Catalyst Development Co. LCC’s latest project in Kalamazoo, located at the southwest corner of North Edwards Street and Water Street, will bring more housing, offices and parking spaces to the growing downtown, which could spark some more retail development in the area. That’s according to Managing Director and Vice President Patti Owens, who said she does not see a slowdown in development coming any time soon for the Kalamazoo area.
What areas are you seeing demand when it comes to downtown development?
We’ve only ever had 11 residential units in two of our mixed-use buildings. Both of them are situated right on the Kalamazoo Mall, which is the nation’s first pedestrian mall that was created way back in the day. We’ve never had any problems filling them, but they are true market-rate apartments. We’re getting the top per square foot rates for these apartments. We could have rented I want to say 50 more apartments over the past decade, if we had had something that was affordable. That is what we have seen and what we are seeing, that there is not anyplace affordable for folks that work downtown to actually live downtown.
What projects are in the works for 2019?
We’re not speculative developers. We are going to develop when we know that there is an actual purpose. This (Catalyst 12) project that we’re doing, obviously is meaningful because it’s creating space for the Kalamazoo Promise to expand by 20 employees and expand their programming so that every young person that is Promise-eligible is afforded the same opportunity to take advantage of that promise. That’s the meaningful part of this building. We’re not just going around developing. We need to have a reason and so that’s the reason. You won’t see us breaking ground on anything else next year or even the year after in Kalamazoo.
With projects under construction, how are you bracing for a labor shortage and other cost challenges?
We know that our construction costs are 20-percent higher than they were when we first envisioned this project a couple of years ago. We’ve done our post-bid interviews and it’s the new reality. There is a shortage of labor. We saw this coming, and our construction manager had the forethought to suggest that we engage with some of the major trades at that point. We took the largest (bid) packages, which would be the foundations and the excavation and the exterior envelope of the building and the electrical and the mechanical, and we started talking with our preferred trades partners in those specific packages: ‘Would you join our team early on and help us design this building using your in-house expertise? We will agree that you will be the trade, you will be the company, you will be the mechanical contractor, you will be the electrical contractor that gets awarded this work.’
How will that position you during construction?
It’s the first time we’ve ever done it, but I can see it’s really going to pay off. They’re in it from the very beginning, and they knew 18 months to 24 months ago that they needed to have the necessary labor to start this project when we started it in August. We assured ourselves that we were going to have the labor necessary to build this building in accordance with the projected timeframe that we have. It’s going to help to make this project really successful.
When do you see the demand for these developments slowing down?
A few years ago, I think we all predicted what’s happening today. I have such a positive attitude about this community, which I think most people that live and work here do because for some reason, Kalamazoo really gets to the heart of you. I don’t see things necessarily slowing down. This kind of large development necessarily will because we’re a small city. There’s not a whole lot of space. We’re buying out public parking lots to develop on, and there’s a shortage of that as well. The new large development within the city center, within the urban core, that will definitely slow down. I don’t see people scraping old buildings to build new ones because we’ve got such a great stock of really lovely, old, historic structures here.
What will the next focus be after more people are living downtown?
We’ve got a great concentration of food and entertainment downtown, but what we don’t have are a lot of the retail that would support people that actually live downtown. I lived downtown for five years and the only time I had to really get in my car was to go get groceries. But I envision that as we get a concentration of these downtown residents, somebody’s going to open a grocery store that’s within walking distance — I hope, anyway. Other services that support people who actually live downtown, I think you might start to see spring up.
I’m not really sure if that’s going to happen next year or 2020. I feel like 2020 is going to be the year that we approach an equilibrium between people that live down here and the services that are really necessary to support those folks.
Interview conducted and condensed by Sydney Smith.