Ordinarily, Cityscape would not cover the opening of an apartment complex, but neither Mill District City Apartments nor its developer, Jonathan Holtzman, qualifies as ordinary. With residential development at a sad standstill in Minneapolis and St. Paul, Mill District stands out as one of a tiny number of urban projects actually moving forward. And Holtzman, for his part, may have discovered a niche — upscale rental — that fits the narrow emerging market.
Let’s start with the project itself. Mill District is a five-story, L-shaped building at the corner of Washington and Portland avenues in downtown Minneapolis, a short walk from the riverfront and the Guthrie Theater. Its 175 rental units curve around a lush outdoor courtyard (with pool) that sits atop an underground parking garage. Units range in size from 500 to 1,400 square feet and feature a loft-style design — big windows that actually open, high ceilings, sliding doors, balconies, fireplaces and upscale finishes. They are, in other words, the kind of downtown apartments that a few years ago would have been sold as condos but now, post crash, work only as upscale or mid-priced rentals.
As downtown employers begin to hire again, many young workers are looking for an urban live/work experience. Mom and Dad no longer have the money to provide the down payment on a condo, so renting becomes the answer. The same holds true for empty nesters who can’t sell their suburban or outstate houses but still want to try urban living. Renting, long an upscale or mid-priced option in cities like New York, Chicago and San Francisco, is quickly overcoming its stigma here and becoming a smart alternative.
A kick-start for downtown?
Minneapolis officials are excited about the trend because it could potentially restart the downtown housing boom that fizzled so abruptly in 2007, leaving 50 or more condo buildings unbuilt. It’s gratifying also that Holtzman’s project went up without public subsidy, a crutch that St. Paul has begun to offer on a limited basis but that Minneapolis is trying to avoid.
In helping to cut the ribbon on Mill District last week, Minneapolis Mayor R.T. Rybak repeatedly praised U.S. Bank for stepping forward to finance Holtzman’s project. “At one of the darkest points in this economic downturn we knew we had to find a project to get going, and our hometown bank stepped forward to do that.” Turning to Holtzman, the mayor said, “This is the beginning of a new future. We love what you’ve done and we want you to do more.”
Holtzman said he would rather be part of the recovery than wait until the recession ends. “Most builders are waiting for the recovery so they can come back into the market with the same old products as before,” he said. “We’re offering something different.”
He compared his niche to the boutique hotel, an idea that’s outperforming the rest of the hospitality market. His target is a younger-attitude audience that prefers active, urban living. Apartments are based on the European model, he said: Units that are a bit smaller but that have high-quality amenities and an array of urban attractions on their doorsteps — in this case, the Mississippi River, hiking and biking trails, parks, theater, sports, dining, entertainment, rail transit and walking or biking to work.
“We believe that this is what the current customer wants and we’re puzzled that our competitors don’t see it,” he said.
A trend toward rentals
Holtzman’s company, Detroit-based Village Green, is a developer and manager of rental properties. It manages 140 complexes in 15 states. It has put up five projects in Uptown and downtown Minneapolis, including Eitel Building City Apartments on Loring Park.
A recent survey found that three-quarters of Americans consider renting a smarter option in today’s housing market — and that nearly 80 percent of the respondents were homeowners. Cities hope that rental projects will be increasingly attractive to young professionals and help fill the gap while the condo market recovers.
“It’s important to get a project in the ground,” said Mike Christenson, Minneapolis’ director of planning and economic development. “When other developers and lenders see a successful project they’re more likely to get back into the game.”