Hundreds of new apartment units are under construction or in planning stages in Lansing and its suburbs, leading some to question whether the market can support so many new rentals.
Much of the new construction is centered in East Lansing, where city planners say people increasingly want to live because of its proximity to Michigan State University, public transit and entertainment.
Economic factors, including a recovering job market, an influx of new renters during the recession and a young generation of mobile job-seekers, are influencing developers’ decisions to build more rental housing.
“I would definitely say that the economy’s improving and we’re definitely seeing development interest pick up, and I think it’s really market-driven,” said Lori Mullins, East Lansing’s community and economic development administrator. “Access to capital impacts the development opportunities.”
Those opportunities more often include rental units.
Today’s young professionals are more transient than previous generations. They carry more student loan debt, marry later and, partly as a result, buy houses later.
And the housing crisis led to scores of foreclosures and more people becoming renters. Lenders appear more willing to finance multifamily apartment housing, Mullins said.
Local companies have asked for help finding housing for new hires, said Bob Trezise, president and CEO of regional economic development firm Lansing Economic Area Partnership Inc.
Jackson National Life Insurance Co., which has headquarters near Interstate 96 and Okemos Road, is in the process of doubling its main office and hiring 1,000 new employees over the next decade.
The insurer “has told us directly that a big part of their ability to attract and fill those jobs is dependent on us building better, bigger, downtown living environments,” Trezise said.
He added that JNL believes many of its new positions will be entry level and geared toward recent college graduates, who are the most likely to rent. JNL declined to comment.
“Making it more likely for these companies like JNL to attract global talent is of a top imperative,” Trezise said. “We have to make sure that we’re providing all of the proper choices.”
The developers proposing a 9-story, 359-unit apartment building for the former Story Oldsmobile site on Michigan Avenue in Lansing say young professionals are their target market. The $77 million development would include indoor athletic courts and spaces for retail. The site is just over a mile from downtown East Lansing.
East Lansing has more than a half dozen apartment projects in various stages, including a 57-unit building near the Trowbridge Plaza shopping center on the city’s southern edge and a proposal to tear down a vacant fast-food restaurant on Grand River Avenue and replace it with a five-story building. Most of the new buildings would have space for at least one retailer.
But the mixed-use residential development spreads beyond city limits. Developers have proposed 219 apartments on more than 12 acres near the corner of Grand River Avenue and Park Lake Road in Meridian Township, for example. And Lansing developer Pat Gillespie recently opened Midtown and Marketplace, two new apartment buildings in Lansing.
City planners trust developers to know the market before they build new projects, said Mullins, with East Lansing. She has heard downtown rental units are in high demand and mostly full. But developers aren’t required to conduct market studies.
Even so, developers won’t spend money on a building no one wants to live in, said Colin Cronin, a vice president with Lansing Township-based rental housing developer DTN Management Co. Cronin said DTN tracks its own rental and occupancy rates and knows what parts of the region are in demand and which are weaker.
An Ohio-based real estate market research firm wrote an economic impact study for a developer planning to build an upscale apartment complex in an old industrial yard in Meridian Township. The $50 million development, Okemos Pointe, would include 450 one- to three-bedroom apartments and townhomes near Okemos and Jolly roads.
Patrick Bowen, owner of Bowen National Research, wrote in March that the proposed housing will “bolster local employment force to attract/retain major employers” and support hundreds of new positions at JNL, Okemos-based Delta Dental and Dart Container Corp. in Mason.
The challenge for developers is to figure out recent grads’ housing preferences, Cronin said, adding that many don’t plan to stay at one job for a long term, he said.
“They kind of plan on moving around, so that’s a good source for the rental markets,” Cronin said. “You can’t just build housing and jobs come. People go to where the jobs are.”
The market for college student housing is saturated, he and Trezise both say, particularly now that several newly built units have come on line. What’s missing are one- and two-bedroom units with higher-end amenities that might appeal to recent graduates and young professionals with more disposable income.
“We think there is a market here for that that has not been tapped into,” said Matt Marshall, a vice president with Atlanta, Ga.-based Ambling University Development Group, the company hoping to build “SkyVue on Michigan” on the former Story Oldsmobile site.
Along with the massive Red Cedar Renaissance project set for the former golf course across the road, SkyVue would make the Michigan Avenue corridor more vibrant and help attract and retain young people who want to live in the urban core, local officials say.
East Lansing leaders extended until August a moratorium on proposals for downtown buildings less than four stories in an effort to increase population density in the city center.
The city has the infrastructure to support more housing downtown, Mullins said, adding that a mix of college students and full-time residents can lead to more diverse retailers and restaurants.
“I like to think about the downtown being at a sort of tipping point where we are seeing a variety of different development types and restaurants,” she said. “We have the ability to move it to a more diverse downtown in the near future.”
Lansing State Journal reporter Ken Palmer contributed to this report.
At a glance
Some apartment development projects proposed or under construction in East Lansing include:
• Next Generation Investment Properties LLC, consisting of developers from East Lansing student rental management firm Community Resource Management Co., wants to tear down a vacant gas station and ice cream shop and a building used as a fraternity house at the corner of East Grand River and Spartan avenues to build a four-story building with 51 one- to four-bedroom units.
• Stonehouse Village VI LLC, made up of developers from East Lansing-based Cron Management LLC, want to tear down a vacant Taco Bell fast-food restaurant building on East Grand River Avenue and build a five-story building with 5,000 square feet of ground-floor commercial space and 30 apartment units. The units mostly would have four bedrooms, but one- to three-bedroom units also will be available.
• DTN Management Co. is proposing to build a four-story building with ground-floor retail, underground parking and 39 two-bedroom units. The $9 million project, called Gateway, would be built on a vacant lot at the corner of Grand River Avenue and Delta Street, across from Biggby Coffee’s original store.
• DTN also will tear down about 15 cottage-style houses at the corner of Gunson and Beech streets, called Garten Haus Apartments, and replace them with five three-story buildings by fall 2016. The $4 million project will include 21 student apartments, mostly with two bedrooms.
• A four-story, mixed-use apartment building near Grand River Avenue and Kedzie Street, called The Element 903, will have 1,500 square feet of ground-floor commercial space and 18 two-bedroom apartments on upper floors. The $2.8 million project is being developed by Rich Foster and Cynthia Harmon, owners of the Foster and Harmon P.C. law firm that owns the property.
• A four-story, mixed-use building with 13 apartments and 1,000 square feet of commercial space that would be built in between an apartment building at 500 Albert Ave. and a house at 122 Division St. downtown. The developer is Lingg Brewer.
• River Caddis Development LLC is building a four-story apartment building with 57 one- and two-bedroom units in the Trowbridge Plaza shopping center at Harrison and Trowbridge roads. The $17 million project also includes the renovation of the shopping center.