GRAND RAPIDS — A residential expert who is quite familiar with downtown feels the housing component of the Grand River mystery project is too aggressive and not based on market conditions.
The year-old, 22-page financial document for the ESNA RiverGrand Development Project may or may not be accurate today, but its contents include 1,500 town homes and condominiums as part of a mixed-use development planned for 40 acres of riverfront property south of downtown that would take about three years to build.
“I certainly think downtown can support 1,500 more units; it’s just this three-year time frame that gives me a little bit of pause,” said Laurie Volk, a principal with Zimmerman/Volk Associates, last week from her office in Clinton, N.J.
Volk conducted a regional housing market analysis two years ago for the Grand Valley Metro Council, along with a separate study for the Downtown Development Authority that focused on the district’s residential market.
“Frankly, based on our market study of downtown, absorbing 1,500 condominiums and town houses in three years would require an enormous capture of the potential market, and I would doubt that is what they really think they are going to do. You know, Grand Rapids is not that big of a market,” she added.
According to the DDA, 1,500 new market-rate housing units were either planned, under construction or completed downtown from 1996 through mid-2004 — the year Volk did her analysis of the market. Since then, other residential projects have been announced.
Moch International is building the nine-story Icon on Bond on the southeast corner of Trowbridge and Bond NW, which will offer 198 condos. Robert Grooters Development plans to build 200 condos in The Riverhouse at 337 Bridge St. NW, next to the Bridgewater Place office tower. Tall House Enterprises has 70 condos planned for its development at 45 Ionia Ave. SW.
Second Story Properties is turning the former downtown YMCA at 33 Library St. NW into 56 condos. Two West Fulton has indicated it will build 80 condos as part of its development planned for the former City Centre parking ramp site at Division and Fulton.
Parkland Properties is building 180 condos in Union Square at 600 Broadway Ave. NW, and plans to convert the 230 apartments in The Boardwalk at 940 Monroe Ave. NW into condos.
“I think those projects that are currently marketing or about to market will be OK. Those will be done before this gets under way,” said Volk.
If all those projects are completed, 1,014 new condos will go on the downtown market in the next few years.
In her study of downtown, Volk found that the market could absorb about 350 new units each year. But she reported that over half should be rental properties to match the financial capabilities of those interested in downtown living.
“We had about 350 units a year but 200 of those were rentals,” said Volk of what was reported in her study.
But Volk said she has seen other proposals that match and exceed the magnitude of the RiverGrand project. One was proposed for West Bloomfield, Mich. The plan called for 21 towers for office and residential, a project that would give the township, which has roughly 64,800 residents, more office space than the Renaissance Center in downtown Detroit.
“From a market perspective, it was crazy. It just isn’t going to happen,” said Volk, whose firm was involved in that project. “This happens a lot, where these extraordinary projects get proposed.”
Volk was intrigued to learn that a California-licensed real estate agent, Duane Faust of ESNA Corp., is a central figure in the RiverGrand proposal.
“California developers seem to think the rest of the country is like California, and that could be why they think this is a workable project. This is something that would totally fly in L.A. But it is kind of interesting that they bring the California perspective with them, rather than try to understand where they’re actually looking,” she said.
At the same time, Volk acknowledged that the ESNA proposal could be a great benefit to downtown by creating jobs and tax revenue and possibly fueling other projects. But she also wondered what concessions city officials are being asked to make to land the development.
“Since nobody knows that right now, those are the deals that don’t usually wind up well for the city. They concede too much. And because this deal doesn’t have any real market reality, just based on what you can get on the site, it will often fall apart,” she said.
“It would be great for the city if it happens. But I think everybody needs to be very careful and really examine what is actually proposed here and how realistic is it.”
Despite a lack of market data to support the ESNA proposal, if it’s still in play, Volk felt that no one should disregard the possibility that the developers affiliated with the project can deliver the super-sized residential portion. For instance, perhaps other parts of the project would draw people here and create a demand for more housing.
“I don’t want to imply that they can’t do more than that — they certainly can if it’s well positioned. I would love to see what they’re proposing to do to capture that large a number of units in just three years,” she said. “But frankly I don’t think it’s planned on any kind of market reality. I think it’s what the site will hold, and we see that all the time.”