14 Outreach
This section summarizes interviews and additional outreach with non-profit and for-profit multifamily developers with existing or prospective projects in the county.
14.1 Process
To gather additional details on the state of Chesterfield County’s rental market, a total of nine persons from six organizations were interviewed in early June 2022. These interviews collected input from:
- For-profit multifamily and mixed use developers,
- Nonprofit multifamily developers and property managers, and
- Commercial real estate brokers focused on multifamily and mixed use properties.
Specific interview topics and questions varied, but were organized around the prevalent trends, challenges, and opportunities found today in the county’s rental market.
14.2 Trends
All interviewees strongly agreed that the demand for rental housing in the county far exceeds the current supply. One individual stated that the market has “shot straight up”—and that the county will only get more expensive in the near future. Recent interest rate increases may cool the pace of new development, along with pricing out homebuyers with marginal incomes. Together, these symptoms would place additional rental demand on an already limited supply.
The growing demand for rental homes can be attributed to many different household types, but respondents noted several important groups. First, families with one or more children, but with incomes too low to purchase a home, are looking for apartments with three or more bedrooms. County schools are often a motivator, as interviewees noted anecdotal increases in households moving from the City of Richmond and the Tri-Cities areas. Due to their higher childcare and other household costs, these families need an affordable rent to balance their budgets.
Property managers of affordable rental communities stated that current waitlists for apartments range from 30 to more than 100 applicants.
Second, there is an acute need for more senior and age-restricted homes, particularly options that are affordable to those on low and/or fixed incomes. These residents have aged out of their previous home due to maintenance or accessibility issues. Finally, among renters who are currently being served by new Class A development, most are one- or two-person households moving into the area to work from home, or are long-term county residents willingly downsizing from a larger home.
14.3 Challenges
Interviewees described a range of obstacles preventing the creation of new rental homes to meet demand. These challenges focus on market conditions, development regulations, and changing attitudes about rental housing.
First, respondents shared that new development has gotten more difficult due to increasing acquisition, material, and labor costs. These trends are currently found in nearly every part of the nation, as well. Among existing properties, Class A, B, and C multifamily assets are all “performing very well,” which demonstrates demand from a wide range of incomes.
However, owners of lower cost, market-affordable rental properties (NOAH) have been less willing to sell their assets, which could lead to revitalization in certain areas, as well as continued preservation of attainable housing options. These long-term, local owners are hesitant to deal with the selling process, and are tax averse with respect to capital gains.
In areas where property values may be lower, prevailing market and community conditions can make development unfavorable. The northern Route 1 corridor was noted as an important example: despite its proximity to downtown Richmond and I-95, crime issues were repeatedly noted as a turn-off for developers. Furthermore, several interviewees stated that the low incomes found along that corridor would not support new market-rate development.
Second, various development regulations were listed as challenges imposed by the county. These primarily focused on utility connection and permit fees, which participants claimed were high relative to other localities, along with increasing costs associated with road and transportation proffers. Additionally, some developers identified first-floor commercial uses, which are encouraged by the county, as challenging for financing. Standalone multifamily development can be easier to obtain versus mixed-use.
Finally, nearly all respondents mentioned increasing public and political concern about new rental housing, particularly focused on apartments using public subsidy to serve lower incomes. This is especially a factor along Route 1, which one respondent called a “victim of its own success” following recent successful developments.
14.4 Opportunities
In spite of the listed challenges, interviewees noted that there were several opportunities to support rental housing development in the county, and specifically along the Route 1 and Eastern Hull St corridors.
LIHTC developers benefit greatly in the competitive scoring process when proposed developments are located in officially designated “revitalization areas.” This has helped support LIHTC development along the Route 1 corridor by Better Housing Coalition, but continuing this designation practice could help support LIHTC development in other parts of the county, where affordable rental housing is needed just as much. Tax abatements, even small amounts, like the recent Route 1 corridor tax abatement policy, also help in the LIHTC scoring process—increasing the likelihood of tax credit awards.
Continued expansion of public transportation along major corridors in the county would also help support affordable rental housing development. Being within 1/2 mile distance of public transportation is another scoring criteria for many publicly-financed housing developments.
Interviewees also saw specific opportunities for each corridor. Many saw greater opportunities for rental housing development along the Hull Street corridor due it having less of a “stigma” and better socioeconomic conditions to support mixed-use and mixed-income developments. One interviewee felt that Hull Street will continue to see more development activity and interest, growing organically like the western Midlothian Turnpike.
Respondents did refer to opportunities along the Route 1 corridor, especially for the revitalization or reuse of vacant and underutilized commercial spaces near the Chester area. But interviewees felt that the county would need to provide meaningful incentives to attract market-rate development to the northern section of Route 1.