DETROIT-The success of the multifamily market is starting to hit those hit worst by the recession, including Detroit. Fourmidable, a property manager of some of the major apartment complexes downtown, says there’s a large demand for rental property in the city.
The company was recently hired to turn around the former Windsor Tower Apartments in Detroit. Scott Allen, president of the firm, tells GlobeSt.com that the apartments had been beset by problems. “We were hired by Matrix Realty Corp. of New York City to come in and do a total renewal of the 323 units,” he says.
After removing about two-thirds of the tenants, Fourmidable embarked on a roughly $1 million upgrade program at the property, which is located near Eastern Market at Interstate 373 and Lafayette. The company upgraded the main lobby and elevators and performed other major repairs, and has renamed the property to Skyview Tower Apartments. Unit rent starts at $575 per month.
Fourmidable is based in Bingham Farms, MI, and manages 88 communities in nine states, but has an expertise in Detroit, where the company runs large Detroit apartment complexes including Lafayette Towers, Lofts at Rivertown and Fort Shelby Tower Apartments. Allen says that there’s no doubt that the multifamily demand, especially at the high end, far exceeds supply in the city. Add that there are 25,000 new jobs expected to be added in the Detroit area this year, and vacancy projections are expected to continue to drop.
“We can’t rehabilitate these properties fast enough,” he says. “There’s a lot of people moving into the city from the suburbs, in part because of the new companies downtown, including Quicken, Blue Cross and Compuware. Also, more students are willing to live in the city, at schools such as Wayne State University. For these renters, there’s a severe lack of decent, well managed rental property.”
According to a second quarter Marcus & Millichap apartment market report, Detroit multifamily vacancy should shrink to 4.5% by year end. The city has posted its third consecutive year of improving operations, and these 1950s and 1960s properties are being hit with rehab opportunities by local firms, some representing out-of-state investors. More than 2,200 units are in the construction pipeline, a significant increase than this year’s total of 140 units and last year’s 28 units built in the city.