Apartments, not condos, have kept downtown population growing
This article first appeared in the St. Louis Beacon, Dec. 11, 2009 - Virginia Benson and her husband, George, live high above street level in a building with sweeping views that still make them pause at sunset. The retired couple makes good use of amenities like the pool, gym, sun deck and barbecue area for residents.
"This is my senior center," Benson, 74, jokes.
But she knows that's far from the case. How many retirement communities in St. Louis share space with a hotel, are across the street from mass transit and overlook both a major highway and a sports arena?
These are all distinguishing characteristics of the Edison condominiums, home to the Bensons and scores of other downtown dwellers. While they are among the oldest people in the building, plenty of other residents are hardly first-time buyers.
"You think downtown, and it's young people living in lofts," Benson said. "I like it that there's a mix of people here, including those like us who are empty nesters throwing in their lot downtown. We certainly feel like we're a part of a community."
According to recent figures from the Downtown St. Louis Partnership, more than half of downtown residents are between the ages of 18 and 34. About 20 percent are 50 and above, and roughly 2 percent are 65 and older.
The Bensons are among a growing number of people moving into downtown, defined by the partnership as being bounded by Chouteau Avenue to the south; Cass Avenue to the north; the Mississippi River on the east and Jefferson Avenue to the west.
More than 12,400 people live in this part of the city, according to a midyear report from the Downtown St. Louis Partnership and the Downtown St. Louis Community Improvement District. That's up more than 500 people from December 2008. By comparison, roughly 8,000 people lived downtown a decade ago.
The city center has gone through plenty of lean times over the years. For decades, old residential construction defined the area, and the vast majority of units were low-cost rentals. Few people lived in the central downtown core.
"The measure of a vital city is people living downtown, and for decades no one lived here," Benson said.
That began to change in the 1990s as developers, taking advantage of the state's historic tax credits and seeing momentum building in the Washington Avenue corridor, invested in lofts and condo buildings downtown. Development reached a fever pitch several years ago, as more than 2,500 units opened downtown in 2006 and 2007, according to a partnership report released late last year.
There's plenty of reason for optimism about residential demand downtown: Interest among young people bodes well for a part of the city that has long been without a steady base of residents. And downtown businesses will like this statistic: More than a third of downtown residents make over $100,000 a year, while only one-fourth earn under $50,000.
"This gives us a base to start with," said Maggie Campbell, president and chief executive of the partnership. "We're fortunate that the trend in this country is a return to urbanity. Young people and empty nesters are moving back to downtowns and center cities everywhere."
Still, stalled or cancelled residential projects, continued concerns about a tight credit market and questions about the future of commercial development are reasons for concern.
The Downturn Takes its Toll Downtown
The Bensons moved downtown four years ago, at a time when the economy was motoring along and developers seemed to see opportunity on street corners across the city. The couple had lived in St. Louis proper for years but was ready to be closer to downtown.
Virginia Benson said she was attracted by the prospect of living in a former warehouse building that was converted into condos and the Sheraton St. Louis City Center Hotel & Suites. Easy access to MetroLink, Highway 40 and cultural institutions like the St. Louis Symphony Orchestra was a bonus.
Benson said downtown development, both residential and commercial, seemed to be at a tipping point when the economic downturn hit. The recession forced developers to abandon or put on hold residential projects, accept major losses in revenue and begin to rethink their marketing strategies. The biggest splash came as the Pyramid Cos., downtown's largest developer, went out of business. Pyramid was involved in a range of development projects, from the Laurel (the former Dillard's department store) to the Arcade, which are at various points of recovery.
The partnership's housing report shows that by late December 2008, more than 1,200 planned condo units had been taken off the "under construction" or "in development" inventory. Because many of the projects were still in the planning stages when the downturn started, there isn't a glut of unsold condo units downtown, the report notes.
Seeing the credit market tighten and the demand for condos decrease (less than 200 units sold downtown in 2008, compared with 400 the previous year), many developers converted unsold condos into apartments. The late 2008 report said hundreds of condos were removed from the market during the recession, and more than 400 apartments were added downtown in 2008. That put the residential breakdown at 5,900 rental units and 1,910 condos.
"That's survival if you're a developer," Campbell said. "A lot of people are rethinking their plans to buy and deciding to rent. One result -- there is now more affordable housing and more choices for entry-level living for people who want to live downtown. (The average price for condominiums sold downtown in 2008 was $246,957.) For a long time, there were more condos being planned than apartments, and this is a balancing out."
This shift, while costly for some developers, prevented a drop in occupancy rates downtown. As of midyear 2009, about 90 percent of all units that had been available for a full year were occupied. (The rate was about the same for both apartments and condos).
In Benson's building, some units that would have been for sale are now being rented. She said she doesn't have a problem with having renters so long as owners still predominate.
The Ely Walker Lofts, which opened on Washington Avenue in 2007 as condos, is now roughly split evenly between rentals and sales. The decision to convert some units into rentals for five years was made last fall in response to market conditions, said Julie Moeckel, the property's community manager. The plan is for the 80-some rental units eventually to be converted back to sales.
The Alexa has also made the transition. Originally planned as a condo building with roughly 100 units, the project is now moving ahead as a 122-unit rental property scheduled to come onto the market this time next year. Sarah Tadlock, owner of Downtown Living Now, a residential real estate brokerage company that has been involved with the project, said that when credit began tightening, the developer had to change course and focus on rentals.
The Bogen Lofts, developed to be 125 condo units, began converting the first group of units to rentals a year ago and converted a second batch in October. The Washington Avenue property is now 90 percent rentals. Bob Petersen, president of Charrette Community Management, said the conversion has allowed the company to take advantage of a federal historic tax credit.
Petersen said 85 percent of the rental units are occupied. The idea, he said, is to return the building to condos within the next five years. Another Charrette property, the Ventana, was developed as 92 condos but over the summer was converted into a split rental/owner building.
"We look at it with the mindset that the conversion to rentals has helped stabilize downtown," Petersen said. "If you waited for everything to sell, (Culinaria) and other businesses wouldn't have come. The rentals have brought a quick influx of people, and we think that it's helped downtown."
Barbara Geisman, St. Louis' deputy mayor for development, said she notices far more rental listings than sales listings these days. She said her impression is that young professionals who want to live downtown are mostly renting.
Tadlock, who focuses exclusively on the downtown residential market, said the $8,000 tax credit for first-time home buyers has motivated some young buyers to live in the city center. She said many are drawn to new construction that is priced under $250,000.
Many of Tadlock's clients are empty nesters looking to downsize from suburban homes and move downtown. While Geisman said homeowners looking to buy a loft downtown might be stymied by difficulties selling their single-family home, Tadlock said many homeowners she works with are selling their homes so that they don't take on a second mortgage -- even if it means taking a loss on that house.
Interest among people of this age group is spurring sales of condos priced around $300,000 or above -- a category of housing that Tadlock didn't see selling during the recession.
Campbell said it's a positive sign that downtown has held its own during the recession. She said she isn't surprised that residential development has largely stalled, given that developers remain on edge and banks have pulled back on lending.
"That will change, and our job is when it does to have downtown ready to outpace the rest of the market," Campbell said.
Why They Moved Downtown
Those who have moved downtown cite a range of reasons.
Addie Kujore, who relocated to St. Louis about a year ago, grew up living in a city and said she wanted to stay in an urban environment.
"The closest thing to downtown realtors would recommend was Soulard or the Central West End," she said. "But I can't live anywhere else but downtown, even if people probably think I'm crazy."
Kujore, 28, said she feels like she's in the heart of the city. Living near work is also a draw. When it's warm outside, she walks from her Columbus Square townhouse to her job at Wells Fargo downtown.
Alisha Johnson, 24, grew tired of driving from West County to her job in Soulard, so she decided in August 2008 to rent an apartment on Locust Street near downtown. Her commute is now five minutes.
Johnson said with so many events hosting clients in the city, it's nice to live close to her office. And she's found that her friends who live in St. Louis County often come to her for nightlife.
But Johnson said she misses the "community feel" of her apartment complex in Creve Coeur. "There aren't as many amenities in my apartment now for people to gather around," she said. "When there's a walking trail nearby [as there was in her previous complex], people tend to see each other more outside their apartments."
David Goldstick, 33, who has lived in a downtown loft since late 2006, feels otherwise. "There's more of a sense of community here that I didn't get in a suburban environment," said Goldstick, who had previously lived in Maryland Heights and University City.
He said he wanted to be a part of what he considered the downtown renaissance. Since moving, Goldstick said he's become much less reliant on his car -- when he drives it's mostly to commute to work in Hazelwood. He walks to restaurants, theaters, sporting events and most recently to Citygarden.
Earline Bell, president of the Downtown St. Louis Residents Association, said she's noticed downtown becoming increasingly vibrant. She has lived in the city center for three years. At first she said she wasn't sure if she'd like downtown. "I thought it would be mostly young people looking to party," Bell said. But she said she's been surprised by the diversity of people living there.
Steve Patterson, author of the blog UrbanReviewSTL, said the walkability of downtown was one of the reasons he moved into his loft on Locust and 16th Street about two years ago. Still, he said pedestrian signals downtown are lacking.
On Kujore's wishlist: more nightlife, more food options -- and a nearby dog park.
Benson said she'd like downtown to feel more like the Central West End, with its mix of incomes, high-end and "funky" restaurants and shops.
"We're getting pretty close to that, which is why we're here," she said.