The combination of growth in downtown businesses and incentives for people to move to Detroit has many city apartment buildings at or near full occupancy.
From lower Woodward Avenue up to the New Center area, apartment owners cite a boost in the past few months. And in some cases, the buildings have waiting lists.
The Studio One apartments and the rental units in the Park Shelton in Midtown are full, as are theLofts of Merchants Row and the Lofts at Woodward in the central business district. Similarly, the residen-ces in the Fort Shelby Tower Apart-ments are nearly full.
The Midtown neighborhood is now 94 percent occupied, according to a study at the end of March by Midtown Detroit Inc. covering the 4,500 apartment units in 92 buildings.
But the apartment boom isn’t limited to Midtown.
“If we had more units right now, we’d fill them,” said Michael Martorelli, sales and leasing manager with the Southfield-based Berger Realty Group, developer of the Park Shelton in Detroit.
Sixty of the 226 units in the building have been used as rentals recently. Fourteen of the remaining units were recently designated as rentals and are being built out, Martorelli said.
“And those units are now leased, sight unseen,” he said.
Young professionals are taking much of the space, Martorelli said, along with students.
In the Campus Martius area, the Lofts of Merchants Row are virtually full on a regular basis, said Terry Schwartz, principal with Bingham Farms-basedDover Realty Advisors, asset manager for the 157-unit building.
Schwartz said the latest tenants are young and making more money than past tenants.
Based on the background checks of residents, Schwartz said, the average age of a tenant at the building in 2005, 2006 and 2007 was 41 with an average income of $70,000.
By 2009, the average age dropped to 33 and the average income was $52,000.
“In the last six months, the age hasn’t changed but the income has,” he said. “We’re now seeing an average income back at $70,000 again.”
Schwartz said roughly 15 percent of the tenants work at Detroit-based Quicken Loans Inc., and employees from the Detroit office ofGalaxE.Solutions Inc. are also leasing space.
Employees from Blue Cross Blue Shield of Michigan, who are being moved to Detroit from Southfield, are now starting to look for apartments.
Demand for the 56 units in the Fort Shelby Tower Apartments
has increased and it is now at 95 percent occupancy after being at near 90 percent a year ago, said Scott Allen, president of the Bingham Farms-based Fourmidable Group Inc., which handles leasing and management for the residential portion of the building.
Detroit took a hit with the end of the film incentives, taking away the stream of filmmakers coming to the city to work on movies.
“So, we’ve replaced a lot of the short-term people with long-term people who are working downtown,” Allen said.
Citywide, a 16.6 percent vacancy rate for 2009 has dropped to 14.1 percent at the end of the first quarter in 2011, according to the Washington, D.C.-based research company Reis Inc., which does not track specific submarkets of the city.
Midtown and downtown are the hot spots, property managers say.
The Studio One apartments at 4501 Woodward Ave. in Midtown were at 85 percent occupancy two years ago and now have 30 people on a waiting list, said Marcel Burgler, principal with Grand Rapids-based Prime Development Co., which developed the building.
Helping Studio One, as well as other Midtown apartments, is that it is in the area included in the Live Midtown program, covering the New Center, Midtown, Virginia Park and Woodbridge neighborhoods.
Through the incentives, employees of The Detroit Medical Center, Henry Ford Health System andWayne State University are given $3,500 over two years to rent in Detroit.
Along with the three employers, the program is also funded by the Michigan State Housing Development Authority and the Hudson-Webber Foundation. First-time homebuyers are offered up to $25,000.
“That incentive program is what put us over the finish line,” Burgler said.
But even with the success in raising occupancies, Allen and others said it’s not time to start increasing rental rates yet. Concessions, such as free rent, gym memberships and other giveaways are coming to an end, Allen said, but rental rates have yet to increase.
By Daniel Duggan, Crain’s Detroit