Cedar Rapids downtown living in demand
Developers say appetite for condos and apartments continues to grow
CEDAR RAPIDS — Builders keep building condos and apartments in downtown Cedar Rapids, and sellers keep selling them, local developers and real estate agents say.
In the past few years, new housing complexes — those owned and rented — have surged in the downtown area, some units with asking prices upward of $600,000. The development trend is expected to continue in a push for a fun, walkable downtown where young professionals, baby boomers and others live, work and play.
“We liked the smaller footprint it has — it’s more environmentally sensitive — and closer to the things we like doing,” said Tom Petersen, 53, who has a condo in Bottleworks Loft Condominiums in NewBohemia. “It’s close to the library, restaurants and I work downtown so I can walk to work.”
Cedar Rapids is in line with cities around the country stacking up rooftops in their downtowns for empty nesters and millennials wanting amenities for work, dining, shopping, entertainment and recreation at their fingertips.
Since 2010 through the end of this year, the downtown core — which includes downtown, NewBohemia, MedQuarter, Kingston Village, Ellis and Czech Village — has or is to see 17 housing complexes open with a combined 452 owner-occupied or rental units and $84 million in total investment, according to figures from the Cedar Rapids development office.
Six more complexes are in the books by 2019 adding another 174 units and nearly $60 million in investment. This year has been the busiest yet with seven of the complexes and 167 units opened or due to be complete.
The Cedar Rapids Metro Economic Alliance reports downtown Cedar Rapids has 1,479 housing units, 208 under construction, and 113 more planned.
“We see strong activity in the pipeline and we don’t see it falling off,” said Doug Neumann, interim president of the Economic Alliance. “Buildings are full before they open.”
Cedar Rapids is “so far behind demand,” he said noting occupancy rates are at 95 percent.
As long as the market isn’t flooded with, say 1,000 units at once, downtown could absorb 200 to 300 new housing units a year for the next several years eventually reaching 3,000 to 4,000 downtown, he said. Once the downtown reaches a critical mass of people, amenities — notably a grocery store — would follow suit, triggering another surge in housing demand, he said.
Des Moines has served as a model for what could happen in Cedar Rapids, he said. The sleepy downtown 15 years ago, now is a vibrant district with shopping, dining and events. It’s bolstered by some 5,500 housing units and another 2,350 planned by the end of 2017, according to a recent Des Moines Register report.
“Downtown vibrancy includes, ‘Do you have a strong business park, arts and entertainment district, walkable environment, is infrastructure kept up,” Neumann said. “We think we have that. The piece we’ve been most deficient in and most behind in is housing. We think we have a lot of the other elements and we can eventually rival Des Moines’ vibrancy in downtown.”
The $4.1 million Village Lofts, 200 Third Avenue SW, stands four-stories tall about two blocks from the Cedar River, close to bike trails, within earshot of the McGrath Amphitheatre, and a few minutes walk to the central business district and NewBo. The first tenants are expected in September.
The Ahmann Co. building has 24 units with most sized between 775 square feet and 1,400 square feet. The 14 owner-occupied spaces sell for $160,000 to $300,000, and 10 rentals go for $1,000 to $1,600 a month. Enclosed parking is available for a one time price of $18,000. As a perk, the developer passed through the city’s 10-year tax break to the tenant.
About half the units already are spoken for, said Stefan Doerrfeld, the real estate agent for the property. Until recently, there has been little opportunity to buy new downtown, so people wanting to be close to the action or downsize are snapping them up, said Doerrfeld, who is also president of the Cedar Rapids Area Association of Realtors.
“I think the lease market will never be oversaturated,” he said. “Baby boomers and millennials will be the driving force behind the market for the next 10 to 20 years.”
A few blocks away, the shell of the six-floor, $9.2 million Metropolitan, 450 First Street SW, has taken shape across from the amphitheater. The luxury development, when completed, is to feature 13 units for sale for $350,000 to $615,000, 22 rentals for $1,000 to $1,200 per month, and ground floor retail space, possibly for a restaurant and small grocer.
B.J. Hobart, of Hobart Historic Restoration, sees The Metropolitan drawing a different audience than Village Lofts, or Hobart’s recent historic renovation of the nearby Mott Building and its plans for a similar overhaul of the Knutson Building. Those are geared for a younger crowd, she said.
“We all put out different products at different price points,” Hobart said. “I still think there’s room for more development. Ten years ago, people came to Cedar Rapids and said, ‘Yuck.’ Now they say, ‘Wow.”
Hobart praised city officials for their “vision” for urban living and programs to help developers accomplish that vision.
Jennifer Pratt, Cedar Rapids community development director, said the push for downtown housing began in 2007 before the epic flood of 2008 wiped out many parts of the central district. The city initiated a program to provide 100 percent tax breaks in the form of exemptions or reimbursements for 10 years for urban housing projects with at least three units. The city has provided $11.5 million in incentives and the state $47 million since 2009, according to city officials.
“If they build the project they said they were going to build, we would provide an exemption on increased value,” Pratt said.
An October 2015 study by Maxfield Research and Consulting, of Minnesota, which was commissioned by the city, estimated a demand of 50 rentals and 50 owner-occupied units per year downtown through 2020 with strong interest from those age 50 and older and those ages 25 to 34.
Caleb Mason, an economic development analyst with the city, pointed out while some developments are higher end, others are devoted to seniors, such as The Commonwealth, and others are marketed as affordable, such as Brickstone Apartments or Kingston Village.
“We are trying to cover the spectrum of the marketplace,” he said.