Just how many apartments have gone up in Madison recently, and how many more are on the way?
It’s a somewhat complicated question, but the latest available figures from the city of Madison’s planning division showed nearly 1,800 apartments were built in the city from 2012 to 2014 — with more than 800 of those units in and around the Downtown, according to Matt Wachter, the city’s housing initiatives specialist.
Another 3,712 apartments were expected to be built between 2015 and 2017, with more than half — or 2,051 units — slated for the core Downtown, or roughly between Park and Blair streets, city planners said.
Another way to see the steady rise of apartments in the city is to look at the value of new multi-family construction added to the property tax base over the last three years. A State Journal review of spreadsheets provided by city assessor Mark Hanson last week clearly showed apartment projects making up an increasing share of Madison’s commercial construction: 51 percent in 2012, 58 percent in 2013 and 68 percent in 2014.
Overall, from 2012 to 2014, apartment projects made up 61.5 percent of the total $704.7 million in new commercial development in the city, or $433.5 million.
And so far this year, the pattern looks much the same.
“We’re still seeing a lot of (apartment-related) activity this year,” Hanson confirmed.
It’s important to note that many of the apartment projects, especially more recently, include some commercial or retail spaces on the lower floors, with structured parking for the mixed-use developments also producing a portion of the projects’ added value.
Rising costs seen
As would be expected with increased demand, there’s no doubt rents have been increasing, nationally and in Madison, and possibly at a higher rate than usual.
“We’ve seen pretty strong rental increases in a lot of urban areas,” Associated Bank senior vice president Steve Sosnowski said, putting the Madison-area rise at 2 to 6 percent year-over-year the past few years. “The range is simply because some landlords have been more aggressive in pushing rent than others.”
Independent local sources for rental rates outside the development or finance industry are hard to find. But according to Zillow, a real estate data firm, apartment rates nationally rose by 4.3 percent year-over-year in May, to a median overall monthly rent of $1,367.
For Madison, the May rise was 3.8 percent to $1,454, Zillow said, though it defines “Madison” based on the Census Bureau’s Madison Metropolitan Statistical Area, which is Dane, Iowa, Columbia and Green counties.
In addition, the rental listing aggregate website Rent Jungle said average rent within 10 miles of Madison for a one-bedroom apartment increased 8 percent over the past six months to an average rent of $895 in May. Two-bedroom apartments rose 11 percent to an average of $1,140 in May, Rent Jungle said in an online report.
In Downtown Madison, studio apartments now rent for well over $2 per square foot, Sosnowski noted, commonly producing monthly charges of more than $1,000 for a snug 500-square-foot space, for example.
Amenities, services worth the price?
At Domain, a 12-story, high-end apartment tower that opened with 241 units on West Johnson Street in April, the most expensive studio space now rents for $1,505, for 503 square feet on the tower’s top floor. That price could be paid by two people, though, if they don’t mind the relatively tight quarters: Madison rules allow two adults to rent a space as small as 378 square feet, Domain’s property manager, Jessica Dent, said.
Domain’s smallest unit is even smaller than that: a 359-square-foot studio that rents for $1,010 to $1,025 per month. But its dimensions don’t seem to be hurting its popularity — all units of that size are currently rented, according to Domain’s website. The building’s largest apartment, a two-bedroom, two-bathroom unit spanning just under 1,500 square feet, costs $3,700 a month. All those units are rented, too, the website showed.
When Domain’s tower opened this spring, close to three-quarters of its units were rented, Dent said, and she expected to be 95 percent full by the end of the summer. She said the building’s rental rates don’t seem too high to the roughly 50 percent of Domain’s tenants who moved here from big cities out of state, including New York, Chicago and Washington, D.C., especially with amenities including a fitness center, poolside courtyard and 11th floor terrace with great views, plus the professional services and many resident events offered.
“It’s also the location,” Dent said. “Having a beautiful apartment ... in one of the best buildings in Downtown Madison is worth paying for (to Domain’s tenants).”
Sosnowski noted that apartments on Madison’s periphery tended to be cheaper — even newer ones in the suburbs, where tenants typically get more space for their dollar.