As More People Move Downtown, Kalamazoo Can Take Advantage, Experts Say

People are moving back to urban areas and downtown Kalamazoo can grow with that trend, a panel of experts said Wednesday. Kalamazoo's core has great potential for residential development, they said -- if public and private sectors can work together.

August 3, 2015

By: Al Jones, MLive Buisness

KALAMAZOO, MI – People are moving back to urban areas and downtown Kalamazoo can grow with that trend, a panel of experts said Wednesday.

Kalamazoo's core has great potential for residential development, they said -- if public and private sectors can work together.

"The new neighborhood paradigm is showing that households are moving back into the city and urban areas are growing faster," said Laurie Volk, managing director of the Zimmerman/Volk Associates Inc., a Clinton, N.J.-based research and strategic analysis firm.

Last fall, Zimmerman/Volk Associates analyzed the potential market for housing in downtown Kalamazoo and its surrounding neighborhoods and produced a 117-page study that Laurie Volk presented to downtown stakeholders, community representatives, civic leaders and others Wednesday.

Among its findings:

-There is enough demand to support the construction of 1,400 to 1,500 new housing units in and around downtown Kalamazoo over the next five years.

-675 could be loft apartments (created from space above stores and businesses) - including 500 in the downtown and near Northside communities and 175 in the Portage Street corridor just south of downtown.

-140 could be townhouses - all in the adjacent Northside and Vine neighborhoods.

-110 could be loft condominiums - including 85 in the downtown, Northside and Vine neighborhoods and 25 in the Portage Street corridor.

-75 could be single family homes - all in the Vine Neighborhood.

"There is a growing market preference for compact, pedestrian-oriented, mixed-use neighborhoods," she said.

That trend is being pushed by the so-called Millennials (people born between 1977 and 1997) and Baby Boomers (those born from 1946 to 1964).

She and Mary Beth Graebert, of the Michigan State University Land Policy Institute, said those generations are interested in more urban living. And the Millennials, some 87 million strong, have become the largest generation of Americans.

For the foreseeable future, developers interested in building housing, need to focus on them.

"Millennials and Boomers are predominantly one- and two-person households," Volk said.

Boomers are often empty-nesters and retirees looking to ramp down from maintaining a full-size, single-family home. She said they are mostly couples heading for retirement. They like movies, the theater, playing golf, gardening and volunteering.

Millennials are mostly single, very socialized people who are very ethnically and culturally diverse, very mobile, and green in terms of supporting the environment and in terms of being new to the business world. Among other things they like nightclubs and riding bicycles.

Volk said 59 percent of all U.S. householders are one- or two-person households. But 68 percent of Kalamazoo area households are one- or two-person households.

Kenneth Miller, chairman of the Urban Committee of Southwest Michigan First, said that its efforts to help make this a more competitive region for job and economic growth has landed on three significant factors: connectivity between Kalamazoo's college campuses and the wider community; leveraging the economic potential of the many institutions here; and housing.

"A healthy downtown needs to be a neighborhood as well as a commercial center," Volk said. "A lot of people need to live there and call it their home."

Southwest Michigan First hosted a event Wednesday at the CityScape Events Center in downtown Kalamazoo to share the findings of the Zimmerman/Volk study. It co-funded the study along with LISC (Local Initiatives Support Corp. of Kalamazoo), the Michigan Economic Development Corp., and MSHDA (the Michigan State Housing Development Authority).

Graebert, who is associate director for programs and operations for the Michigan State University Land Policy Institute, said there is a real need to have more housing in "walkable" areas so that people can walk to their jobs.

"There is a shift in demand from those 'edge' places," she said referring to places that are just a bit too far outside of the core city to walk.

She also said the location of valuable income property is shifting from outlying areas to walkable urban areas in any number of Michigan metropolitan areas.

"Housing and commercial projects in the downtown are very possible," said Todd Poole, president and founder of 4ward Planning, a New Jersey-based real estate, fiscal and economic impact analysis firm. "But it's only possible to the extent that the public sector partners with the private sector."

Poole provided an analysis of the feasibility of mixed-used and other housing projects in downtown Kalamazoo and its surrounding neighborhoods. He said the return that developers could expect from their investment falls short of what number crunchers would like, unless they get help from public sector.

That includes relaxing such things as parking regulations and the minimum size of an apartment.

"The cost of construction is what the cost of construction is, pretty much the same across the country. You can't change that," Poole said.

The difference is that townhomes, condominiums and other properties here can't command the high rents and premiums paid in bigger cities.

Volk said the biggest challenge Kalamazoo faces as it develops housing that will stimulate economic growth is putting together the appropriate types of housing units and projects that the city is able to support "not necessarily always financially," she said, "but in terms of TIF (Tax Increment Financing) or a variety of different kinds of development incentives that cities have introduced to encourage development."

The biggest advantage Kalamazoo has, she said is, "This is a great market. Downtown Kalamazoo looks fantastic. There's a lot of museums, bars, theaters, all of the cultural attractions that young people, particularly the technological creative class, are looking for. They just need to keep provided more and more units that for that market that continues to grow."

Mattie Jordan-Woods, executive director of the Northside Association for Community Development, asked if researchers had talked to organizations who advocate for low-income people and minorities who have sometimes been displaced when new housing projects raise the tax rates in surrounding communities and make it impossible for them to stay.

She was also concerned about gentrification (buying and improving run-down or low-income properties and making them all unaffordable for the people previously living there).

Volk said communities need to be sensitive to that and municipalities can help by  freezing property tax rates for senior citizens and people living on fixed incomes in areas where there is new development.

But she also said, "A certain amount of neighborhood improvement or the introduction of households with higher incomes" can help attract stores and businesses to neighborhoods that would never otherwise have them.

Steve Walsh, executive director of the Vine Neighborhood Association, said, "I'm very encouraged by the data."

"I know anecdotally that people have been moving back into Vine," he said.

He said he hopes that new projects in the downtown or other neighborhoods don't cause a shift in city services that Vine has become familiar with over the past several years. Those include public safety and community planning and development services.

"The hope is that if this is successful and this vision is embraced, that our neighborhood might become even more attractive for those residents that are not necessarily looking for those lofts, condominiums and townhouses, but are looking to take advantage of the proximity to the downtown, the commercial corridors, and other things," he said.

What's next?

"I think there's a lot of coordination that's going to have to happen," said Andrew Haan, associate director of the Michigan Office of Urban and Metropolitan Initiatives through Gov. Rick Snyder's office.

He said that includes making sure people are tapping into all the tools that are available and making sure that development opportunities are communicated to developers.

"This was a great start but there are publicly held and privately held sites that are ripe for development and we will be doing a lot of work moving forward," he said.

A link to the study is the housing study may be accessed on the Southwest Michigan First website (www.southwestmichiganfirst.com/KalamazooHousingAnalysis).



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