Subsidy of Downtown Apartment Projects

TFP this morning ran a commentary piece discussing the tax breaks provided to five of the largest downtown apartment projects.

Passenger Flats

Market City Center

Heritage – Maclellan on Broad

1400 Chestnut

Walnut Commons

All five were provided substantial property tax breaks via the PILOT (property in lieu of tax) program. While the focus on the piece is on questioning the decision to extend the tax breaks as opposed to letting the market determine demand it is a substantial piece of the puzzle to help understand where the market is.

With more than 1,000 units in these five projects gaining this kind of incentive it has created a situation that from the outside looks like a stronger market than it in fact is. Again echoing my earlier retail observations the developer has led the charge here and it is going to take a number of years for the market to catch up.

Once I can track down a link to the commentary I will post it.

ULI 2019 Forecast – Chattanooga Forecast

ULI presented it’s 2019 forecast yesterday at a gathering of development interested types. The national and regional forecasts presented a generally upbeat outlook for the next year while addressing the fragmentation and complexity of the market. The real value however was in the local context and comments from John Clarke and Tiffanie Robinson. The TFP article captured the key takeaways:

https://www.timesfreepress.com/news/business/aroundregion/story/2019/jan/15/downtown-southside-apartment-building-expect/486757/

John’s comments regarding multifamily development in the coming five years added some great detail to my post from last week on the same issue:

https://chacre.com/2019/01/09/chattanooga-commercial-real-estate-2019/

The full ULI 2019 Forecast can be downloaded here:

https://americas.uli.org/research/centers-initiatives/center-for-capital-markets/emerging-trends-in-real-estate/americas/