Business

Rental housing boom hits the Corridor

New developments offer modern housing choices for 'missing middle'

Crews work this week on the Kingston Family Apartments at Seventh Street and Diagonal Drive SW in Cedar Rapids. The 52-unit Kingston Family Apartments project is one of almost 1,000 rental units under construction, just on the market or being planned in the city, creating one of most active rental development times in the city’s history, according to City Council member Scott Olson, a commercial real estate broker. (Cliff Jette/The Gazette)
Crews work this week on the Kingston Family Apartments at Seventh Street and Diagonal Drive SW in Cedar Rapids. The 52-unit Kingston Family Apartments project is one of almost 1,000 rental units under construction, just on the market or being planned in the city, creating one of most active rental development times in the city’s history, according to City Council member Scott Olson, a commercial real estate broker. (Cliff Jette/The Gazette)
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CEDAR RAPIDS — Rental housing complexes are popping up around Cedar Rapids at a rate some say the city hasn’t seen before, and with them come choices — the “missing middle” as it’s called — largely absent for decades.

Just off Interstate 380 at Diagonal Drive SW, crews are working on a 52-unit project called Kingston Family Apartments.

Planning is underway on the 183-unit apartment complex near Rockwell Collins called Flats at Timberline.

And along the Cedar River, 16 units in the recently restored Chelsea — formerly the Knutson Building — are all leased.

“We’ve never seen the number of projects going at the same time and the variety of projects going at the same time,” said Scott Olson, a commercial real estate broker and Cedar Rapids City Council member.

At least 22 projects representing $200 million in investment and promising 971 total units are under construction, planned or just on the market in the city.

These projects are the ones receiving public incentives and do not include additional private developments.

Elsewhere

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Iowa City also is in the midst of its own rental housing boom, with 1,327 units spread across 17 developments for student housing-oriented projects alone between 2016 and 2019.

A survey of the Des Moines metro housing market by CBRE/Hubbell Commercial found the area added 3,230 apartments in 2017, and another 3,061 are planned for this year, according to a Des Moines Register report.

However, signs of saturation are starting to surface, with a vacancy rate of 18.5 percent in downtown Des Moines, according to the report.

‘Missing middle’

The demand for rental housing is up across the country, and it’s being met with a category of housing planners dub the “missing middle.”

Dan Parolek, principal of Berkeley, Calif.-based Opticos Design, an architecture and urban design firm, coined the term to describe a “range of multiunit or clustered housing types compatible in scale with single-family homes that help meet the growing demand for walkable urban living.”

Examples include stacked duplexes, bungalow courts, multiplexes, town houses, courtyard apartments and live-work spaces.

Parolek said this style of multifamily housing was more common in pre-1940s development and has been missing for several reasons. One is outdated city zoning codes, he said. (Cedar Rapids is modernizing its zoning code to make it easier for developers to deliver “missing middle”-style units.)

Demand for such housing can be found in the demographics.

Two-thirds of millennials and one-third of baby boomers want housing in a walkable environment, Parolek said, citing data from Realtor.com.

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Also, more people live alone — 30 percent — and by 2025, up to 85 percent of households may not have children, he said, citing census data.

“Household demographics have shifted dramatically, and housing builders have not adjusted,” Parolek said. “High-quality, small units under 1,000 square feet or housing types like a cottage court with a strong sense of community are ideal for them.”

‘Chugging along’

In Cedar Rapids, the rental boom is occurring throughout the city, in all four quadrants and covering all price points, from market rate, high-end and “affordable,” Olson said.

Craig Byers, an agent with Pivot Real Estate and co-chairman with Olson of the Downtown Housing Working Group, said while growth in housing has picked up, it remains measured to avoid flooding the market.

“Our market, I think, is chugging along at a great rate,” Byers said. “Our absorption time is very low. As soon as we are putting them on line — a lot of units are pre-leased before the certificate of occupancy.”

The third building of the mixed-use Depot development in the New Bohemia District, Byers said, quickly rented out its 26 high-end units. The company is already on to three more developments, including Building 4 of the Depot development, the 329 Building in NewBo, and the 500 on First in Kingston Village, which will feature 36 studio units and a rooftop common area, Byers said.

In transition

B.J. Hobart, of Hobart Historic Restoration, who restored the Knutson into the Chelsea, said her team is planning now for the Savoy, with 12 to 15 condos in a new building between the Chelsea and the Mott Building. The complex sits on the bike trail and by the Cedar River and McGrath Amphitheatre.

The demand is coming from a few places, Hobart, Byers and Olson said. It includes people who want a walkable lifestyle either close to work or amenities, and they want the flexibility of not being stuck with a mortgage.

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Hobart estimated 75 percent of downtown renters are in transition. Some are young professionals looking for their first home to buy, some are professionals working in the Corridor for a limited period of time, and some are former homeowners downsizing and renting while they figure out where they want to buy next, she said.

“The common denominator is they want to live near the urban activity — the shows, the shops, the restaurants,” Hobart said.

l Comments: (319) 398-8310; brian.morelli@thegazette.com

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