For Mike Christie, putting money down on a yet-to-be-built loft in downtown Ann Arbor made perfect sense.
At age 31, he is divorced, has no kids, and he is doing well financially, thanks to his family’s trucking business, C-MAC Transportation in Wayne County’s Brownstown Township.
Christie owns a house in Scio Township, but when the Loft 322 project on Liberty Street was announced, he reserved a third-floor condo.
“I really wanted to live downtown for a while,” Christie said. “Everything was always to rent. You couldn’t buy. There was no way I was going to spend $1,500 a month and not get any equity.”
Christie said he is entranced with the prospect of being able to walk to restaurants, stores, theaters, University of Michigan sporting events and other cultural venues that give Ann Arbor its reputation as a good place to live.
“I work 45 minutes away. I spend so much time in the car that, when I’m home, I don’t want to drive anywhere,” he said.
Mike Christie isn’t alone.
Young professionals and empty-nesters are lining up to buy urban loft-style condos in downtown Ann Arbor, as a couple of major projects get under way. And they appear willing to pay a premium for downtown homes that in some cases aren’t much bigger than a small apartment.
The rush underlines the pent-up demand. Despite the town’s desirability, there has been a lack of downtown housing – especially for those looking to buy instead of rent.
“I believe we have a huge demand for downtown housing,” said City Council Member Leigh Greden, D-3rd Ward. “More downtown residents is better for downtown businesses, the tax base and our goal to expand non-motorized transportation options.”
City officials hope to add 1,000 new residences downtown by 2015, declaring that the new dwellers would strengthen the city and ensure the viability of retailers, restaurants and other charms that make Ann Arbor unique.
Greden said the city needs to work to make it easier for developers to build downtown by improving development codes and streamlining the approval process.
The recent demand for these new projects is significant because some notable million-dollar condominiums built in the past few years have struggled to find buyers.
These new loft projects, while by no means cheap, offer downtown residences for mere mortals who can afford condos in the $400,000 range.
Establishing that demand may give the Downtown Development Authority some political capital as it tries to convince city officials to adopt its plan to develop two of three city parking areas for new condos, retail and office space, while using the third site for a multi-level parking garage.
Those plans would seek to build much more affordable housing, bringing prices under $200,000, said DDA Executive Director Susan Pollay.
“What we understand, from the research we’ve done, is that there is no lack of demand,” Lackey said. The problem, she says, with the current projects is they price out even many middle income buyers.
Still, there is no shortage of people willing to pay extra for the privilege of living downtown. Two weeks ago, at a weekend sales event, the Chicago-based Morningside Group, reserved 70 percent of its 68-unit condominium project in the old Eaton Corp. plant. The former auto parts factory occupies an entire city block on First Street, between Liberty and WIlliam.
One of the hopeful buyers in the “Liberty Lofts” project is Shirli Kopelman, a 36-year-old assistant professor of business at the University of Michigan.
“I love lofts, first of all. I like high ceilings, I like that style of architecture,” she said. “The other attraction is walking and feeling like you live in a small community and can walk to everything.”
While there is no rigid definition, lofts usually have an open layout, high ceilings, big windows and exposed brick. They originally were exclusively remodeled spaces in commercial or industrial buildings, but the definition has evolved to include new construction.
Kopelman has reserved a one-bedroom, fifth-floor unit that has a rooftop terrace. All the condos there will be decked out with amenities like granite countertops, designer lighting and other elegant touches.
She won’t know the final price of her condominium for a few months, when the developer completes its master deed and asks for binding down payments from the people with reservations.
But the condominiums are being marketed for between $268,000 for a 844-square-foot, one bedroom, one-bath, second-floor unit to more than $600,000 for a 2,100-square-foot, two bedroom, two-bath, fifth-floor condominium.
“The initial response to the project has been overwhelming. Seventy percent of the residences have been reserved in less than two full weeks of marketing,” said Ron Mucha, vice president of Morningside. “While reservations in and of themselves are not conclusive proof of market demand, they are certainly a strong indicator that there is pent-up demand to live in downtown Ann Arbor.”
Marketing materials for Liberty Lofts and Loft 322, the 21-unit, five-story building to be built next to Seva restaurant on East Liberty Street, put the prices per square foot at well over $300. Neither project has begun construction.
Loft 322, a project by Royal Oak-based Denali Development, has reserved 20 of its 21 units since mid February. They are priced between $359,000 for a two-bedroom, two-bath and $776,000 for a three-bedroom, 2.5-bath penthouse.
Liberty Lofts’marketing materials include the square footage of terraces and balconies in the condo’s floor plan. If that’s taken out of the equation, the condos are listed at between $320 and $377 per square foot.
By comparison, single-family homes in nearby neighborhoods sell for around $200 a square foot. Kopelman, who has been splitting time between Ann Arbor and New York, said the prices have to be viewed in context.
“If you compare this to New York, these are cheap houses,” she said.
Peter Allen, who is a partner in the 26-unit Kingsley Lane loft project at the corner of Kingsley Lane and Ashley Street, said he has reservations for 11 of his 26 units. Construction should begin this spring.
He predicted that within two years condominiums similar to the ones being marketed now will be selling for $400 a square foot.
Allen said the prices he set last summer for the units likely will rise from the upper $200s to lower $300s after he gets final construction bids.
“It’s more expensive to do this work than we thought,” he said.
While the prices appear high when compared with single-family housing, they are not too far out of line with existing condominiums that are being resold downtown.
A 1,700-square-foot condominium built by developer Ed Shaffran in the former Armory building at the corner of Ann Street and Fifth Avenue is being marketed at about $360 a square foot – $649,000. That’s about double what it sold or in June 1999.
Similarly, resales of the 37 condos in the 20-year-old Sloan Building on East Huron Street fall in that range as do the 13 condos in the One North Main building. Many of the condos in these buildings are well over $500,000 and some have been offered at close to $1 million.
Developer Mark DeMaria, one of the partners in the Loft 322 project, believes the market is strong for housing in the $450,000 range.
“I felt there definitely was a pretty strong demand because there really is limited downtown housing,” he said. “Ann Arbor is really ripe for this type of living.”
DeMaria is so confident that he already is planning a second residential and retail project in downtown to be built in conjunction with Shaffran. He declined to provide more details about the location of the project.
Slow movers, moving
The market wasn’t always hot for this type of condo.
In 2001, the development arm of DTE Energy built 47 street-level residential brownstone condominiums and eight penthouses on the eighth and ninth floor of the Ashley Mews building at West William and South Main streets.
The penthouses, which were marketed between $700,000 and $1.5 million in an unfinished state, sold very slowly. To date, only four of the eight have sold, but two sold in the past few months.
And by the end of March, all 47 brownstones will be sold, said Michelle Prentice, a financial analyst for DTE who is helping close out the project. According to the Register of Deeds, seven units sold in the past four months at prices ranging between $350,000 and $614,000. The brownstones, which are between 1,400 and 2,800 square feet, are considerably larger than the envisioned Loft 322 and Liberty Lofts condos will be.
Developer Jeffrey Spoon had trouble finding buyers in his condominium projects as well. The Collegian building on Maynard Street, originally was to be a mixture of offices and condos, but he couldn’t find condo buyers and turned the space into offices.
Similarly, a Spoon condominium project at the corner of Fifth Avenue and Washington Street still is struggling to find buyers. Two of eight units have sold, but the penthouse has been on the market for several years and now is being offered at a reduced price of $1.115 million. The rest of the condo space is now being marketed as offices.
On the horizon
If the Downtown Development Authority’s project gets legs, and the former YMCA site is reused for residential properties, downtown could add several hundred new units in the next few years.
That doesn’t include projects like the one Shaffran and DeMaria may unveil later this year.
That rush to build would put the city on track to meet its goal of 1,000 more units in 10 years.
Developer Jerry Spears, a longtime Ann Arbor real estate figure who has built a number of rental lofts above retail shops and restaurants downtown, said he thinks there will be demand for the first projects.
But after the town adds 1,000 units, supply may catch up to demand. Spears isn’t sure how big the pool of people is that can both afford to buy these condos and want that lifestyle.
“I think there’s going to continue to be demand in the right price range for several hundred units,” Spears said.
Mike Ramsey can be reached at firstname.lastname@example.org or (734) 994-6864.
© 2005 Ann Arbor News. Used with permission
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