The shortage of rental apartments in Detroit’s popular Midtown district would be eased a little by construction of a new mixed-use project breaking ground on Tuesday.
Known as the Auburn, the $12-million project will create 58 rental apartments and 11 storefronts on a vacant site on the southeast corner of Cass and Canfield. There will be 97 parking spaces behind the L-shaped building. The project is scheduled to open in August 2012.
Designed by Kraemer Design Group of Detroit, the Auburn would feature studio and one-bedroom apartments renting for about $700 to $850 per month. The target market is graduate students, young professionals and others looking for reasonably priced units in the district.
Midtown is the area north of downtown Detroit that features major employers including Wayne State University and the Detroit Medical Center. In the past few years, demand has outstripped supply for apartments near WSU and other anchors. Some rental buildings in the vicinity are fully booked.
“We really need these units,” said Sue Mosey, president of the nonprofit group Midtown Detroit, one of the partners in the Auburn project.
“Demand is extraordinarily strong right now,” added David DiRita, a partner in the Roxbury Group, a Detroit-based private developer working on the project.
The deal to create the Auburn involves a typically complex financial package similar to those that undergird other Detroit projects. The deal includes tax credits already approved, a Ford Foundation grant to support the storefronts, a loan from the nonprofit fund Invest Detroit, a grant from the Michigan State Housing Development Authority, and other layers as well.
Mosey and DiRita said such complex financing is still necessary even in Midtown because rents — and therefore rates of return to investors — remain low. Apartments in the Auburn will rent for about $1.25 per square foot, while a deal done strictly with market-rate capital might require rental rates of $2.25 per square foot or so.
“We’re managing to come up with newfunding sources, but typically you still have to bring some subsidy to the deals if you’re going to be doing quality projects,” Mosey said.
Mosey said Midtown Detroit hopes to create more than 300 residential units in a series of projects over the next three years and about 60,000 square feet of new retail and commercial space. “Some of them are very close,” Mosey said. “All of them are going to happen.”
“We just see tremendous potential,” she added. “The biggest challenge is just getting the stuff to market based on complex layering of financing and being able to line up the right development partner skills.”
“It has a life of its own now,” DiRita said of Midtown development, “and it’s just exciting to be a part of it.”
By John Gallagher, Detroit Free Press