Condo Prices

[twoshort]

A study showed Grand Rapids can absorb some 350 condos a year for the next 5 years. Has there ever been an indication of a price point for these condos? Some of these places are going for 300k+. After association dues some of these place are $1900-$2000/mo with 20% down. With only 5% down ($15k on a $300k home) it's around $2350/month.

With the median family income in Grand Rapids being around $45k/yr.. who are they trying to sell to? Do you think they'll be successful? What does everyone think?

[Rizzo]

What gets me, if theres such a "need" for this market, why not meet it? Maybe a few high-rises...

[GRDadof3]

A study showed Grand Rapids can absorb some 350 condos a year for the next 5 years.  Has there ever been an indication of a price point for these condos?  Some of these places are going for 300k+.  After association dues some of these place are $1900-$2000/mo with 20% down.  With only 5% down ($15k on a $300k home) it's around $2350/month.

With the median family income in Grand Rapids being around $45k/yr.. who are they trying to sell to?  Do you think they'll be successful?  What does everyone think?

<{POST_SNAPBACK}>

If you are referring to the Zimmerman Volk Study that the Grand Valley Metro Council commissioned, it shows market rates of $1.20 - $1.30 psf at the low end of their T6 Urban Core area, which is pretty expensive even for a single family home (see page 6). I think there is still untapped potential there, for sure. Who will be attracted to the price ranges is another question? I think that is why many potential developers are standing back on the sidelines to see what happens. They may be scratching their heads too. But in the report, it states that 18% of the buyers will come from outside this market. I am seeing that in single family homes, where about 1/4 of the buyers I meet are from other markets, especially metro Detroit, New York, Indianapolis, Chicago, etc..

Is is just me or is it hard to get away from this forum I am supposed to be working

[GR_Urbanist]

A study showed Grand Rapids can absorb some 350 condos a year for the next 5 years.  Has there ever been an indication of a price point for these condos?  Some of these places are going for 300k+.  After association dues some of these place are $1900-$2000/mo with 20% down.  With only 5% down ($15k on a $300k home) it's around $2350/month.

With the median family income in Grand Rapids being around $45k/yr.. who are they trying to sell to?  Do you think they'll be successful?  What does everyone think?

<{POST_SNAPBACK}>

Unfortunatly it seems to be more about selling a hip, downtown lifestyle to more wealthy individuals in the suburbs than it is about promoting downtown living for middle or lower income peoples. I cannot fault them though. The cost of construction is high and they have to make those cost back quickly in order for the banks to even give them a dime in financing. I do hope that simple, small apartments will be added to the housing choices downtown so that people of more modest means can have a chance to live there as well. But it good to have people living there no matter who they are.

[Freddy C]

I say great if they can attract the wealth to the city. Given that such is new development, its not gentrification that is driving out modest income people and hence their gain is not current residents loss. More importantly, it will add to the tax base of the city, which hopefully will translate into improves city services, schools and other fiscal expenditures.

[L.M. Bach]

I would think that condo expansion would have to be synonymous with the economic growth and hopeful job expansion of Grand Rapids. If the Medical Mile really brings the great economic future it promises, then perhaps not only the number of jobs will increase, but their value as well.

But I cannot see the point of building a condo without a distinct need there first. It's like putting the cart before the horse. And to assume "if you build it, they will come" would be foolish from the investor's standpoint, because that is not a very targeted approach (from a marketing perspective). With that mentality, it is very possible they will have either several empty condos for an extended period of time or they will have to compromise the cost to the tenant just to compensate for the cost of the investment. And, if the market is not ready for the "product", so to speak, then wait for a better opportunity to ensure better occupancy and reap bigger profits. However, we all know these projects take years to complete, so one would have to anticipate the future market and watch the competition and hope their analysis is more than just a blind guess. It's a challenging balance. You want to be one of the first, because if you play it safe--the competition will beat you to it and steal your market share.

I have just seen many retail centers built in soft markets, sucking air with their poor occupancy and one has to wonder if that poor investment was attributed to the lack of NEED/indispensable income. Granted, commercial and residential real estate vary in their scope...but the marketing principles remain the same.

My guess is that it will be gradual and linked to economic growth, based on the aforementioned (or at least I think it would be wise to build accordingly). I'm sure they will use Grand Rapid's downtown appeal (which appears to be improving--ex: Art Museum) as their marketing message. However, I can only see this reaching a small demographic audience--considering the prices are so high and there are incentives that pull people to the suburbs--which is partly why we are having such problems with urban sprawl.) It will be interesting to where this leads and how it all pans out.

EDIT: I think I might have misunderstood the original post. Oops!

[Freddy C]

I would think that condo expansion would have to be synonymous with the economic growth and hopeful job expansion of Grand Rapids.  If the Medical Mile really brings the great economic future it promises, then perhaps not only the number of jobs will increase, but their value as well. 

But I cannot see the point of building a condo without a distinct need there first.  It's like putting the cart before the horse.  And to assume "if you build it, they will come" would be foolish from the investor's standpoint, because that is not a very targeted approach (from a marketing perspective).  With that mentality, it is very possible they will have either several empty condos for an extended period of time or they will have to compromise the cost to the tenant just to compensate for the cost of the investment.  And, if the market is not ready for the "product", so to speak, then wait for a better opportunity to ensure better occupancy and reap bigger profits.  However, we all know these projects take years to complete, so one would have to anticipate the future market and watch the competition and hope their analysis is more than just a blind guess.  It's a challenging balance.  You want to be one of the first, because if you play it safe--the competition will beat you to it and steal your market share. 

I have just seen many retail centers built in soft markets, sucking air with their poor occupancy and one has to wonder if that poor investment was attributed to the lack of NEED/indispensable income.  Granted, commercial and residential real estate vary in their scope...but the marketing principles remain the same.

My guess is that it will be gradual and linked to economic growth, based on the aforementioned (or at least I think it would be wise to build accordingly).  I'm sure they will use Grand Rapid's downtown appeal (which appears to be improving--ex:  Art Museum) as their marketing message.  However, I can only see this reaching a small demographic audience--considering the prices are so high and there are incentives that pull people to the suburbs--which is partly why we are having such problems with urban sprawl.)  It will be interesting to where this leads and how it all pans out.

EDIT:  I think I might have misunderstood the original post.  Oops!

<{POST_SNAPBACK}>

The name of the game is speculation. The less the risk the less the reward, I think. The conservative approach can backfire as well....as an area can miss reaching its full potential. Nationaly, this is a trend of shifting demographics as empty nesters are finding that they don't need those 4 bedroom homes anymore, as the children are all grown and moved out. They then desire something that requires less maintenance and is offers cultural amenities via central location. Not to mention that rising gas prices in the future will make living dense more attractive and desirable, as well as, more economical.

[GRDadof3]

The name of the game is speculation. The less the risk the less the reward, I think. The conservative approach can backfire as well....as an area can miss reaching its full potential. Nationaly, this is a trend of shifting demographics as empty nesters are finding that they don't need those 4 bedroom homes anymore, as the children are all grown and moved out. They then desire something that requires less maintenance and is offers cultural amenities via central location. Not to mention that rising gas prices in the future will make living dense more attractive and desirable, as well as, more economical.

<{POST_SNAPBACK}>

I agree. I think if you were to ask the salesperson working at River House (for instance) to give you a run-down of her reservations, it would most likely be:

Empty nesters from Cascade and EGR who don't need the mega-mansion anymore and like to eat out a lot, go to shows, etc.;

Single, married or co-habitating professionals or business owners without kids

Medical or law professionals moving into the area

Just a hunch.

[joeDowntown]

I agree with you and Freddy. A lot of people have lived the suburban life, mowed lawns for 20+ years, commuted to work, cooked and cleaned, etc. The idea of living close to work, with no maintenance, nightlife right below you and the ability to say "let's eat out" and then be at the restaurant in five minutes is a very inviting idea to the boomers. They are also the ones with the nest egg to pay $200-400k to live there.

I just hope someone realizes that people without nest eggs want to live downtown to and invest more in apartment living. It drives me nuts to hear that the Peck building is turning into condos.

We NEED more apartments. Hopefully the S. Division Mainstreet Initiative will fulfill part of this need.

Joe

I agree.  I think if you were to ask the salesperson working at River House (for instance) to give you a run-down of her reservations, it would most likely be: 

Empty nesters from Cascade and EGR who don't need the mega-mansion anymore and like to eat out a lot, go to shows, etc.; 

Single, married or co-habitating professionals or business owners without kids

Medical or law professionals moving into the area

Just a hunch.

<{POST_SNAPBACK}>

[MJLO]

I remain cautiously optimistic about the downtown housing market. I think we may be putting the cart before the horse, and trying to force growth, that is not upon us quite yet. If people really do move there, I would hope what would follow would me somewhat of a developing domino effect. Our CBD has made Great strides towards becoming great, what it really lacks, to make it "cool" ugh, is Retail, i'm not talking about Little Bohemia, or that jewelry place where the owner randomly shoots at people on monroe center. We would need high end shops something akin to a Michigan Ave in Chicago, obviously not on that scale, but you get the idea. As for Riverhouse, I will not believe that the second phase of Bridgewater is going to be built, until I actually see crews, and machinery building on that foundation.

and forgive my ignorance, but what is the S. Division Mainstreet Initiative?

[joeDowntown]

MJLO,

The Mainstreet Initiative (and its various other names) is the improvement of Division between Fulton and Wealthy (new streetscape, parking, boulevard etc). It also includes new living space, mainly geared towards artists who would have studio and living space together. Ground floor retail, but again mainly geared to the art community. I think it will be excellent addition when it is complete.

Joe

I remain cautiously optimistic about the downtown housing market. I think we may be putting the cart before the horse, and trying to force growth, that is not upon us quite yet.  If people really do move there, I would hope what would follow would me somewhat of a developing domino effect.  Our CBD has made Great strides towards becoming great, what it really lacks, to make it "cool" ugh, is Retail, i'm not talking about Little Bohemia, or that jewelry place where the owner randomly shoots at people on monroe center.  We would need high end shops something akin to a Michigan Ave in Chicago, obviously not on that scale,  but you get the idea.  As for Riverhouse, I will not believe that the second phase of Bridgewater is going to be built, until I actually see crews, and machinery building on that foundation.

and forgive my ignorance, but what is the S. Division  Mainstreet Initiative?

<{POST_SNAPBACK}>

[GRDadof3]

I agree with you and Freddy. A lot of people have lived the suburban life, mowed lawns for 20+ years, commuted to work, cooked and cleaned, etc. The idea of living close to work, with no maintenance, nightlife right below you and the ability to say "let's eat out" and then be at the restaurant in five minutes is a very inviting idea to the boomers. They are also the ones with the nest egg to pay $200-400k to live there.

I just hope someone realizes that people without nest eggs want to live downtown to and invest more in apartment living. It drives me nuts to hear that the Peck building is turning into condos.

We NEED more apartments. Hopefully the S. Division Mainstreet Initiative will fulfill part of this need.

Joe

<{POST_SNAPBACK}>

I disagree Joe. I think that the Peck Building going to condos is a good thing, and shows more confidence in the Monroe area. Isn't part of the problem with a lot of Grand Rapids an overabundance of rental properties, thus leading to decline in upkeep, declining tax revenue, less neighborhood pride and involvement, and many other social problems? I am not saying this as a fact, I am asking the question. As you mentioned on another post, Kentwood has been struggling with the rental to homeownership ratio for years, and MAY be starting to turn it around (I cross my fingers). Although, in the urban core area right downtown, I could see where there are probably few places to rent (The Boardwalk is still renting, aren't they?)

But I could be wrong. Maybe there needs to be rentals in place first, and then transition to homeownership as a neighborhoods begin to revitalize. I am not an expert on redevelopment With interest rates as low as they have been over the past couple of years, a couple of friends of mine who own rental houses are struggling to fill them because you can own a home for a few hundred bucks more. I just don't see why someone would choose to rent in the current market.

Maybe Lighthouse Dave can help me out here.

[daniel nudnik]

I think there is a place in the market for high-income housing, but it must be rounded out by a sufficient supply of middle- and lower-income places too.

I think that home prices in GR are still low enough to abate any fears of over-gentrification by new development. There are also great affordable developments on the market, such as Union Square.

Generally I think ownership is superior to tenancy. Families and young folks should have a chance to build up some equity without it costing $3000 / month. That isn't to say the wealthy shouldn't have classy residences downtown, rather I believe that if developers also create adequate space for the non-rich, the city as a whole will be "richer" - richer in opportunity, richer in variety, richer in resiliency to economic swings. One of the reasons GR is doing so well right now is that even people my age are able partake in its growth and development. That is, those who are lucky enough to have cheap places or nice jobs.

A thing to consider would be pre-automobile city neighborhoods, in which the need for foot accesibility drove income levels and property uses to become more mixed, and mixed on a compact scale. These neighborhoods become their own engines for growth, possessing sufficient supply of labor and capital as well as plenty of demand for services and goods. In the age where these neighborhoods formed the majority of the city, development effectively multiplied as a function of itself. The car disrupted the process, but there's no reason mixing and compactness can't coexist with the car. Chicago is a good example of how it can work.

So back to the original point, expensive downtown condos are great - as long as everybody else has a chance to invest in the city too. There's no reason why GR can't have both.

[joeDowntown]

GRDad,

You make a good point. Why would it be good for one place, but not for another?

The main reason I think apartments are so important downtown is that it attracts certain types of individuals that downtown needs:

a) People who don't care if their car is five feet from the door (if they even have a car). They live, work and play downtown.

B) The "creative class" that is so sought after by the state has disposable income (hopefully, from "creative class" jobs) but don't have any equity built up to even think about buying a condo. I think these people are classic consumers, which downtown needs in order to drive retail.

c) It adds diversity. Economic, social and diversity in age. Downtown won't be much fun if it is 100% 55+ who like going to bed at 9:30 (Although that is a stereotype as I am not 55+ and like to go to bed at 9:30)

I think the mix could even be 60-70% condos and 30-40% apartments, but I think it would be good for downtown.

Joe

I disagree Joe.  I think that the Peck Building going to condos is a good thing, and shows more confidence in the Monroe area.  Isn't part of the problem with a lot of Grand Rapids an overabundance of rental properties, thus leading to decline in upkeep, declining tax revenue, less neighborhood pride and involvement, and many other social problems?  I am not saying this as a fact, I am asking the question.  As you mentioned on another post, Kentwood has been struggling with the rental to homeownership ratio for years, and MAY be starting to turn it around (I cross my fingers).  Although, in the urban core area right downtown, I could see where there are probably few places to rent (The Boardwalk is still renting, aren't they?)

But I could be wrong.  Maybe there needs to be rentals in place first, and then transition to homeownership as a neighborhoods begin to revitalize.  I am not an expert on redevelopment   With interest rates as low as they have been over the past couple of years, a couple of friends of mine who own rental houses are struggling to fill them because you can own a home for a few hundred bucks more.  I just don't see why someone would choose to rent in the current market.

Maybe Lighthouse Dave can help me out here.

<{POST_SNAPBACK}>

[Florida]

Any renderings of this project.

[GRDadof3]

Any renderings of this project.

<{POST_SNAPBACK}>

Peck Building

[twoshort]

Any renderings of this project.

<{POST_SNAPBACK}>

Which project?

[DTDC]

There's a sign in the window downstairs (Peck Building) now saying "...starting at $125,000..." No idea which unit brings the low price. Guessing maybe the smallest one by the elevator.

[Josh]

Speaking of all these condos, has there been any word on the 20 East Fulton project? This was formerly known as Park Place and is supposed to be built next to our friend, the J.A. Building. Plans showed a 14 story tower adjacent to the 2 story J.A. Building. I haven't heard any news, so I was wondering what happened.

[Rizzo]

Probably fell through like lots of other projects.

[superNOVA]

Park Place is still in the air. However, it never had very good chances. If it gets built it would be a miracle.

[GR_Urbanist]

Park Place is still in the air.  However, it never had very good chances.  If it gets built it would be a miracle.

<{POST_SNAPBACK}>

I'm honestly starting to wonder if some of these developers are ever serious about what they propose. If it isnt Moch, it's some other pie in the sky guy who always have a good speech and a fancy drawing for the Press who then splashes what amounts to a free ad on the front page of the paper. Fast foward a few months and you find no activity, no word from the developer, and a for sale sign on the lot that was supposed to be the site of their grand building. Its not just fustrating, it can lead to a big let down for the city as a whole. You get the impression that there is real momentum downtown. Then you see, with some of these projects, that it was all smoke and mirrors. It may not be true that you have to be a DeVos to get a project approved in this city but it sure seems that you have to be one in order for it to ever get built.

[joeDowntown]

Or it is that they have the money and moxy to get it done. I agree. There seem to be a lot of pipe dreams although Park Place may get killed because of developers that do have the moxy to get it done. There is an awful lot of competition for condo's these days, especially with the YMCA building, Riverhouse, Icon on Bond, the RSC development, Front Row, City View, Union Square and a couple of smaller developments (like the Fox Building) all pushing forward. Maybe they are waiting to see what the market dictates. I say just build it (I like the Park Place design), but then again, I am sure the bankers don't approve of that thinking.

Joe

I'm honestly starting to wonder if some of these developers are ever serious about what they propose. If it isnt Moch, it's some other pie in the sky guy who always have a good speech and a fancy drawing for the Press who then splashes what amounts to a free ad on the front page of the paper. Fast foward a few months and you find no activity, no word from the developer, and a for sale sign on the lot that was supposed to site of their grand building. Its not just fustrating, it can lead to a big let down for the city as a whole. You get the impression that there is real momentum, then you see, with some of these projects, it was all smoke and mirrors. It may not be true that you have to be a DeVos to get a project approved in this city but it sure seems that you have to be one in order for it to ever get built. 

<{POST_SNAPBACK}>

[GRCentro]

A little over a month ago I saw a couple guys from Design+ (I believe) out taking measurements of the JA.

[Nitro]

A little over a month ago I saw a couple guys from Design+ (I believe) out taking measurements of the JA.

<{POST_SNAPBACK}>

Doesn't surprise me. Vern was one of the three (Bob Tol, Vern Ohlman, & Ray Kisor) involved in that project.

Nitro