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Old 11-08-2017, 07:19 AM
 
Location: Tennessee
28,536 posts, read 21,393,949 times
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I saw on Facebook comments that the rents start at $2,000/month. I didn't see that listed in the article nor on the project website - maybe I just overlooked it.

If this is true, and I can't imagine $2,000/month being a starting point, I don't see this succeeding, at all. This will attract (maybe) a few highly paid Eastman professionals, physicians, executives, and corporate housing recipients, most from outside the area and only for a short duration before they buy. There definitely won't be enough tenants to fill the space or even close at that price level. What are 2BRs going to go for - $2,500? A $2,000/month payment could probably get you a close to $300,000 house in this area, even with a low down payment and PMI. If you have that kind of a monthly housing budget, why would you rent? You could also buy a house for a $1,000 monthly payment and could repay your transaction costs on both ends in a year or so with the difference between owning and renting on an average local home. Throw in a landscaper and housekeeper too if you have that kind of cash, and you probably still won't approach that rental budget.

I pass by the Overlook at Indian Trail complex daily. I don't think that's anywhere near at capacity. I may be completely wrong. There don't appear to be enough cars there, even after business hours, for the place to be more than half full it seems. They start under $1,000. Double the budget and you have a much, much smaller applicant pool.

I don't know. The main problem with downtown Kingsport is the smell/pollution. Adding more housing, while nice and if done right I think it will help the town, is not going to change this fundamental issue. I was downtown at lunch and shortly after work yesterday. The smell was atrocious at lunch. People do not want to live in that. Kingsport is going to have to have something better than surrounding towns to compensate for the smell/smokestacks on a project like this.
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Old 11-08-2017, 08:21 AM
 
Location: Blountville, Tennessee
99 posts, read 118,849 times
Reputation: 63
A someone who grew up in Kingsport since the 90's, I don't think downtown smells at all. I think people over exaggerate the issue.

I have many friends who are from outside of the Tri-Cities, graduate from UT, and come to work at Eastman but cannot find decent apartment housing in Kingsport. They ended up all living in Johnson City. That's a loss of city utilities and their services such as dining, shopping, and maintenance. All of those result in the difference of jobs ans business loss/growth for Kingsport. We should support more developments across the city but especially downtown. Kingsport has the nicest downtown in terms of lay out of the Tri-Cities but lacks the people and anchor businesses to spur growth. 10 years ago downtown JC was dead and Kingsport was much busier while now they have switched positions
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Old 11-08-2017, 08:40 AM
 
Location: Johnson City, TN
667 posts, read 826,683 times
Reputation: 449
I think Kingsport is betting on supply creating demand and with the incentives thrown at this development they are taking a huge risk. I remember a several years back when, deciding there was a lack of $400,000+ homes in the city, Kingsport threw incentives at high-end home builders thinking it was just a lack of supply that was driving people to Johnson City. Very few homes were built using these incentives because there simply wasn't a market.

Take a look at this article just posted today regarding the rental market in the Tri-Cities:https://donfenley.com/2017/11/08/rep...ental-markets/. There is a sense of unease regarding the Sullivan Co rental market and the head of UDC essentially saying he will not be building anything else there.

The only way I could see the Town Park Lofts working is if rents got so high in Johnson City that people would be forced to Kingsport simply due to economics. Something similar to what you see in Asheville and Nashville where rents within the city are out of reach of the average worker. Did Kingsport perform any feasibility studies prior to incentivizing this project? Would the developer have undertaken this project assuming 100% of the risk? It just doesn't make sense to me.
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Old 11-08-2017, 08:57 AM
 
Location: Brooklyn, NY
6,957 posts, read 10,245,643 times
Reputation: 5757
Quote:
Originally Posted by Serious Conversation View Post
I saw on Facebook comments that the rents start at $2,000/month. I didn't see that listed in the article nor on the project website - maybe I just overlooked it.

If this is true, and I can't imagine $2,000/month being a starting point, I don't see this succeeding, at all. This will attract (maybe) a few highly paid Eastman professionals, physicians, executives, and corporate housing recipients, most from outside the area and only for a short duration before they buy. There definitely won't be enough tenants to fill the space or even close at that price level. What are 2BRs going to go for - $2,500? A $2,000/month payment could probably get you a close to $300,000 house in this area, even with a low down payment and PMI. If you have that kind of a monthly housing budget, why would you rent? You could also buy a house for a $1,000 monthly payment and could repay your transaction costs on both ends in a year or so with the difference between owning and renting on an average local home. Throw in a landscaper and housekeeper too if you have that kind of cash, and you probably still won't approach that rental budget.

I pass by the Overlook at Indian Trail complex daily. I don't think that's anywhere near at capacity. I may be completely wrong. There don't appear to be enough cars there, even after business hours, for the place to be more than half full it seems. They start under $1,000. Double the budget and you have a much, much smaller applicant pool.

I don't know. The main problem with downtown Kingsport is the smell/pollution. Adding more housing, while nice and if done right I think it will help the town, is not going to change this fundamental issue. I was downtown at lunch and shortly after work yesterday. The smell was atrocious at lunch. People do not want to live in that. Kingsport is going to have to have something better than surrounding towns to compensate for the smell/smokestacks on a project like this.
The rents are stated to run from $900-$1300/month, according to the Kingsport Times News Article.

Someone on Facebook is smoking something LOL, there's no way the $2,000/month price point would work in Kingsport--or probably anywhere in the tri-cities, aside from a luxury vacation retreat.

Kingsport has a demand for newer apartment housing, and they may have to adjust the price point if the rentals are sluggish. My guess is their strategy is to pull would-be renters locating to the tri-cities in general, away from the other primary cities of Bristol and Johnson City.

The $900-$1300/month price point looks high at first glance.
However, if you use the "you should earn 45 times the rent in annual income rule" (which is common for the New York City rental market--and many others), a renter needs to earn $40,500 annually (for the $900/month apt) and $58,500 annually (for the $1300/month apt). These spaces are clearly targeted towards educated millenials and/or young professionals or families with 1-2 kids. However, a large percentage of anyone professional who has been in the workforce for 10-20 years + (factory, military, medical, education, government, corporate etc), should be earning at least $40k/annually.

I'll be eager to see how they rent. If they do not rent briskly/well, then clearly the city of Kingsport made a big mis-step in gauging/determining demand for the area.
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Old 11-08-2017, 09:28 AM
 
Location: Brooklyn, NY
6,957 posts, read 10,245,643 times
Reputation: 5757
Quote:
Originally Posted by setnick View Post
A someone who grew up in Kingsport since the 90's, I don't think downtown smells at all. I think people over exaggerate the issue.

I have many friends who are from outside of the Tri-Cities, graduate from UT, and come to work at Eastman but cannot find decent apartment housing in Kingsport. They ended up all living in Johnson City. That's a loss of city utilities and their services such as dining, shopping, and maintenance. All of those result in the difference of jobs ans business loss/growth for Kingsport. We should support more developments across the city but especially downtown. Kingsport has the nicest downtown in terms of lay out of the Tri-Cities but lacks the people and anchor businesses to spur growth. 10 years ago downtown JC was dead and Kingsport was much busier while now they have switched positions
I don't mind the smell either, but I grew up around here. Everyone is different in terms of their tolerance, I suppose.

In terms of the downtowns, yes, Kingsport's is definitely the densest and laid out the best of all 3 cities--it has the most potential--there's just not a huge amount of energy after like 5-6pm down there. Bristol's is very charming but feels like a medium-sized town (which it is) instead of a city, really. Johnson City has tons of energy and lots going on, in terms of the restaurant/bar vibe. But its downtown is super scrappy, sort of not aesthetically appealing, a couple of ugly storage units and hodge podge warehouses around, and small for the cities' size. However, it is gentrifying FAST currently, and was slow over the years to realize its potential. I think in another 3,5,8 years or so, JC's downtown will be more dense and aesthetically appealing.
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Old 11-08-2017, 11:21 AM
 
Location: Tennessee
28,536 posts, read 21,393,949 times
Reputation: 35009
Quote:
Originally Posted by setnick View Post
A someone who grew up in Kingsport since the 90's, I don't think downtown smells at all. I think people over exaggerate the issue.

I have many friends who are from outside of the Tri-Cities, graduate from UT, and come to work at Eastman but cannot find decent apartment housing in Kingsport. They ended up all living in Johnson City. That's a loss of city utilities and their services such as dining, shopping, and maintenance. All of those result in the difference of jobs ans business loss/growth for Kingsport. We should support more developments across the city but especially downtown. Kingsport has the nicest downtown in terms of lay out of the Tri-Cities but lacks the people and anchor businesses to spur growth. 10 years ago downtown JC was dead and Kingsport was much busier while now they have switched positions
Other than the smell, I don't disagree with any of this at all. As more people move to Johnson City but work in Kingsport, this definitely deprives Kingsport of additional revenue and businesses that would be created by people actually living in Kingsport.

I don't think Kingsport will catch up given how much the university has improved and the factory drawbacks, but I think it can improve.

Quote:
Originally Posted by jjbradleynyc View Post
The rents are stated to run from $900-$1300/month, according to the Kingsport Times News Article.

Someone on Facebook is smoking something LOL, there's no way the $2,000/month price point would work in Kingsport--or probably anywhere in the tri-cities, aside from a luxury vacation retreat.

Kingsport has a demand for newer apartment housing, and they may have to adjust the price point if the rentals are sluggish. My guess is their strategy is to pull would-be renters locating to the tri-cities in general, away from the other primary cities of Bristol and Johnson City.

The $900-$1300/month price point looks high at first glance.
However, if you use the "you should earn 45 times the rent in annual income rule" (which is common for the New York City rental market--and many others), a renter needs to earn $40,500 annually (for the $900/month apt) and $58,500 annually (for the $1300/month apt). These spaces are clearly targeted towards educated millenials and/or young professionals or families with 1-2 kids. However, a large percentage of anyone professional who has been in the workforce for 10-20 years + (factory, military, medical, education, government, corporate etc), should be earning at least $40k/annually.

I'll be eager to see how they rent. If they do not rent briskly/well, then clearly the city of Kingsport made a big mis-step in gauging/determining demand for the area.
Those rates sound more in-line with what I thought. There is just no way anywhere in the Tri-Cities would support a $2,000 1 BR. That's really no more than The Reserve near Sam's in Johnson City.

Personally, I don't think someone making just $40,000 should be paying anywhere near $900 in rent, but the calculations are what they are. That leaves them virtually no wiggle room in their budget and they're going to be rent burdened. Those calculations may be more reasonable for NYC where people generally don't have cars and their associated costs, but it seems like a real stretch.

I think they're trying to target the Eastman market. I really don't see this Kingsport complex attracting people who work in Johnson City. It's an interesting concept, and it may very well pull enough tenants from The Overlook and the new UDC complex at Walmart to make itself viable. With that said, I think Kingsport is oversaturating itself with rentals, and I think at least one of these complexes is going to struggle.

Last edited by Serious Conversation; 11-08-2017 at 11:31 AM..
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Old 11-08-2017, 01:26 PM
 
Location: Brooklyn, NY
6,957 posts, read 10,245,643 times
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Quote:
Originally Posted by Serious Conversation View Post
Other than the smell, I don't disagree with any of this at all. As more people move to Johnson City but work in Kingsport, this definitely deprives Kingsport of additional revenue and businesses that would be created by people actually living in Kingsport.

I don't think Kingsport will catch up given how much the university has improved and the factory drawbacks, but I think it can improve.



Those rates sound more in-line with what I thought. There is just no way anywhere in the Tri-Cities would support a $2,000 1 BR. That's really no more than The Reserve near Sam's in Johnson City.

Personally, I don't think someone making just $40,000 should be paying anywhere near $900 in rent, but the calculations are what they are. That leaves them virtually no wiggle room in their budget and they're going to be rent burdened. Those calculations may be more reasonable for NYC where people generally don't have cars and their associated costs, but it seems like a real stretch.

I think they're trying to target the Eastman market. I really don't see this Kingsport complex attracting people who work in Johnson City. It's an interesting concept, and it may very well pull enough tenants from The Overlook and the new UDC complex at Walmart to make itself viable. With that said, I think Kingsport is oversaturating itself with rentals, and I think at least one of these complexes is going to struggle.
Yeah, that UDC Apartment complex behind Wal-Mart is a great idea, but in execution, it's not an ideal location at all. I drove through there and saw a few rough looking cars/people hanging around, so something tells me that may have to go a different route rental-wise than "luxury." Many more options to live in the Kingsport area than to overpay and live behind a Wal-Mart and Bojangles in a crowded complex .. yikes.
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Old 11-08-2017, 02:15 PM
 
Location: Tennessee
28,536 posts, read 21,393,949 times
Reputation: 35009
Quote:
Originally Posted by Rangerred View Post
I think Kingsport is betting on supply creating demand and with the incentives thrown at this development they are taking a huge risk. I remember a several years back when, deciding there was a lack of $400,000+ homes in the city, Kingsport threw incentives at high-end home builders thinking it was just a lack of supply that was driving people to Johnson City. Very few homes were built using these incentives because there simply wasn't a market.

Take a look at this article just posted today regarding the rental market in the Tri-Cities:https://donfenley.com/2017/11/08/rep...ental-markets/. There is a sense of unease regarding the Sullivan Co rental market and the head of UDC essentially saying he will not be building anything else there.

The only way I could see the Town Park Lofts working is if rents got so high in Johnson City that people would be forced to Kingsport simply due to economics. Something similar to what you see in Asheville and Nashville where rents within the city are out of reach of the average worker. Did Kingsport perform any feasibility studies prior to incentivizing this project? Would the developer have undertaken this project assuming 100% of the risk? It just doesn't make sense to me.
I don't want to prematurely judge this project off of the failure of other heavily incentivized projects in Kingsport. With that said, I'm skeptical.

The Kingsport city government has a consistent record of throwing incentives at projects that are suspect at best over the past several years. How much money have they thrown at different operators of the glass plant? What incentives were doled out to various operators/owners of the mall? Simply throwing cash or tax abatements doesn't ensure success.

A lot of these incentives scream desperation. This is another tax abatement situation where they are hoping for future increased sales tax and other business revenue to offset the lack of property taxes. There's no guarantee it will work, and it may be a moonshot. It seems the city is basically throwing different things out there in the hope something catches on. Throwing out all these incentives is basically a tacit acknowledgment of what we all know - standing on its own two feet without any "sweeteners," Kingsport lacks the ability to attract much significant investment and new projects. I don't really blame the government for throwing out the incentives, but I do not think building a beautiful new apartment complex across the street from a belching paper mill is going to attract many people.

Kingsport is in a tough situation. It is so dependent on the heavy industrial employers that it can't go after reforms (even if it helps the town) that would antagonize the employers, but it's precisely the heavy industry that is in large part making the town unappealing and contributing to its decline. I think the government is at least making an effort, but they are facing headwinds that neither Johnson City nor Bristol have to deal with, and I'm not really convinced the city government is competent enough to turn things around.

I'd expect this project to open to a lot of fanfare, but ultimately probably sitting half-vacant with the retail businesses it ends up with struggling along.
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Old 11-09-2017, 07:48 AM
 
Location: Gray, TN
2,165 posts, read 3,966,464 times
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Kingsport has to keep trying these things. What is the alternative, give up? The glass company was a 50/50 shot from the beginning but you miss 100% of the shots you don't take. I like that Kingsport is taking their shots.
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Old 11-09-2017, 08:47 AM
 
Location: Tennessee
28,536 posts, read 21,393,949 times
Reputation: 35009
Quote:
Originally Posted by rccrain View Post
Kingsport has to keep trying these things. What is the alternative, give up? The glass company was a 50/50 shot from the beginning but you miss 100% of the shots you don't take. I like that Kingsport is taking their shots.
I agree that they don't have much choice now. Their backs are basically against the wall. I don't think it will be a major success, but I don't think it will outright fail. I think it will put pressure on the existing newer apartment complexes, and will probably siphon from them.
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