Downtown apartment occupancy remains high
Colliers report shows average rent at $1.88 per square foot; influx of new inventory has dried up slightly.
Downtown Grand Rapids’ apartment market continues to gain significant momentum, according to a recent report by Colliers International West Michigan.
The report was produced by Colliers’ in-house multifamily team, which recorded data from 17 downtown apartments for the report. Information included number of units, occupancy, rent per square foot, amenities and parking accommodations.
Across the units surveyed in the report, occupancy is high, with the exception being 601 Bond, which opened in late June and now stands at 45% occupancy. Other communities ranged from the Brix at Midtown at 87% to the Rowe at 99%.
Lofts on Monroe, Lofts on Michigan, Lofts on Alabama and Heritage Place all were fully occupied.
Matt Jones, Colliers associate vice president of multifamily investments, said the apartment development pipeline in downtown Grand Rapids has been full, delivering thousands of units a year for many years prior, but recently, the influx of new inventory has slowed slightly. The only noteworthy downtown development is Studio Park, south of Van Andel Arena.
The project, led by Olsen Loeks Development, is an ambitious mixed-use development promising to deliver 246 market-rate lofts and condominiums. Other facets include a nine-screen movie theater and listening room by Studio C!, an office tower to be occupied by Caledonia-based insurance brokerage Acrisure, a Canopy by Hilton hotel and a 946-space parking ramp for office, residential and hotel tenants, as well as spaces for public parking.
The residential portion of Studio Park is expected to come online this fall.
Within the last two years, hundreds of units have become available and are filling quickly. Now that the lease-up period for larger projects is ending, Colliers is starting to see the pendulum swing back in the landlord’s favor in terms of pricing for units.
The average rent across all major downtown apartments is $1.88 per square foot. The largest rent per square foot is at 601 Bond Apartments with $2.25 per square foot. According to earlier Business Journal reports, the development features 160 one-bedroom units between 704 and 862 square feet and priced from $1,450 to $1,950 per month; and 42 two-bedroom units ranging in size from 695 to 1,002 square feet and priced from $1,750 to $2,725 per month.
The community offers reserved parking at $150 per month.
“People always wonder how people are paying these prices downtown to live in apartments, and if you look on a global scale, or really just even in the Midwest, Grand Rapids remains pretty affordable compared to cities like Minneapolis and Chicago,” Jones said.
The cheapest rent in the report can be found at Icon on Bond at $1.59 per square foot. The building has had a troubled history, according to a previous Business Journal report. The structure at 538 Bond Ave. NW was opened as a condominium building in 2007 when the national housing market collapsed.
New York-based Time Equities, which also owns 601 Bond, bought the building in 2013.
Amenities at Icon on Bond include a clubhouse and fitness center, in-unit washer and dryer, controlled access and private balconies or patios. The community also is pet-friendly and offers reserved parking at $75 for a surface-lot space and $125 for a covered space.
“One of the things you’ll notice … is tenants have a lot of options when they’re looking for buildings downtown, and so tenants are starting to be a little more discerning and looking at amenity packages in addition to location and quality of finish, etc.,” Jones said.
Additionally, the starter housing market in Grand Rapids is extremely competitive, Jones said, so would-be homebuyers are choosing to remain as renters while waiting for the right opportunity to buy.
“We don’t see the velocity from an absorption standpoint slowing down anytime soon,” he added.
The amount of outside capital placing equity in the Grand Rapids market also is driving rental pricing, Jones said. In addition to Time Equities’ stake in the market, three other complexes in the report, Lofts on Alabama, Lofts on Michigan and Lofts on Monroe, are under the ownership of KMG Prestige in Mount Pleasant and are part of the Lofts of GR portfolio.
The portfolio was rebranded from 616 Lofts after KMG took over from Grand Rapids-based 616 Development, which filed for bankruptcy in January 2019.
Jones said tenants are moving to West Michigan and investors are continuing to chase deals mainly because of lifestyle. Access to Lake Michigan and lack of natural disasters is appealing both in the short and long term, he said.