Cedar Rapids downtown housing momentum growing, but can developers make it work?

When it comes to downtown housing in Cedar Rapids, developer Fred Timko has witnessed the increasing demand firsthand.

Timko, who developed the former Osada apartment complex into Bottleworks Loft Condominiums in 2008, is now working on 17 high-end condominiums, called Kingston Commons, at 100 Fourth Ave. SW.

Construction of the 1,600 square-foot units, which will be priced between $300,000 and $350,000, started in August, and Timko already has six sold.

"It was a great initial response considering they aren't even built yet," he recalled.

Both young professionals and empty nesters have inquired about the condos, which should be ready in May 2014. Once Timko has between 10 to 12 units sold, he'll start looking for his next housing project.

The strong demand Timko has seen at Kingston Commons isn't unique.

The occupancy rate for downtown's existing 1,000 units is between 93 percent to 95 percent, according to a new Cedar Rapids Metro Economic Alliance survey on downtown housing.  More new housing projects are in the works, which could bring an additional 100 units on line.

"The vacancy rate shows there is a demand," said registered architect and city councilman Scott Olson, who co-chaired the committee that oversaw the survey along with Morgan Stanley's Fred Rose. "A 5 percent vacancy rate is normal turnover, so all existing housing is doing well."

Growing interest

Olson said downtown housing had been in the Economic Alliance's five-year development plan for some time, but the 2008 Floods slowed things down.

"There's been a resurgence," he said. "Out of adversity comes opportunity. We're just starting to see growth again."

This growth was apparent at a May urban living forum hosted by the Economic Alliance, which attracted about 170 people. That attendance figures were about three times higher than in years past.

During the event, the organization surveyed 117 of the attendees on their opinions of downtown housing options. Respondents were asked what was keeping them from living downtown, cost preferences and why they would like to live downtown.

Survey results showed that the majority of potential renters, about 68 percent, are comfortable with a price range of $500 to $1,200.

Of those seeking to purchase a home, 34 percent said they favor a price range of $150,000 to $199,000. Another 14 percent said they'd be comfortable paying $250,000 or more.

The survey found there were a number of draws and amenities that appealed to potential downtown dwellers.

Chief among them was downtown's renewed energy, activity and nightlife, which 46 percent of survey respondents said they liked most about the city center's lifestyle. Another 36 percent said they favored downtown's walkability and being close to the action, and 33 percent said they liked the fact that living downtown would put them close to their offices.

The survey also pointed out the obstacles downtown still faces when it comes to attracting residents. Key hurdles included access to grocery stores, pharmacies, gas stations and other amenities - which nearly 47 percent of respondents cited - as well as the availability of parking -cited by 40 percent of respondents.

Work to be done

"We are on the cusp of a lot of people wanting to live downtown," Timko said.

But to get there, Timko and Olson said downtown needs a broad range of living options to offer residents, especially market-rate apartments. But making the numbers work for such units sometimes can be tricky.

"We need some units in that $800 to $1,200 range," Olson said. "So hopefully we can fill in that gap."

But there are promising projects, including High Property Management's Coventry Lofts, that will help satisfy this demand.

Downtown needs more than just rental units for downtown housing to succeed, though, the survey suggested. Residents want grocery stores and things to do on the weekend.

Flood recovery aid has solved some of these quality-of-life issues, according to the Economic Alliance. Aid  has spurred an estimated $750 million of downtown development, including new attractions, such as events at McGrath Amphitheatre Cedar Rapids and the renovated U.S. Cellular Center.

More projects are under discussion, including connecting a regional bike trail system, said Jon Dusek, president and CEO of Armstrong Development Co. and chairman of the Downtown Self-Supported Municipal Improvement District.

"We're putting a lot of pieces into place," he said.

Timko agreed.

"The amphitheater, New Bo Market, the casino they're building - people are choosing to live downtown not for the convenience but because they find it a neat place to live," he said.

And once the people are there, the amenities residents want, such as grocery stores, will soon follow.

"Hy-Vee doesn't build in the middle of nowhere," Timko said. " But Cedar Rapids is an easy town to get around in."

The city, developers and economic development groups  just need to continue to capitalize on the momentum.

"We're struggling in Iowa to retain and attract young people," Dusek said. "We have an aging population so we need to figure out ways to attract young professionals ... . When you go downtown, you feel a certain energy. We need to respond to that."