St. Louis has shown resilience in front of the latest downturn. In-migration supported the metro’s housing market, as the affordable prices attracted remote workers looking for more space in less dense settings.
While this trend might slow down once employees fully return to their offices, the strengthening job market could be instrumental going forward. As of May, the unemployment rate in St. Louis was 4.6 percent, well below the national average of 5.8 percent, according to data from the U.S. Bureau of Labor Statistics.
“Job recovery and creation will be key to maintaining the health of the market over the long term,” Draper and Kramer Assistant Vice President & Regional Property Manager Kristen Alessi, told Multi-Housing News. Alessi revealed how the company’s St. Louis portfolio performed in the past 18 months and also talked about her expectations for the Midwest city.
READ ALSO: COVID-19 Shines Light on Midwest Markets
How has the pandemic altered the St. Louis multifamily market?
Alessi: At our properties in St. Louis, the pandemic seemed to strengthen our retention numbers. In fact, we saw some of the highest monthly retention percentages and occupancy in years, which stands in contrast to trends seen in many urban markets, where properties in the immediate downtown area experienced an occupancy dip in the early months of the shutdown.
One possible explanation for the strong performance of our St. Louis assets is that the communities are a little outside the immediate downtown area, close to quality schools and ample green space. This helped us bring in new residents that were seeking more attainably priced housing in lower-density locations.
As a result, we did not experience a dip in rental rates like we did in some of our other markets and were able to push rates as activity continued. The majority of our existing residents felt comfortable in their units and confident in the capabilities of our property management teams, which also helped us maintain solid occupancy.
Since the onset of the health crisis, have you encountered any rent collection difficulties across your St. Louis portfolio? How did you go about them?
Alessi: Like all companies in our industry, we have experienced some rent collection difficulties over the course of the pandemic.
Last spring, Draper and Kramer was quick to respond on a portfolio-wide basis and we produced a thoughtfully planned and executed rent deferral program across our properties that allowed our residents to defer rent and pay it back as they could.
Overall, our St. Louis properties had consistently high rent collection percentages every month and one property did not utilize the rent deferral program at all.
Your company recently broke ground on a new property in the metro, part of an 11-acre master-planned community. How is construction work going? Are the material and labor shortages affecting your timeline?
Alessi: We’re very excited about construction progress for Moda at The Hill, a 225-unit wrap-style property in St. Louis’ historic The Hill neighborhood. We officially broke ground earlier this summer, and the project is moving forward on schedule. We now have a garage up, and the team has started building out the first level.
So far, construction is on track and we have not experienced delays due to material or labor shortages. Right now, the property is on schedule to open in late spring 2022.
Why is The Hill in such high demand now? What makes it so appealing?
Alessi: Known for its rich history, The Hill is attracting residents who appreciate its walkability and variety of local restaurants, shops, markets and parks. That’s in line with what we’re seeing in other markets, where renters are gravitating to housing that gives them all of the urban conveniences and cultural experiences they seek in lower-density residential enclaves that embrace their own authentic identities.
What sets St. Louis apart from other multifamily markets across the Midwest?
Alessi: It will be interesting to watch multifamily activity in secondary cities like St. Louis coming out of the pandemic. Anecdotally, there’s been a lot of regional migration over the past year and a half as people who can now work remotely from nearly anywhere reevaluate where they want to call home.
Some favor smaller metros like St. Louis that are viewed as more accessible and affordable—a trend that was underway before COVID-19. Job recovery and creation will be key to maintaining the health of the market over the long term.
Are there any vulnerabilities across the market?
Alessi: Every market has its own challenges, but St. Louis has shown how resilient it is over the past 18 months and how it will continue to grow and prosper as time goes on.
Our St. Louis portfolio has continued to see high occupancy and increased rental rates even as we head into what we consider the slower season. The biggest challenge we see—in St. Louis and across our portfolio—is lingering uncertainty around any future restrictions or mandates related to the pandemic.
That said, we feel our ability to overcome the obstacles we’ve already faced is validation of our model and our commitment to safety and service, even in unprecedented times.
Please tell us how you think the St. Louis multifamily market will evolve for the remainder of the year and beyond.
Alessi: The local multifamily market emerged from the pandemic relatively unscathed and continued rent growth is an encouraging sign going into the final months of the year. Unit deliveries are expected to rebound in 2021 after a decline last year, and while absorption may lag in the short term, the region’s improving job market will help keep supply and demand largely in balance.