Getahn Ward

gward@tennessean.com

More than half of apartments rising in Nashville region are in Germantown and other downtown areas.

The West End/downtown submarket has the Nashville area's highest monthly apartment rent of $1,720.

Lenders are more cautious in lending for new apartment projects in urban markets.

For Nick Ingram and Loren McBride, leaving a Murfreeboro apartment for a newly built one in Germantown was a lifestyle choice to be closer to the downtown Nashville entertainment venues they often frequented.

Last week, the couple and their two dogs settled into a unit at Broadstone Germantown, drawn in part by a pitch of a month's free rent and a $1,000 gift card.

"Basically, by the time you add that over the course of the year-long lease, it ended up being almost as cheap as what we were paying in Murfreesboro," Ingram said, estimating that with the value of the incentives, the couple is paying $1,250 a month instead of $1,470.

Between Broadstone Germantown, Carillon, Peyton Stakes and 909 Flats, more than 1,000 apartment units are coming online in a Germantown area market that's considered ground zero of Nashville's apartment construction boom. Beyond perks, developers are dangling amenities such as a rooftop entertainment venue and art studios to differentiate their properties in the increasingly crowded market.

The swanky projects are also driving changes at older Germantown apartments. For instance, four-year-old Vista Germantown is charging $300 to $400 less a month on new leases versus rates that apartment complex at Fifth and Madison offered this time last year, said Carrie Regan, its area manager. Residents have access to complimentary fitness classes every other weekend under a partnership with Nashville personal training firm Results Fitness. And a sound room, pet lounge and rooftop sitting area, along with changes to interior design and the clubhouse are being considered as part of planning for next year's budget.

"At this point, the leasing is generally going fairly well," Woody McLaughlin, a member of the Greater Nashville Apartment Association's statistics committee, said about the new apartments overall. "As more of these begin to come to market, we may test that. The first-to-market apartments are in a little better position than the later to the market."

Across from Broadstone Germantown, more inventory is on the way with construction underway on the 411-unit LC Germantown and the 101-unit Atlas in Germantown, among other projects. Overall, nearly 16,000 new apartment units are under construction in the Nashville region with more than half of those in the West End/Downtown submarket that includes Germantown, according to the apartment association.

The West End/Downtown submarket has the Nashville area's highest monthly apartment rent of $1,720, which is significantly higher than the marketwide average of $1,118 per month as of the end of September. That rising trend reflects in part the addition to the market of new higher-priced units.

Who's buying in Germantown?

Leasing agents at the new Germantown apartment complexes said a large number of the new tenants and prospects are people relocating to Nashville from other U.S. cities including larger markets where the apartment leasing rates are much higher.

Overall, McLaughlin said millennials and seniors over age 55 are the two fastest-growing segments of the nation's apartment renters. "People don't realize empty nesters are a rapidly growing segment," he said.

At the roughly 40 percent leased Carillon near the Nashville Sounds' First Tennessee Park ballpark, the average age of residents is 32, said Robert Hunt, executive vice president of development for San Antonio-based developer Embrey Partners. About half are moving there because of job relocation, 20 percent are coming from a home and 29 percent coming from other Nashville apartment communities, he said. The average household income is $103,000 a year with 32 percent of the residents considered professionals by occupation, 23 percent are administrative workers, 10 percent work in sales careers and 8 percent in health care.

Mary Olson cited location of the Carillon within walking distance of her husband's corporate job with Regions Bank in downtown Nashville and the amenities as reasons for signing a one-year lease. In September, they moved in with their Yorkshire terrier, Zoey, from Wisconsin where her husband had a 45-minute daily commute to work.

"Our requirements were pool, balcony and workout room," Olson said.

Amenities galore

In some cases, the new apartments branded around specific themes to appeal to targeted demographics.

"Live Soulfully" is the tagline for Broadstone Germantown, which is touted as being a musically inspired apartment community that targets creative people. Offerings include the rooftop music venue called Open Stage where Grammy-award winner Jason Isbell performed at the community's grand opening last month. All of the floor plans are named after music venues, such as Ryman and Ascend. The community features a songwriter's room, pet spa and salon, yoga, spin and barre studio and a bike shop with repair station, among other amenities.

Andrew Steffens, development director at Broadstone's developer Alliance Residential Co., referred to the soundproof songwriter's room as an ideal space for the more than 35,000 Nashville area songwriters.

At Carillon, the first-floor amenity rooms such as the fitness center, game room and residents' lounge have baseball-related names such as The Dugout, The Bullpen, The Home Plate and Spring Training. The water-tempered pool will be opened through wintertime.

"Being close to the stadium certainly is a benefit because residents are able to enter the game simply by walking across the street, purchasing a ticket and going to The Band Box (bar and restaurant)," Hunt said, citing two courtyards, grilling stations and gathering areas for residents among other recent added amenities.

In addition to a saltwater pool, hot tub and residents' hangout area with Frothy Monkey coffee, amenities under construction at Peyton Stakes include a spa room, art studio and a rehearsal space.

"It's such a great neighborhood,' said resident Kara Manelli, who moved from Tampa in September to join her fiancee, a songwriter. "We walk to the coffee shops and the restaurants, watch football games at Germantown Pub. There's just so many great local spots that we've gotten to know the people who go there and work there."

Stuart Proffitt, a managing principal with Peyton Stakes' Charlotte, N.C.-based developer Proffitt Dixon Partners, expects to meet its internal target of leasing 15 units a month. The apartments are the first in Nashville for Proffitt Dixon, which has had projects in some U.S. submarkets absorb 30 units a month.

Overbuilding risks

So, how many new apartments can Germantown handle?

"If we continue to have the job and population growth that we've seen and others are also patient with their lease up, then things will absorb fine," Proffitt said.

One sign of caution that was visible nationwide two-to-three months ago was lenders turning off the spigot on financing of new multifamily projects in urban markets. Banks concerned about an oversupply of deals in the pipeline increased the equity that developers are required to contribute from 10 to 15 percent to 45 percent, said Fred Kane, Cushman & Wakefield Nashville's vice president of land services.

"So the developer is being de-incentivized to develop apartment projects because there's no money in it for him with the new equity requirements," he said, adding that the pullback eased somewhat in the past two weeks. "The financing has come back for an A-plus developer in an A-plus main and main location."

Kane doesn't see any A-plus locations left in Germantown, but said that the Cowan Street industrial area just east of that historic community where a Topgolf sports entertainment complex is rising is attractive.

"The best properties that have the best locations will be fine," he said about new apartments. "If it's not the best product in the best location, they'll have to provide concessions such as a few months off rents."

Local condo broker Grant Hammond, who's active in Germantown, sees a plateau in that area's apartment rents for the next two years until new units are absorbed and the market works through the new inventory.

He also sees a break over the next year in new apartment construction projects in Germantown where Hammond estimates that 2,000 new apartment units will be delivered over the next two years. He cited building costs such as for framing and land being up 50 percent and 40 percent, respectively, as a factor in that expected lull.

The Historic Germantown Neighborhood Association's goals for next year include engaging that area's growing rental community, including apartment complexes, said Richard Audet, that group's president.

"We want to see if we can get those folks more involved in the day-to-day of the neighborhood," he said.

Over the past two years, Germantown has seen an increase in renters versus homeowners with the epicenter of that community also shifting eastward toward the Cumberland River.

Now Audet is pleased with new projects on the drawing board that are expected to bring more individually owned condos to Germantown.

"We'd love to see some of those renters becoming permanent (owners within) our community," he said.

Rising downtown average rents

Average rents in the West End/Downtown apartment market, which includes Germantown, are up sharply over the past five years.*

Third quarter 2016, $1,720**

Third quarter 2015, $1,565

Third quarter 2014, $1,417

Third quarter 2013, $1,358

Third quarter 2012, $1,347

* As more higher priced units are added, the average rent rises without existing units necessarily seeing similar cost increases.

Source: Greater Nashville Apartment Association

Under construction/coming to Germantown area

909 Flats, 909 Rosa L. Parks Blvd., 232 units

Broadstone Germantown, 1100 Third Ave. N., 276 units

LC Germantown, 1226 Second Ave. N., 411 units

Carillon, 1001 Fourth Ave. N., 306 units

Peyton Stakes, 1401 Third Ave. N., 249 units

Atlas in Germantown, 101 units, 206 Madison St.

PDG Germantown, 1300 Fourth Ave. N. and 1305 Third Ave. N., 244 units

Stock-Yard site project (planned), 901 Second Ave. N., 310 units

Source: Greater Nashville Apartment Association/Staff Research

Reach Getahn Ward at 615-726-5968 and on Twitter @getahn.