Residential developers in downtown Grand Rapids and the adjacent neighborhoods could be missing out on an opportunity to serve a growing market segment.
While most of the region’s development has focused on the extremes in the housing spectrum — either rentals for low-income workers or high-end market-rate space for professionals — few developers have paid much attention to the “missing middle” housing segment.
The notion of middle-market housing is gaining steam nationally as urban demographics shift and cities once again become centers of a diverse population base. The growing population of millennials and baby boomers looking to rent homes in cities necessitates housing types not built since the early 1940s, said Stefan Pellegrini, a principal with Berkeley, Calif.-based Opticos Design Inc. who spoke at the University of Michigan-Urban Land Institute of Michigan conference in November.
“Nationally, the demand for small lots and attached-type housing exceeds supply by roughly 35 million units,” Pellegrini said.
This middle-market housing is typically close to public transportation, is adaptable to a variety of neighborhoods and works well for revitalization efforts, he said. It includes duplexes, bungalow courts, townhomes, live-work units and courtyard apartments and can fit between single-family homes and mid-rise apartments in primarily walkable, urban neighborhoods, Pellegrini said.
Designs are typically characterized by simple, small footprint units that keep prices affordable, about $600 to $1,000 per month.
Developers at Rockford Construction Co., which has significant investments on Grand Rapids’ west side, say these kinds of housing products must fit within the context of their surrounding neighborhoods.
“These places have a culture and you need to take the time to understand that and what people have traditionally sought and what their aspirations are,” said Mike VanGessel, CEO and founding partner of Rockford Construction. “So how you implement that is going to be back to understanding the neighborhood. Affordability is a key component of all that.”
With an 18-unit development at 600 Douglas Avenue, Rockford Construction proposed a project that fit with the surrounding area, but also stood out as a unique product in the market, VanGessel said.
The four-building project is roughly 15,000 square feet and sits on about four-tenths of an acre. The mix of units varies between the buildings. One building has four two-story townhomes. The second building has eight one-bedroom apartments in a two-story structure, while the third three-story building has two one-bedroom ground-floor units and one townhome on the second and third stories. The fourth building has two studio apartments on the second floor. Included in the design is a community garden and a storage area for bicycles.
Aimed at a mix of students and young professionals with its proximity to Grand Valley State University and the downtown area, 600 Douglas is one of the city’s newest housing products that can help address a growing population of young renters and empty-nesters, VanGessel said.
While he believes middle-market housing product could be viable in several city neighborhoods surrounding downtown, including Eastown and the west side, VanGessel said such projects take more thought than just making the numbers work.
Adding to the complexity is that GrandRapids currently lacks a cohesive housing plan. However, sources said mixing new development with long-standing neighborhood dynamics doesn’t have any easy solutions.
“Private developers can — on their own — develop market-rate housing to beat the band if they find it makes business sense to them,” said Jim Talen, the 16th District Kent County commissioner and a board member of the Grand Rapids Downtown Development Authority. “That’s not necessarily the case for affordable housing or something in between, and I would argue that there is a case to be made for building something in the middle.”
Strong cities are built around a diverse downtown, Talen said, noting Grand Rapids won’t grow with just affordable and market-rate housing while ignoring the middle-market segment.
“We need to be intentional about what the balance of housing is in our near neighborhoods and downtown,” he said. “A critical component of that is building on what we already know about the need for housing on all levels.”
Through studies such as the Arena South Visioning study and the Michigan Street Corridor Plan, the community provided insight to its housing needs, Talen said. He said he is optimistic about how city leaders and private developers are approaching the residential planning process in the downtown area.
“We’re working hard to make the process happen soon because the (market) is heating up really fast,” he said.
To jumpstart the middle-market for housing, Talen recommended that city officials look for creative ways to employ existing tools in zoning and other codes that could make it easier for developers to access that market.
“We have to talk about … what we want our downtown and neighborhoods to be like,” he said. “There has got to be a way to find tools in the toolbox to make city living accessible to more people.”
If the city and taxpayers believe in subsidizing development for affordable and market-rate housing through programs such as the Low-Income Housing Tax Credit and the Community Revitalization Program, it should also try to attract a market somewhere in the middle, Talen said.
With help of a consultant, Downtown Grand Rapids Inc. is launching a planning effort to help guide the next 15 years of investment in the city, and Talen said he’d like to see that plan include a framework for future housing development.
The discussion of middle-market housing comes as real estate development along the South Division corridor and in the Heartside District continues to generate interest, thanks in part to the new Downtown Market and other new retailers. The investment in those areas of the city has also brought to light some of the related development challenges involved in gentrifying city neighborhoods, in particular the question of how to help significant homeless populations living in the city.
Some sources say the cluster of homeless people dampens the prospect of continued investment and development along that corridor of the city.
But long-time advocates dispute that sentiment.
“I do think Grand Rapids is going to have its fits and starts, and it’s not a new conversation,” said Denny Sturtevant, executive director of the Dwelling Place, which maintains about 600 subsidized housing units for homeless individuals and people dealing with persistent substance abuse. “I’ve worked here for 35 years … and the same conversation was going on back when I started.”
Another housing redevelopment effort that is stressing housing equity is Well House’s 19:1 campaign. With the effort, the nonprofit is attempting both to inform the public about the serious housing disparities in Kent County, as well as to begin a dialogue to change it, according to a statement from the organization.
While there are 19,000 vacant housing units in Kent County, there are 1,000 people experiencing homelessness, according to Well House. That means for every person sleeping on the streets or in shelters, there are 19 vacant housing units they could be living in, the organization said.
“A lot of problems we see today are a function of a lot of things in our economy and public policy,” Sturtevant said. “But the (South Division) neighborhood is still transforming.”
The perception of the area continues to change and has already changed a lot from when Sturtevant started his work in the community.
“It’s gone from skid row to edgy to kind of artsy,” he said. “It’s only now gotten to a point where people are actually worried about gentrification.”