City is ripe for more luxury apartments

Lee’s Summit could support an additional 2,500 luxury apartments, according to a housing study commissioned by the city.

Ryan Elam, director of the city’s Development Center, recently announced the study results to the City Council’s Community and Economic Development Committee.

A recession, which began with a housing slump in 2008, halted apartment building in the city for nearly a decade.

“During the downturn, we didn’t see a lot of multifamily construction at all,” Elam said.

Last year Lee’s Summit had an explosion in permits and building of apartment complexes.

In 2014 the Residences at New Longview gave evidence that Lee’s Summit would be part of a national boom in apartment building; The 309 units that were erected were leased quickly.

In 2016, the city approved five new apartment complexes, for a total of 1,419 living units.

By December of last year the council was beginning to worry about whether it was approving too many such projects. The city was granting Chapter 100 tax incentives to limit property tax increases on apartments over a 10 year period. In March, the council hired consultants Vogt Strategic Insights to do a market study and analysis.

Elam said the question was: “Are we going to end up with a bunch of empty apartment complexes?”

He said the study shows Lee’s Summit could support another 2,515 units of “luxury,” or Class B, apartments beyond what exists or have been approved for construction. The consultants define a luxury apartment as one that is upscale, built with high-end materials, plentiful space and amenities which can demand the highest rents in a market.

It predicts Lee’s Summit could support another 377 to 503 units of senior-only housing, excluding continuing care institutions like assisted living, or buy-in institutions like John Knox Village or the Village Cooperative of Lee’s Summit.

The study said there also is demand for affordable housing, with the city needing nearly 400 of apartments with fewer amenities, without hurting current apartment complexes or the Lee’s Summit Market.

Councilwoman Diane Seif said the report contained important information for the Lee’s Summit Housing Authority, which is charged with providing housing for older adults and those with disabilities. She added that it is good to have to help assure residents of neighborhoods where additional apartment complexes are being proposed.

The study considered demographics, population growth forecasts, household income and the regional market for apartments in Kansas City suburbs, Elam said. The consultants looked at various properties to compare amenities and other variables in completing the report, which is more than 200 pages.

Elam said the consultants completed a “field survey” of 27 apartment projects in Lee’s Summit and 101 in the Kansas City area, looking at 3,272 and 18,900 units respectively, to compare rents and amenities for the study. The other cities in the market study were Independence, Blue Springs, Grandview, Overland Park, Olathe and Lenexa.

It used a conservative 4.4 percent predicted growth in households over the next 10 years, Elam said.

He said that in Lee’s Summit, 30 percent of the renters in apartments are new households (people moving to the city) and 70 percent are older adults who are from existing households, many of those renters either moving up from lesser-quality apartments or empty-nesters who become “renters-by-choice.”

Councilwoman Trish Carlyle questioned the figures.

“You’re telling us, we need 2,500 more apartments in Lee’s Summit or they’re going to live somewhere else, and they need to be high-end units?”she asked.

Elam said that the projections were based on conservative numbers, but also warned that it is hard to predict shifts in housing preferences over time.

Councilwoman Diane Forte said she was had been becoming concerned about the incentives and number of units because of the surge of projects in 2016.

“I thought we were way saturated,” Forte said. “And I thought this report was going to come back and prove it. I’m surprised.”

This story was originally published June 28, 2017 at 2:46 PM with the headline "City is ripe for more luxury apartments."