyles of people is such now that they?re willing to pay more.?
It?s not the first change Golden Valley-based Dunbar has made at the market-rate development. Since construction started in 2007 at the 9.6-acre site of the former Hoigaards sporting goods store, Hoigaard Village has increased its planned build out from 374 units to 416. It also turned away from a heavy emphasis on condos. All the completed 294 units are rental apartments.
The Adagio building will be no different. But unlike the larger of the two buildings on the site ? the 220-unit Camerata ? it will offer no studios. Contacted this week, Dunbar president Frank Dunbar declined to comment, saying ?it?s pretty early for us to discuss anything.?
However, multifamily property specialist Abe Appert with the Bloomington office of CBRE, said St. Louis Park doesn?t have the walkable amenities available in Uptown and downtown Minneapolis, where studio apartments rent well. Renters in St. Louis Park, he said, need to make up for the lack of outdoor amenities with a more spacious home life.
?The urban studio renter is different than the suburban studio renter,? Appert said. ?I see St. Louis Park as somewhere between the two.?
Under its proposed new configuration, Adagio would bring 84 one-bedroom and 16 two-bedroom apartments onto the St. Louis Park rental market. Half of the one-bedroom units will feature dens.
While specifications for those units were not available from the developer, one-bedroom units at neighboring Camerata range between 668 and 1006 square feet. Studios in the building measure 515 square feet, while two-bedroom units measure 1,095 square feet.
The development?s other building, the 74-unit Harmony Vista, offers one-bedroom and one-bedroom-plus-den apartments sized between 706 and 1,139 square feet. It also features 1,133-square-foot two-bedroom units.
Currently, 77 percent of the units at Hoigaard Village are larger than one-bedroom. With the addition of Adagio and the planned 22-unit Medley Row townhouses, 74 percent of the units will be larger than one bedroom.
Gina Dingman, president of Everest Real Estate Advisors in Minneapolis, is one market expert who doesn?t see apartment developers necessarily trending away from studios. However, due to high construction costs, she said one-bedroom apartments have been getting smaller for years.
?If you look at some of the projects in the early 2000s, 1,000 to 1,100 square feet was about average,? she said. ?Now, the average is 850 to 875 square feet.?
St. Louis Park has a vested interest in the success of Hoigaard Village. The city provided $5 million in tax increment financing for the project. In a 2008 interview with Finance & Commerce, Hunt estimated that the market value of Hoigaard Village will be about $70 million.
Eliminating studio apartments may also increase the appeal of an apartment building to a wider range of renters. Schachtman said even newer studios ?? which tend to be larger than those built 20 years ago ? still only appeal to ?a certain group of people.? Dingman defined that group as being toward the lower end of the 18 to 35-year-old market.
?Efficiency units are not always the easiest to rent,? Schachtman said.
Appeal comes with a price. The most recent Apartment Trends published by Minneapolis-based Marquette Advisors pegs the average monthly rent for a studio apartment in the metro area at $692. One-bedroom units average $804, while one-bedroom-plus-den units command $1,116.
If construction breaks ground this year on the Adagio as planned, it will still be more than two years behind schedule. Completion was previously scheduled for spring 2010.
Source: http://finance-commerce.com/2012/01/studio-apartments-may-be-losing-suburban-appeal/
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