Two new apartment projects are beginning to test the market for upscale housing in the heart of the city, with promising early results.
Work is nearly complete on The LaSalle, a 67-unit apartment project in the former LaSalle Hotel, and Studebaker Lofts, a 52-unit project in the former JMS Building.
Meanwhile, people already are moving into the two historic buildings, contributing to a growing population of permanent, full-time residents downtown.
The projects, developed with support from taxpayers, represent the tip of the spear in terms of new market-rate housing downtown, with as many as seven similar projects set to come online by the end of 2019.
Those projects, ranging from a repurposed former printing plant to a new nine-story apartment building, comprise an additional 450 new living units in the Central Business District and East Bank.
And they promise to breathe new life into a city that has struggled to reinvent itself since residents and businesses started fleeing for the suburbs in the 1960s.
Colfax @ Hill, a newly constructed apartment building at Hill Street and Colfax Avenue, already is close to full. The mixed-use building features 17 market-rate apartment units with rents ranging from $1,000 to $1,800 per month. It opened in August.
Still, who will occupy all the new apartments remains to be seen.
A 2013 study by Zimmerman Volk Associates found downtown could absorb as many as 670 new market-rate housing units over five years as millennials and baby boomers abandon the suburbs for the convenience and excitement of downtown.
But the prices for some of the units — $800 to $2,600 and up so far — leave room for question in a city where, according to the online rental site Apartment List, a typical one-bedroom apartment costs $600 per month.
The same 2013 study found that just 30 percent of the potential market for new downtown housing — empty nesters and retirees, traditional and non-traditional families and younger singles and couples — could afford to pay more than $1,500 per month in rent. Only 8 percent could afford to pay more than $2,000 per month.
At the same time, plans for hundreds of new market-rate apartments at Eddy Street Commons, the popular mixed-use development south of the University of Notre Dame, and in downtown Mishawaka promise to introduce even more competition to the market.
Still, developers show no signs of concern.
“We’ve been seeing a crazy amount of interest, which is really exciting,” said Brooke Davis, regional property manager for Bradley Co., which manages Studebaker Lofts on behalf of South Bend-based developer Great Lakes Capital.
Rents in the eight-story building, formerly a mixed-use office building, range from $800 per month for a one-bedroom unit to $2,600 per month for a three-bedroom unit.
The upscale units feature vinyl plank flooring, granite countertops, tile backsplashes, stainless steel appliances, freestanding tubs and in-unit washers and dryers, and offer access to a rooftop terrace and on-site fitness center.
Parking is available in the nearby garage at Main Street and Colfax Avenue, or on-site next to the building.
“We have 12 (apartments) leased already,” Kristen Sawdon, director of asset management for Great Lakes Capital, said during a recent tour of the unfinished building. “And we anticipate being close to 100 percent leased within a year.”
It’s a similar situation at The LaSalle, which quietly welcomed its first residents at the beginning of the year.
Currently, 26 of the building’s 67 units are occupied and 34 are leased, Melanie Reusze, chief operating officer for Fishers, Ind.-based developer Real America, said.
“We’ve had a great response,” Reusze said. “Normally we think 10 units per month is successful, and we’re up to 13 units per month. We’ll probably be fully occupied by the end of the summer.”
Like Studebaker Lofts, The LaSalle offers vinyl plank flooring, granite countertops, stainless steel appliances, in-unit washers and dryer and dramatic views of downtown and the St. Joseph River.
It also offers access to an on-site fitness center and a community room with large-screen TV and ping-pong table.
Rents in the building range from $798 for a one-bedroom unit to $1,298 for a two-bedroom unit.
The city assisted with both projects, providing $2.3 million in incentives to Real America for The LaSalle and $790,000 in incentives to Great Lakes for Studebaker Lofts. It sold the LaSalle to Real America for $1. The building had been vacant for more than 10 years.
Adam Jolly moved into the The LaSalle in January. The 25-year-old pays $798 per month for a one-bedroom apartment plus $40 for parking. He also pays for utilities.
“I always kind of wanted to live downtown, I was kind of enticed by urban living,” said Jolly, who previously lived with his parents in Granger. “Plus I work downtown, so it’s kind of a win-win.”
He said he considers the cost reasonable for a “luxury apartment.” Rents at nearby Eddy Street Commons range from $1,600 to more than $3,400 per month for a similarly appointed one- to three-bedroom unit.
“It’s easily lived up to my expectations,” Jolly said of the apartment.
In addition to apartments, The LaSalle and Studebaker Lofts both offer retail, restaurant and/or office space on the lower levels.
No tenants have been announced for The LaSalle, but Centier Bank and The Lark, a “champagne salon,” plan to open inside of Studebaker Lofts later this year.
Reusze, with Real America, said she expects commercial interest in The LaSalle to increase as more residents move into the nine-story building.
“We expect probably by fall, the commercial spaces will have tenants in them,” Reusze said. “They have to see people living above them, then they come out of the woodwork.”
She said a restaurant or coffee shop would fit well in the building, which sits half a block north of the Morris Performing Arts Center and three blocks south of Memorial Hospital.
Laurie Volk, co-managing director of Zimmerman Volk Associates, the firm that conducted the 2013 housing study, referred to early demand for both apartment buildings as “really encouraging” for downtown.
“That definitely says there is a market there that (had not been served) in the past,” Volk said. “That’s great.”
How big of a market?
“What we’ve found is, the more downtown housing there is, the more the market grows to support even more downtown housing,” Volk said. “And that encourages retailers, and then retailers encourage more residents. It just builds on itself.”
The key, she said, is variety.
“Ideally, (developers) would be offering a wide range” of options, Volk said, from affordable “micro” units for recent college graduates to spacious one- to three-bedroom apartments for young couples and financially secure baby boomers.
Volk dismissed the threat of competition from Eddy Street Commons, which is set to expand in the next few years to include at least 400 new apartments, a grocery store and 8,000 square feet of new retail space.
Like downtown, Eddy Street offers urban-style living in a dense, walkable environment, though it caters mostly to Notre Dame types, from students, parents of students and alumni to faculty and staff.
“There is that housing right next to campus, but that doesn’t have the same authenticity as downtown housing does,” Volk said. “And that’s another byword for millennials, is authenticity.”
Source: South Bend Tribune