An urban renaissance is underway in the Lehigh Valley's former manufacturing hubs of Bethlehem, Easton and Allentown.
According to the Lehigh Valley Planning Commission, the region’s three key cities are simultaneously poised for growth for the first time in decades – marking the end of a 40-year plateau and pointing to a regional population boom forecasted for the next quarter-century.
With so many prospective residents vying for their own piece of the Valley’s urban landscape, area real estate developers are answering the call to build – quickly, profitably and in accordance to new consumer preference.
In result, many are sidestepping new construction in favor of rehabbing existing properties into functional living and retail spaces.
Multifamily rehab projects have grown to comprise a popular stake in the Lehigh Valley apartment market, differentiating a largely-homogenous offering of new construction with tactfully renovated living and retail spaces.
Several of these multifamily residential projects, including The Pinnacle at 65 in Bethlehem and The Simon Silk Mill in Easton, launched earlier this year to rapid lease-up periods and no shortage of public interest.
COVETED BY DEVELOPERS
Rehab projects satisfy more than the increased demand for affordable, maintainable housing.
These ventures also play a role in beautifying the community by renovating and enhancing existing structures and mark a trendy departure from the norm of ground-up construction.
Distinctive spaces, such as industrial settings, office buildings and historic properties, lay the highly-coveted foundations for multifamily residential units across the region and are hastily being snatched up by developers.
The proliferation of the rehab trend is driven in part by potential cost savings and time associated with construction.
Rehab projects are good for bank and developer, bypassing the time commitment that ground-up construction typically entails by incorporating existing walls, framing and roofing into the multifamily blueprint.
Using the “bones” of a building also creates the potential to reduce the total capital costs and generate greater yield for the developer.
TRICKY BUT DOABLE
This ambiguity of incurred costs sometimes can be a double-edged sword.
Building from the ground up is easier, simply because incurred costs are more accurately accounted for.
Rehab projects consist of opening up the walls and hoping for the best. Costs can vary greatly – and may be more or less on any aspect of the project.
However, the market has seen a persistent wave of successful rehab projects that showcase the ingenuity of area developers.
The Valley’s multifamily rehab projects have benefited significantly from the market’s growing penchant for apartments but can contribute the majority of their success to the emphasis on buyer preference.
Developers have been remarkably in tune with the wants and needs of buyers, notably, a massive new, growing market of move-down baby boomers entering the market.
Members of this demographic have very specific tastes – they want to downsize their living options without sacrificing quality, paired with the walkability of a city and the convenience of a community.
Rehabbed spaces popping up on the market have solutions, and, justifiably, the fastest absorption rates.
In meeting this market’s tastes, developers are truly redefining the term multifamily.
These spaces have been refitted to offer buyers larger living spaces outfitted with full-size kitchens, wine fridges, dining rooms and extra half-baths.
Nearly all of these spaces are mixed use, accommodating residential and retail tenants.
The Simon Silk Mill project, for example, has incorporated coffee shops, artist spaces and a gym, in addition to apartments. It gives residents the ability to get coffee, go to the gym and grab a bite to eat within steps of their residence, creating almost a mini-urban environment.
As the market progresses, multifamily projects will consist less of standard garden apartments with pools and clubhouses and focus more on taking measures to manufacture pseudo-communities.
Valley developers peddling these rehab projects are on the forefront of changing trends in the marketplace, with plenty of room for growth.
Jeff Drobins is vice president, commercial division manager at Peoples Security Bank & Trust in Bethlehem Township. He can be reached at firstname.lastname@example.org or 610-317-4683.