GRAND RAPIDS — Walking around the southern end of the historic Heritage Hill neighborhood, Mark Miller points out clues for how Grand Rapids could achieve greater housing affordability in the coming years.
The architect and urban designer at Nederveld Inc. in Grand Rapids identified several multi-unit apartment buildings from more than a half-century ago that are either no longer allowed by current zoning statutes or can require lengthy approval processes. If the rowhouses, townhouses and similar structures were currently allowed, developers would have more options to offer affordable housing in Grand Rapids, he said.
“You’re trying to do what we would say is density done well — elegant density,” Miller said.
Miller refers to the old developments as the “missing middle,” a term coined in 2010 by architect and urban planner Dan Parolek. While sources differ on the definition of the term, the Michigan chapter of the American Planning Association defines it as “a range of multi-unit or clustered housing types compatible in scale with single-family homes that help meet the growing demand for walkable urban living.”
Miller argues that opportunities exist to increase density and add to the housing supply by building multi-unit residential buildings in place of single-family homes.
“Instead of putting a single-family house on it, you’re doubling the density,” he said. “We don’t like to talk about that. … There’s a fear of density.”
In part, that’s because many people still associate the concept of dense housing with the stereotypical large residential towers, Miller said.
But the so-called missing middle bridges the gap by offering density in a condensed format. As an example, Miller cited a 17,715-square-foot apartment building at the northwest corner of Wealthy Street and Madison Avenue. The building at 357 Madison Ave. — built in 1922 — contains 19 apartment units, according to owner David Klinzing.
Because of its size and density and its location among single-family homes, the building serves as a prime example of the type of housing that, if it were to be built these days, could help increase affordable options in Grand Rapids, Miller said.
Such a development also doesn’t appear to be “detrimental to other houses” in the neighborhood, in that they continue to hold their values, he added.
FINDING THE MIDDLE
Issues of housing affordability have emerged in the central business district in downtown Grand Rapids and the surrounding neighborhoods as developers bring online more than 1,000 new apartment units in the coming month.
Developers tell MiBiz that cost of new construction in the region stands at about $2 per square foot, meaning it’s not uncommon for newly built one-bedroom apartments to rent for around $1,000 per month.
“There’s only so many people that can afford $2 per square foot,” said John Wheeler, director of business development at Orion Construction Inc., a Grand Rapids-based general contractor and development firm. “We’re trying to figure out density issues and how to build (more affordable options).”
To Wheeler, the issue of the “missing middle” is less about housing types as outlined by Miller and more about building enough housing to support all income levels.
The developer pointed to the recent opening of The Wheelhouse, a casual dining restaurant that debuted in late-May in Orion Construction’s new Arena Place development. The restaurant hired approximately 130 new employees, largely in service positions such as cooks, servers and bartenders.
Many people employed in such positions make too much to qualify for income-restricted housing supported by Low Income Housing Tax Credits (LIHTC), but they also make far too little to afford many of the newly built apartments, Wheeler said.
With upcoming projects such as the 94-unit Venue Tower located next to The B.O.B., Orion Construction hopes to keep construction costs to a minimum as a way of achieving lower rents, according to Wheeler.
“At Venue Tower, we’re really trying to drive rents down to find out how big the missing middle is,” he said.
Housing statistics for the Grand Rapids area show good cause for concern over affordability. According to online real estate portal Rent Jungle, the average price for an apartment within 10 miles of Grand Rapids was $919 as of February 2016.
That’s up from $851 in February 2015, but actually down from a peak of $952 last July.
Additionally, the housing stock in the downtown area and its surrounding neighborhoods consists of 65 percent market-rate rentals, according to an April report from Downtown Grand Rapids Inc. The remaining 35 percent are income-restricted units.
IDENTIFYING NEW OPTIONS
With a number of new affordable housing developments around Grand Rapids in the pipeline, renters could see some relief in the coming months as more units come online.
But as Orion Construction’s Wheeler pointed out, many potential renters make too much to qualify for that type of housing.
That dichotomy — people working downtown who cannot afford the market-rate units and who do not qualify for income-restricted housing — drives the need for more supply and different kinds of buildings, said Miller of Nederveld.
Commercial real estate sources said there’s no one way to hit affordability targets, but Miller argues that developing rowhouses and townhouses will add density. Additionally, Miller supports the adoption of Accessory Dwelling Units (ADUs), or allowing carriage houses or converted garages to become living units.
Numerous cities facing affordability issues are allowing ADUs “by right,” meaning no zoning process is required for them to be converted into housing, he said.
City Planning Director Suzanne Schulz noted that many of these housing options are allowed under the city’s zoning code, but they often require a Special Land Use permit. To obtain a permit, it’s about a five-week process and a developer typically must get on the schedule for an administrative meeting, she said.
“We have to figure out many different layers to solve this affordability issue, and more housing is one of them,” Miller said. “The affordability issue can be solved by simply making smaller units.”
To that end, a number of West Michigan developers have started building smaller apartments, often called “micro-units.”
One of them is Kalamazoo-based NoMi Developers LLC, which is set to open Walbridge Common north of downtown Kalamazoo later this summer, as MiBiz has previously reported. The mixed-use development will include 16 micro-units, each offering 320 square feet, as well efficiency, one-bedroom and two-bedroom units.
With the micro-units, the goal was to keep rents down by avoiding costly add-ons such as movable walls and hideaway beds common in other similar developments, said Jon Durham, a partner at NoMi.
By doing away with those amenities, the developer is targeting rents of around $600 per month with all utilities included, according to Durham.
Miller at Nederveld concedes smaller units don’t work for everyone. However, he said developments such as Walbridge Common and a handful of projects around downtown Grand Rapids will help with achieving affordability goals.
“That seems like affordable housing,” he said.