Curious Iowa: What’s up with all those downtown apartment projects?

CEDAR RAPIDS – If home is where the heart is, then the ongoing increase in residential development means that the heartbeat of downtown Cedar Rapids is steadily growing stronger.

Hundreds of new downtown multi-family units have come online since 2020 as area developers look to meet the growing demand for rental housing across all price points, and hundreds more will be added in the next few years.

With so many units opening up in such a short time, some of The Gazette’s readers are wondering: What’s the demand for these types of projects, and who is going to live there?

Seeking answers, several wrote to Curious Iowa, a series from The Gazette that answers readers’ questions about our state and how it works. In this installment, we take a look at some recent and upcoming downtown housing projects, who’s behind them and who they will ultimately serve.

What’s the state of downtown housing?

Downtown housing has been a priority for community leaders and area developers for years — particularly since the 2008 flood swept through and destroyed a significant portion of housing on the northwest side.

Ever since, the city has commissioned an annual housing report from Maxfield Research and Consulting to provide a snapshot of the market and offer projections on how many and what kinds of housing might be needed to keep pace with population growth and other demographic changes.

“It’s a way to track how the housing market is doing overall,” said Bill Micheel, Cedar Rapids’ economic and development services director. “Developers use it in a similar way to track trends over time. It's one data point for decision making” around what projects to pursue.

Per the most recent Maxfield report, Cedar Rapids’ downtown core was home to approximately 19,257 people across 8,231 households in 2024.

That’s an increase of nearly 13.6 percent in population since 2010 and a 19.5 percent increase in the number of households. The discrepancy between population and household growth can be explained by the recorded decrease in average household size.

The downtown population was disproportionately bolstered by a rise in rental tenants between 2010 and 2024 when compared to the surrounding area. While city- and county-wide rental rates declined somewhat during that time, downtown rental rates increased slightly to 44 percent of all households.

And still, the data outlines a tough market for those seeking rental housing.

Per Maxfield’s estimates, the citywide rental vacancy rate in 2024 was around 1.5 percent — well below the 5 percent recommended for adequate choice, competitive rates and unit turnover. Vacancy rates specific to the downtown core were not listed.

Given that pressure and an anticipated increase in the city’s overall population, the report outlines demand for up to 3,046 general occupancy rental units to be added citywide between 2024 and 2030.

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What’s in the works?

There are several multifamily projects underway or nearing construction in the downtown core backed by a mix of local and regional developers looking to capitalize on the growing demand for downtown rentals.

Some highlights include:

Emerson also is working to convert the former Dragon building, at 329 Second Ave., into a mixed-use building to include both residential and commercial space. He credited a voracious appetite for downtown housing among potential tenants as the drive behind both projects.

“I’m all about downtown. I’ve got 300 (rental) units downtown right now, and we have zero vacancies,” said Emerson, who owns more than 30 downtown properties. “Every project that we’ve done has filled up probably in about a month or two after opening.”

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Those projects follow other recent additions such as the 200 new units that came with the $49 million development of the Banjo Block on Fifth Avenue SE and the 423 spots offered at the Kingston Village development through a mix of rental and for-sale units built on the west bank of the Cedar River.

The New Bohemia area has experienced particular growth with Watts Group’s $20 million NewBo Lofts development adding two 55-unit buildings to the market last year, and another 34 units being offered at local developer Chad Pelley’s recently constructed Fulton Lofts.

Per the 2024 Maxfield study, absorption of those new units has been mixed with some being absorbed into the market very rapidly and others taking longer to lease. The 2025 report — expected this fall — will offer more detailed insight into the uptake of those units.

Like Emerson’s Guaranty Bank project, many downtown housing projects involve the redevelopment of an old commercial building into new residential units. Options abound for such development in Cedar Rapids, particularly given the post-COVID decline in demand for downtown office space.

Community Development Director Jennifer Pratt said the city has worked to make such redevelopments more accessible for developers through the application of form-based zoning

Such zoning focuses more on the physical characteristics of the development rather than mandating the specific land use to give developers the flexibility to meet modern demands while maintaining a cohesive urban footprint.

“We focus on the exterior of the building and make sure it fits in the context of the broader area. … If there’s a huge demand for commercial space, we want those buildings to be able to do that. Right now, we’re seeing the opposite” where people want more residential, Pratt said. “We want to make sure there are no barriers to let the market provide for whatever the demand is.”

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Where is the demand coming from for these projects?

Darryl High, principal and founder of High Properties, acknowledged that the influx of new units could lead some to question whether the necessary demand exists to fill all the downtown developments, but he overall expressed optimism that the projects will find success.

High Properties recently purchased and remodeled a multifamily building at 1113 Sixth St. SE. Dubbed NewBo Ivy, the building offers a mix of one- and two-bedroom apartments in the bustling New Bohemian neighborhood.

High said the demand is high enough that some tenants are signing leases on the apartments before the remodeling is even complete in an effort to preemptively snag one of the revamped units.

He anticipated other downtown projects can expect the same enthusiasm, even if it takes a little longer to see tenants trickle in.

“No matter … the market, you’re going to have little spells where a bunch of units come online, and maybe it takes a little bit of time to absorb them,” he said. “That doesn’t mean the demand is not there because the demand is absolutely there to live in downtown Cedar Rapids.”

That demand was echoed in projections from the Maxfield report, which outlined a continued need for investment in the downtown rental market. Per the report, demand is particularly high for young professionals and older adults — a point both High and Emerson echoed with anecdotal evidence.

Early career professionals tend to enjoy the flexibility of a rental near the bustling city center, Emerson said, while an increasing number of older adults are turning to downtown apartments as a means to downsize as they age.

Both tend to enjoy the units’ proximity to downtown retail districts, restaurants and other nearby amenities.

“The walkability and the energy of downtown is one thing that is really nice for a lot of people,” Emerson said. “They feel like they can go out, hang out somewhere a few blocks away and then walk right back home.”

High concurred and outlined what he sees as the positive correlation between the availability of housing and the health of the downtown district overall.

The addition of downtown housing provides extra foot traffic in the area, High said, and directly contributes to the success of those downtown retailers. In turn, having a strong downtown retail and commercial market makes the area more attractive to potential tenants.

“We need more people living down there, walking down there and just bringing more activity” to the downtown area, High said. “Everybody wants these new, cool restaurants and different things to do … but you need the people there to make that happen.”

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