A new survey confirms what apartment seekers have long groused about — there just aren’t that many rental apartments on the market in downtown Detroit.
The survey by the nonprofit groups D:hive and Downtown Detroit Partnership found that rental apartment occupancy rates in the immediate downtown area hit 97% in August. The scarcity of available apartments has had some rental apartment buildings running waiting lists.
Jeff Aronoff, executive director of D:hive, said the survey looked at 26 buildings in the downtown area with more than 3,200 units. Three buildings’ representatives did not respond to the survey. Aronoff said the occupancy survey would be conducted quarterly.
“It’s pretty full,” Aronoff said of the rental apartment market. “You hear this conclusion around town that downtown is basically full with occupancy in the upper 90% range, but that’s never really been tied to any research methodology.”
The tight market is bringing new supply on to the market. The Broderick Tower, on Woodward at Grand Circus Park, is expected to welcome its first residents within a couple of weeks once last-minute delays are resolved. The Auburn, a mixed-use retail and residential project, is nearing completion at Cass and Willis in the Midtown area.
In addition, a hoped-for renovation of the David Whitney Building at Woodward and Grand Circus Park into a boutique hotel, retail and residences could start construction next year. And there were published reports Tuesday that downtown’s Milner Hotel, in the Paradise Valley district (formerly known as Harmonie Park), would be converted soon from a hotel to rental apartments and condos. A spokesman for the hotel could not be reached for comment Tuesday.
Aronoff said the new projects coming to market result from rising demand. But providing new units still requires help from the city and state in the form of tax credits and other incentives to build.
“Demand is doing what demand does, but it does it slower here because every project requires so much in terms of subsidies,” he said. “Supply increases to meet demand, but it seems to happen at a pace a little slower than it would if we were working in a totally normal market.”
Until recently, many apartment developers said they could demand rental rates only in the $1.20-per-square-foot range. Stewart Beal, a partner in Motown Construction, the owner of the Broderick Tower project, said rates at the Broderick have risen to around $1.50 to $1.60 per square foot, a sign of the improving market. But subsidy-free projects would probably require rental rates to hit $2 per square foot or higher, developers say.
The Broderick Tower is a former office building overlooking Grand Circus Park. Offering views of Comerica Park and the Detroit River, it features 124 units ranging in size from studios to penthouses. As of Tuesday, 114 units, or 92%, were rented in advance.
The first tenants were to have moved in earlier this month, but last-minute delays have pushed the first move-in date to next month. As a result of the delays, a few people have canceled their rental deposits to go elsewhere.