Focus, Economic Development, and Real Estate

A great rebound year for development downtown

DDA’s banner award day in August reflected more than $100 million in investments.

December 20, 2013
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Downtown Monument Project
Work on Monument Park at Division Avenue and Fulton Street is close to completion and, when finished, the area will complement a boom in residential building downtown. Photo by Jim Gebben

More than a handful of key urban developers and the Downtown Development Authority stepped forward this year to make significant strides in the Central Business District.

Rockford Construction, Orion Construction, Brookstone Capital, 616 Development and a few others either announced, started or completed building projects in downtown. All include new living spaces — either market-rate or affordable apartments.

In addition, CWD Real Estate Investment decided to make improvements to a pair of office buildings in the district, and the DDA felt it was time to consider upgrading two longstanding public spaces: Monument Park and Veterans Park at downtown’s east end.

The district’s activity was so furious last summer that the DDA had a record day in August for awarding financial support to developers when the board voted to hand out more than $5.5 million over the coming years in grants and development support to six projects.

“We’ve got a lot of good stuff going on,” said DDA Chairman Brian Harris then.

DDA Executive Director Kristopher Larson told the Business Journal he and the board felt it was a good year for development, without question. He also characterized this year as a “great rebound year for downtown” and mentioned the DDA is still hearing from builders who are interested in the district.

“We are seeing tremendous depth in the housing demand, and our conversations with local real estate developers, and even the state, give us a great level of confidence that our marketplace can support a great deal more of residential development,” said Larson.

“So we are continually hopeful that we can attract more residential product across various product types, whether these be for sale, for rent, affordable or market rate. They are all important to building a diverse downtown,” he added.

Larson said that day in August when board members set the record for awarding financial incentives reflected the depth of the demand for housing. “Certainly those days are somewhat coincidental that everything manifests around one big meeting. It was fun to see all the accumulation of projects — over $100 million in total investment — being proposed all in the same day,” he said.

“I think that is a great reflection of where we’re going in the city and how we will continue to attract a diverse set of development types, because on that day we saw everything from office rehab to new affordable housing construction to a new office tower. And we haven’t had a new office going up in downtown for quite some time.”

The office tower is the Arena Place project Orion Construction has proposed near Van Andel Arena. It’s a mixed-use development that includes 40,000 square feet of office space, the first new space of its kind in the 20 years since Bridgewater Place opened. The project also offers 76 market-rate apartments, 10,000 square feet for retail and parking. Orion’s investment in it has been estimated at $30 million.

“When a developer is ready to make that type of an investment in your community, it means that they have confidence in the future of the market. That was a great vote of confidence for the direction of the downtown marketplace,” said Larson.

Construction on Arena Place is slated to begin early next year on the former Area 1 parking lot on Ottawa Avenue SW just west of the arena. The DDA listed the lot for sale as part of its Arena South Visioning Plan, which was completed earlier this year, and Larson said the probability is good that the board will list more lots next year.

Area 1 wasn’t the first lot on which the DDA entered into an option agreement for development. In April 2012, Jackson Entertainment LLC, an affiliate of the Celebration Cinema group, picked up a two-year option on the Area 5 lot on Cherry Street behind the arena. Jackson is considering putting a movie theater and entertainment complex with meeting space on the site.

“Our conversations with Celebration Cinema continue, and they are continuing to work through their overall development scheme. So we’re hopeful that will continue to manifest,” said Larson.

Larson also said the board was negotiating with the Michigan Department of Transportation for a right-of-way the agency owns that runs between the Area 5 and adjacent Area 4 lot. “If we can complete that transaction, then we have a much larger development site with a recombined 4 and 5,” he said.

Tying Area 4 and 5 together would give the DDA about a five-acre parcel for development. “That would create a lot of opportunity for a big-scale project that becomes transformative in the same way that the arena and the Downtown Market have already started to transform our neighborhood.”

Larson said the city is moving in the same residential direction as much of the rest of the nation. Instead of single-family home construction, multi-family — such as apartments with commercial space on the ground floor — is in the spotlight. He said statistics reveal the current household size is below two persons per unit, and that means people are either marrying later or are empty nesters, which is the fastest-growing segment of the population in the country.

“A number of studies have showed that we’ve basically built all the single-family housing we need in the country and, really, the untapped demand now is for multi-family. For a lot of local developers, that is exactly what they’re doing,” he said.

Larson said some of the developers who have a history of doing projects downtown have moved into the district’s surrounding residential neighborhoods with multi-family projects. Rockford Construction and 616 Development are just two of those, and Larson said they are meeting a demand and diversifying their portfolios with those projects.

“While the downtown is a great investment, downtown isn’t for everyone. And there exists significant opportunities in some of these near neighborhoods to be able to deliver multi-family product. Thinking about how to create other residential housing opportunities, even in our near neighborhoods, is good for the core of our city as a whole,” he said.

“I think when you see developers spread their wings outside of the downtown core, it’s also not solely a reflection of investment. In some cases, it’s a reflection of supply.”

Larson felt the next urban frontier for development will be along Division Avenue, where The Rapid will run its Silver Line from 60th Street to downtown. The public transit agency is in the process of building mini-stations for its Bus Rapid Transit service and those sites could serve as catalysts for residential and commercial projects.

“That’s where we could and should be really locating a lot of our new high-density residential and mixed-use development to really help build in the functionality for that transportation spine,” he said.

The DDA will remain active in the district’s development but will do so on a deliberate basis. Its effort to revitalize Monument Park is close to wrapping up after the board decided to expedite the work in July. Next on the to-do list for public spaces is finding the funds to rebuild Veterans Park.

“In our downtown, we have seen over 90 buildings rehabilitated and there doesn’t exist a significant amount of existing product still starving for rehabilitation or adaptive reuse or available development sites,” said Larson, “which is why the DDA is being very intentional about ensuring that as it sells land, it is for the right project that really helps to advance downtown.”

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