Apartment completions show 25 percent increase Apartment completions show 25 percent increase By CAMILLE H. GAMBLE The Daily News Apartment completions were up 25 percent in the Memphis area in 1996, absorption was up and DeSoto County apartments had the highest average rent increase, according to a recent report by SPL Corp. and LEDIC Management Group. A total of 297 apartment units were completed in fourth quarter 1996, for a year-end total of 1,408 units. Absorption increased to 1,740 in 1996, a 112 percent increase over 1995, according to the report. Properties started in the fourth quarter but not completed were Lincoln on the Green (408 units) and Island Park (296 units) on Mud Island. For the year, multifamily building permits totaled 2,784 units, an increase of 254 percent over the 787 units permitted in 1995. ìWe are projecting in í97 that we will probably have slightly fewer than 4,000 units,î said Ken W. Edmundson, president and chief operating officer of LEDIC Management Group. ìAnd from what is in the pipeline for 1998, we can see another 5,000 units. We are estimating that in the three-year period between 1996 and 1998 that we are probably going to see roughly 10,000 to 12,000 units come in the marketplace.î Edmundson noted that the figure is half of what the market saw in the same period in the mid-1980s. ìItís not nearly the overbuilding that everybody was concerned about, but 12,000 units in an 80,000-unit market is significant,î he said. He said the future success of the units coming on line in the í90s will be attributed to changes in the development and management from the 1980s. ìYouíve got very capable developers all of them are good,î Edmundson said. ìYouíve got much stronger managers. ìWe have a different kind of market today than we had in the í80s,î he said. ìBut that doesnít necessarily mean it is going to be simple.î Eric Bolton, president of Memphis-based Mid-America Apartment Communities Inc., said real estate investment trusts and lenders will help keep the market from becoming too crowded. ìThere is enough discipline on the capital in the market these days that real massive overbuilding is not going to happen,î Bolton said. ìI think there may be periods of softness, but certainly not the catastrophic overbuilding we had in the late í80s and early í90s.î Bolton said the periods of softness that may occur will probably have the impact of putting pressure on the ability to push rents very aggressively for a period of 12 to 24 months, instead of causing tremendous rent decreases. SPL/LEDIC also reported that apartment sales dollar volume in the 50-plus units category totaled $113.6 million in the Memphis/Shelby County market in 1996, a 71 percent increase from the 1995 sales total of $66.4 million. ìBusiness was more normal in í96,î Edmundson said. ìSales were actually higher in 1994, almost double. In 1994, we had $206 million in sales, yet a lot of that was foreclosures or distress sales. 1996 saw more routine transactions.î The Germantown/Cordova submarket had the highest average monthly rents reported in the fourth quarter 1996 for old (built before 1980) and 1990s construction at $616 and $770, respectively. The Downtown submarket had the highest average rent for 1980s construction at $673. The highest annual rent increase for old construction apartments during 1996 occurred in the Southeast Shelby County submarket with a 5.5 percent increase. The DeSoto County submarket had the highest annual rent increase for 1980s and 1990s construction, at 5.7 percent and 7.3 percent, respectively.