Developer plans $8M apartment building
With financing in place, a developer is “ready to go” on an $8-million apartment project in the region.
Orion Construction Inc. and Parkland Properties of Michigan recently announced opening up the bidding process to the Builders Exchange and other networks on the roughly $8 million High Point Flats apartment project in Muskegon’s historic Hackley Bank building, 285 W. Western Ave., after securing incentives, permit variances and lower-cost financing.
As a market-rate rental housing project, High Point Flats’ current design concept includes extensive restoration of the early 1900’s Hackley Bank building located in the heart of downtown Muskegon. The project also calls for a rooftop deck and new construction of a two-story building next to the existing eight-story tower, which will add 24 units to the 48 units within the original facility.
The 72 market-rate rentals will have an anticipated price range between $600 for a basic one-bedroom, to nearly $1,200 for a premium two-bedroom apartment, according to Jon Rooks, associate broker and owner of Parkland Properties.
“There definitely is a need for this type of market-rate housing, and it will significantly impact the downtown area,” said Rooks.
Orion and Parkland Properties also signed a letter of intent to hire Orion as the general contractor. Concept Design will serve as the architect.
The High Point Flats project was temporarily put on hold after the initial announcement of the multi-million dollar project, due to working through permitting hurdles and securing lower cost financing and incentives.
“We’ve been very excited about High Point Flats for a long time and we knew it would be a complicated project that required extensive collaboration and creative problem-solving to bring to fruition,” said Rooks.
“As we look at the current model and review the bids, we’ll make a final determination of the viability of High Point Flats kicking off this year. At this point, the big news is that the project is out for bid, and we are financed and ready to go.”
Incentives for the project include brownfield tax credits relating to 20 percent of the project, a Community Revitalization Program interest-free loan for 20 percent of the project, a CRP grant for nearly 5 percent of the project, and a city Tax Increment Finance Authority agreement for approximately $750,000, according to Rooks.
The apartment project is also located within a Renaissance Zone, meaning Parkland Properties will be exempt from property taxes, and residents will be exempt from city and state taxes until 2023.
The bidding process will end on Sept. 1, with a goal to begin construction in September and apartments opening during 2016.
High Point Flats is the second market-rate housing project Parkland Properties is bringing to the downtown Muskegon area to meet a growing demand for that type of housing in the community. The company’s for-sale housing option, Terrace Point Landing, recently opened its first model home for tours.
“These market-rate housing projects are considered by the state to be major impact investments, which will be catalysts for future market-rate housing,” said Rooks. “They will establish comparables for market studies and appraisals in the future and give banks confidence to lend money to future developers and developments in the core of downtown Muskegon.”
Combined, the two projects will provide a total of 142 market-rate housing options for the community. Parkland Properties expects approximately 350 additional individuals to live downtown in the next three years, according to Rooks.
“Once the rates for rental climb, based on supply and demand, more units will be built and the catalyst effect will kick in,” said Rooks.
“In the last 10 years, the rental rates for apartments I own in Grand Rapids have doubled. We hope the same thing happens in Muskegon.”