There has been a lot of new development in downtown Ann Arbor in recent years and the vast majority of that has been apartments, much of it catering to students. I thought I would assemble a summary of what’s been completed and what’s on the table. This is only formally announced rental developments and thus does not include condominium projects. There are a couple of other things in the works on both the student and market rate apartment side that could be added to the list in the near future.
|Property||Status||Year Built||Market||Units||Beds||Parking Spaces|
|Sterling 411 Lofts||Completed||2008||Student||97||318||109|
|615 S Main||Completed||2014||Market||156||186||132|
|Ann Arbor City Apartments||Completed||2014||Market||155||205||73*|
|611 E University||Proposed||2018||Student||90||343||56|
|618 S Main||Proposed||2018||Student/Market||229||588||163|
|The Collective on 5th||Proposed||2019||Market||360||540**||200|
So 2,097 total units encompassing 4,762 beds could conceivably be added to the market in a roughly 10 year time frame. Is this a lot? Considering there was essentially no units added in the downtown area in the preceding 30+ years, I don’t think so but let’s take a look at a couple numbers.
Everyone asks me about student housing and for good reason, student high rises are the biggest thing changing the skyline of Ann Arbor right now.
Including The Foundry which just opened last month there have been 2,557 beds of private student housing built in the greater downtown area since 2008. If you add in the Munger Graduate Residences built by the university and The Courtyards (a private student development on north campus) you come up with a total of 4,085 beds. In that time the University of Michigan has added 4,117 students. Actually seems just about right. There’s another 1,241 beds proposed by 2019 while enrollment is expected to grow anywhere from 749 to 2,352 students depending on which trend analysis you use. Based on the rhetoric from the administration, I would assume the lower end of that spectrum, perhaps 1,000 or so, many of them graduate students. Still, this seems to buck the thinking that new housing is pulling many kids out of neighborhood homes. Long term I think that is a theme but it seems that to date and in the short term future, housing supply is meeting growth.
Additionally, our own research at my day job shows that occupancy in off campus housing at U of M was 98.6% for the 2015-16 school year (national average is 95.3%) with rent increases averaging 7.8% over 2014-15. Pretty strong market.
The market rate apartment side is harder to gauge compared to say, population growth, but the numbers are modest anyway. There have been just two developments with 311 units and 391 total bedrooms between them, Ann Arbor City Apartments and 618 South Main. Both are 100% occupied with rising rents. I was told by management at 618 that the lease up was the fastest for a new development project they’ve ever been involved in. Given the macro demand for urban living and relative lack of supply, it’s pretty easy to surmise there is still a substantially untapped market for market rate apartments catering to young professionals, empty nesters and essentially anyone else looking to rent an apartment. Granted the rents are out of reach for many but that tends to be the case with new construction (and that’s a whole other blog anyway).
Against my better judgement (I’m guilty of reading too many MLive comments) I included parking numbers in the table as well. I actually think the ratios of parking spaces to units/beds is not out of line but I realize many people disagree (that’s perhaps another blog as well). It’s important to remember we don’t want to really encourage driving downtown but rather the use of more efficient, sustainable transit. Also, the hope is these buildings will still be here many years from now and research shows the use of private automobiles decreasing substantially in the future. It’s all about smart growth folks.
In summary, it really doesn’t seem that student housing is overbuilt, at least not yet, but new buildings will have to start attracting tenants from older properties rather than relying on natural enrollment growth. Downtown apartments, however, seem to have plenty of runway with demand almost certainly far outstripping supply.
* Ann Arbor City Apartments is built on top of a public parking garage in partnership with the city. There are 251 total spaces. 73 available for full access, 73 available for nightly access and 105 public spaces.
** Total number of bedrooms have not been established for The Collective on 5th, the proposed development on the Library Lot. This number assumes 50% of the units to be one bedroom or studio units, 50% to be two bedroom units based on the number of units projected and target demographic.