Order Reprints

By Nathan Peck | MiBiz
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Kalamazoo economic developers say that downtown is ripe for residential development, as evidenced by plans by Phoenix Properties for a mixed use development on South Rose and Michigan Avenue. RENDERING COURTESY OF TOWER PINKSTER

KALAMAZOO — Who says the residential real estate market has hit the skids?

A recent study on the availability and demand for residential real estate in and around downtown Kalamazoo shows that the area is ripe with opportunity for developers. Recent development projects announced by Phoenix Properties, Catalyst Development Company, Thomas Huff’s Peregrine Realty and Mavcon are all indicators that demand for downtown living options outstrips the supply downtown, say two of the city of Kalamazoo’s economic developers.

A study by consulting firm Tracy Cross & Associates lends quantitative data to what economic developers have been sensing anecdotally, said Martha Aills, special projects coordinator for the City of Kalamazoo.

“Not only do we have a residential market, which we always kind of knew by the seat of our pants, or from conventional wisdom, but (the report) lays out how we could have different products in different areas and develop them so that they are non-competitive so we could be working in several places all at the same time,” Aills said. “It ties in nicely with what is going on in River’s Edge right before the recession hit. It warms our hearts a little to know we’re moving in the right direction.”

A developer had proposed a 75-unit development along Harrison Road on the city’s north side, but later scuttled the plans as the recession hit. The study stated that the recession had hit the region’s residential markets hard, but paints a brighter picture once the Western Michigan University School of Medicine opens in 2013-2014, and brings 800 direct jobs and 1,000 spinoff jobs to the region. Professionals already have expressed interest in apartment living downtown — borne out by the fact that there is just a 2-percent vacancy rate in downtown apartments, said Jerome Kisscorni, executive director of Economic Development for the City of Kalamazoo.

“That is the strongest portion of the market, studies show it, and we know it from a standpoint of what we see in the core downtown area. We are starting to see it on the riverfront, and projects that are coming down,” Kisscorni said. “You have to look at the medical school. We know that there is going to be some heavy spinoff on that and there is great speculation that people will want to be downtown, and that will strengthen the downtown market that much more.”

Efforts by the city toward “placemaking” around the River’s Edge and Arcadia Commons West areas abutting downtown will spur further investment in those areas, according to the report. The report stresses a variety of living options are needed in the region, starting with apartments downtown, but eventually leading to condominium and single family housing, as well as “live-work” spaces appealing to artists and creatives. The report provides a basic “recipe” for housing products that may be a stepping off point for developers.

“From a governmental standpoint, we’re not developers,” Kisscorni said. “We may have some ideas, but going out and getting someone — now you have a document that we can hand them, tell them here’s what the market is, here’s the background data that they can take and build a concept around that.”

Still, there is an uphill climb for developers as the city of Kalamazoo has averaged just 28 new residential units annually for the last six years. The report stresses that there must be a progression of housing types built at appropriate rental rates and prices in order to fuel further development. For areas such as Arcadia Commons West, three-story apartment buildings built over garages are recommended with rents ranging from $535 to $1,035 per month. Rather than dictating developers’ actions, Aills and Kisscorni hope that the extensive research can lend support to investors’ proposals.

“We hope this can be a tool that is useful as developers talk to banks,” Kisscorni said. “It is a guide. We’re not going to discount anything.”