Downtown Housing Study Summary
Downtown Huntsville is well-positioned to be a vibrant urban center, but it is at a critical cross road in its housing development process. Momentum has commenced in transforming the downtown into a walkable live/work/entertain environment. However, a critical mass of housing must be achieved or the city will miss its opportunity to become the center of a vibrant, diverse, and economically dynamic city with long-term sustainability. A lively urban center has proven to be critical to the Millennial workforce, embraced by the empty-nesters, and valued by the region’s employment base.
The Huntsville region has a solid economic growth platform and household formation continues. However, the current and planned housing supply in downtown Huntsville is likely to be insufficient to reach the critical housing mass necessary to establish a sustainable “live” component that is on par with successful peer cities. Without the critical mass, Huntsville will be at a competitive disadvantage competing for new companies and new workforce.
Downtown Huntsville has many of the key attributes noted in successful downtown markets. The most critical is a core of community and governmental leaders who share common visions with a development strategy that links economic, social/cultural, retail, employment, entertainment, and housing uses via traffic-and-pedestrian-friendly corridors. The city has established districts, including the downtown entertainment district, that offer a variety of cultural experiences, arts and entertainment, food, education, employment, and outdoor recreation. Lagging is the creation of varied rental housing options.
Rental housing demand is following a rocket’s upward movement propelled by the change in demographics, the transitory nature of workers, and the decline in home ownership. Some of this is driven by financial factors but much of it is also driven by lifestyle choice. Huntsville is impacted by the same shifts in renter households as noted throughout the nation. Nationally, renting increased among all age groups, household types, and income groups. Population on both ends of the age spectrum has driven up the numbers of young and old renters. Declines in home ownership either by choice or necessity have increased the number of middle-aged renters. Renter households aged 50+ jumped from 10 million to 15 million nationally and represented over 50% of the total increase in rental households between 2005 and third quarter 2015. The number of 30- to 49-year-old renters climbed from 15 to 18 million contributing to 33% of the growth in rental households. Equally impressive is the growth trend in the number of single persons and married couples without dependent children who have moved into renter housing as a lifestyle choice.
Downtown Huntsville’s rental options are skewed to the Millennial workforce typically associated with persons aged below 35. Downtown housing demand by the Millennial workforce is projected to continue and this ongoing demand must continue to be met. However, missing in the downtown sector is sufficient product that will accommodate and attract the 35- to 55-year-old renter and the empty nester. These age groups tend to have more disposable incomes and seek variety in their entertainment options such as restaurants, cultural activities, and community events. They are a key demographic that will support the retail aspects of the downtown sector.
Downtown Huntsville has the opportunity to build 500 to 600 additional apartment units immediately. This is in addition to the projects that are currently anticipated to enter the market at The Avenue and City Centre.
Competitive supply, however, will not remain static waiting for additional downtown Huntsville units to be approved and delivered. In fact, each new addition of housing supply in the surrounding region will detract from Huntsville’s ability to reach the critical housing mass required to achieve the sustainable “live” component of a walkable live/work/entertain environment in the downtown sector.
Therefore, although sufficient demand currently exists for a diverse housing product to be created, the city will miss its opportunity to achieve a walkable live/work/entertain environment if the positive traction occurring is not accelerated and in process, momentum is lost to other submarkets, nearby competing communities, or other significant competing mixed-use developments, such as the Town Madison mixed-use development. With 500 acres of interstate frontage, Town Madison is planned to include residential, retail, restaurant, entertainment, office, and hotel uses.
The additional 500 to 600 units should enter the market between 2018 and 2020. This will provide the minimum rental housing stock necessary to support land uses that complement housing including retail, restaurants, tourism activities and entertainment. With the additions, total rental housing by 2020 aligns with peer cities’ downtown housing supply as supported by the analysis included in this study. The peer city studies suggest new supply of 500 to 600 units is supported by 2020. This represents about 30% of total rental housing demand generated in the region between 2018 and 2020.
Product type is critical and should be diverse to accommodate various age groups. The city has the ability to encourage and incentivize product type that accommodates diverse age groups. Examples include housing for the 35- to 50-year-old and empty-nester residents near pedestrian and pet friendly parks. Land prices drive high density development, which should be placed within the entertainment core to provide support for parking structures. Arts and entertainment-oriented tenants complement historical districts where live/work spaces create an infusion of culture and energy attracting and supporting unique tourism-related opportunities.
By achieving the required housing critical mass with the immediate development of 500 to 600 units in addition to the current and planned development, downtown Huntsville will continue to evolve and expand. The synergistic impact of varied rental housing becomes an economic engine necessary to sustain and enhance the vibrancy of the downtown core which in turn supports the continued vibrancy of the entire Huntsville area.