GRAND RAPIDS — A tightening apartment market in and around downtown Grand Rapids hasn’t deterred a New York City developer from moving forward with a more than $50 million project in the city’s North Monroe neighborhood.
Time Equities Inc., a New York City-based private real estate investment firm, expects to begin leasing the 202 units at 601 Bond Ave. NW this coming fall and deliver units in the spring of 2019, said Ethan Coleman, the firm’s asset manager.
Grand Rapids-based Pioneer Construction continues work on the 16-story apartment tower, which will include ground-floor commercial space and on-site parking.
However, the project will come online as some signs indicate the local apartment market could be cooling off. Still, Coleman said Time Equities sees strength in the market.
“People talk about there potentially being a supply issue with apartments in downtown Grand Rapids, but from everything we’ve seen so far, it really hasn’t been an issue,” Coleman told MiBiz. “Projects that have come online have been absorbed quickly. We feel that Grand Rapids is a very strong market from a fundamentals standpoint.”
Coleman pointed to the overall population and job growth in and around Grand Rapids, adding that “demand for downtown experiences … is on the rise and will continue to get better.”
“We felt that even if potentially there’s a short-run issue, it would be just that and in the long run — which is our perspective — Grand Rapids is a great place to invest,” he said.
Recent research shows the apartment market in Grand Rapids remains on solid ground. A report released Monday morning from San Francisco-based apartment listing website Apartment List found that while Grand Rapids rents were flat last month, the region has experienced rent growth of 2.1 percent since the start of the year.
The median rent for a two-bedroom apartment in Grand Rapids at $920 per month still falls more than $250 short of the national average, according to Apartment List.
Time Equities first came to Grand Rapids in 2013 with its $17 million acquisition of the Icon on Bond apartment building located across the street.
Many of Time Equities’ holdings are in primary markets like New York and Chicago. However, Coleman noted that as higher-profile markets become more competitive and tighter for apartment deals, places like Grand Rapids become more attractive, particularly as they offer higher returns to investors.
“Recently, some of the secondary markets like Seattle, Denver, Austin have also similarly gotten very tight. We’ve seen that move further down the tiers of markets as people just look for returns,” Coleman said, adding that with fewer investors and less institutional capital, many REITs tend to avoid places like Grand Rapids.
“It’s just kind of below their size threshold because if they want to sell, they’re concerned about whether they’ll be able to sell quickly and easily,” Coleman said. “They fear that in a small market, there’s not enough buyers and they can’t exit the deal. (We’re) a long-term holder.”
Editor’s note: This story has been changed from its original version to clarify that Time Equities is a private real estate investment company, not a real estate investment trust.