Despite a relative lull in multifamily residential housing construction at the beginning of 2017, indications point to another surge.
Currently in the city of Grand Rapids, there are 19 projects under construction and more than 2,000 apartment units, most of which fall into the market-rate category. Meanwhile, there are 15 proposed or approved projects in the city with nearly 15,000 units, many of which qualify as affordable housing developments.
Several projects seemed to stall earlier this year, and at least one project, the Warner Building, switched from a residential component to hotel prior to its groundbreaking in June. A major signal residential might still have forward momentum is the groundbreaking of 601 Bond by the New York-based development group Time Equities Inc. The 16-story, 140-unit mixed-use building in the North Monroe neighborhood had gone dark for months before abruptly beginning site work in July.
The increase in construction is based on multiple factors, said Scott Nurski, NAI of West Michigan multifamily investment advisor.
Starting with more than a decade of little multifamily construction combined with mild population growth and employment growth, as well as more expected household growth as young adults move out of parental households and roommate situations, all contribute to the pent-up demand, Nurski said.
“These factors have led to a significant increase in multifamily construction across West Michigan,” he said.
With the spurt of growth, such as Arena Place and multiple 616 Development and CWD Real Estate Development projects, occupancy rates still are strong, Nurski said.
“We expect the added unit supply will help alleviate the relative shortage of rental availability but will start to impact occupancy levels a bit in the next 12 to 24 months,” he said, adding only a few submarkets will feel a market saturation.
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