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Sunday, 24 June 2018 14:00

Condo conversion slowly gaining steam in Grand Rapids market

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Rockford Construction Co. wants to convert 26 apartment units into condominiums at 7th Street Lofts, located at 600 7th St. NW in Grand Rapids. The company is working with Steve Volkers Group LLC to market the units for sale. Rockford Construction Co. wants to convert 26 apartment units into condominiums at 7th Street Lofts, located at 600 7th St. NW in Grand Rapids. The company is working with Steve Volkers Group LLC to market the units for sale. COURTESY PHOTOS

GRAND RAPIDS — Amid Grand Rapids’ ongoing apartment-building boom, commercial real estate developers also are noticing demand for urban condominiums.

Because the financing market remains unfavorable for building new condo projects, developers looking to capitalize on the market mostly have been forced to convert existing apartments into salable units.

Steve Volkers, owner and CEO of Grand Rapids-based Steve Volkers Group LLC, is involved in two condominium projects currently, including one small-scale new project and one condo conversion.

“You have a lot of apartment product coming to market — not just in the core, but even in the suburbs — so I think that’s where you’ll see some of these change over (to condominiums),” Volkers said. “I don’t think it will be a ton, but I do think there will be a market for for-sale product.”

Urban condos have been relatively slow to materialize in many of the hottest real estate markets around the country. Chicago and Seattle — both perceived as booming rental markets — have only just begun to see the development of new condo units, according to various reports.

While many reasons can help explain that slow growth, financial institutions’ wariness to lend to condo projects has remained a main factor, as MiBiz previously reported.

“We just couldn’t build it or finance it until really the last year,” Volkers said. “Banks weren’t interested unless you had (a specific) amount of reservation agreements pre-construction. It was just very difficult to get financing. But now things are actually moving, so they’re looking at it.

“I think the market is there, if we get the right mix of units.”

Despite the challenges with lenders, some new condo development has begun to emerge. Volkers and a group of partners announced in early June that they planned to build The Townhomes of Breton Village, a nine-unit condo project on the city’s southeast side. In downtown Grand Rapids, the developers behind mixed-use redevelopments like The Rowe and The Morton also have included a few condo units in their projects.

However, condo conversion remains the most likely path to entry for new condos on the market. To that end, Rockford Construction Co. Inc. tapped Volkers to handle marketing and sales at 7th Street Lofts on the city’s northwest side, where the developer wants to convert the project’s 26 apartment units into condos and offer them for sale.

Mike Mraz, managing partner of real estate development for Rockford Construction, described 7th Street Lofts as an ideal project to convert into condominiums, citing its location near the burgeoning Bridge Street corridor, its many amenities including a fitness center and the presence of an on-site coffee shop.

“I think the market is asking for a variety of housing options,” Mraz wrote in an email to MiBiz. “Ever since the recession, the number of condos in the market has remained pretty much the same, causing pent-up demand for that unit type. We are seeing buyers wanting to invest in the urban core and near neighborhoods, which is exciting to see.”

Volkers, who is marketing the project, said his group already has sold eight of the units. He expects sales to reach 15 units by the end of the year at a cost of around $200 per square foot.

ADDING TO THE SUPPLY

Just to the east, across the Grand River from 7th Street Lofts, another newly-built project will begin the process of converting rental units to condominiums in the coming weeks.

The Homes at River’s Edge, Orion Construction Co. Inc.’s 32-unit, highend development on North Monroe Avenue, will hit the market as condos by the end of this month, according to principal John Wheeler.

The development, which is located along the eastern bank of the Grand River, opened to tenants earlier this month. After leasing 12 units, the company decided to close leasing and begin the process of selling the remaining 20 units, Wheeler said.

Grand Rapids-based Griffin Properties will market and sell the units, which are priced from $300 to $365 per square foot, according to Orion.

“There’s demand for condos,” Wheeler said. “There’s just nothing on the market.”

By adding to that supply with units at the River’s Edge and 7th Street Lofts projects, industry sources say property owners — as opposed to just tenants — will help to further the growth of downtown Grand Rapids and its adjacent neighborhoods.

“I think homeownership adds to downtown. We’ve got a lot of rentals, which is great,” Volkers said. “But long-term owners only help that whole neighborhood and help to develop the neighborhood as it grows.”

Read 3739 times Last modified on Sunday, 24 June 2018 09:24