With a housing crisis gripping Grand Rapids and office buildings sitting empty post-pandemic, city officials and housing advocates are eyeing a bold solution: transforming vacant commercial spaces into affordable housing.
“We’re in a housing crisis,” said Millinda Ysasi, a Second Ward Commissioner for Grand Rapids. “People have left Grand Rapids due to not having a place to live. One of the factors involved in creating affordable housing is making more units, which will help more in the long term.”
Some people haven’t returned to working in an office after the COVID-19 pandemic, leaving a number of office buildings in downtown empty, Ysasi said.
While there may be a surplus of vacant office and commercial spaces, the city lacks available affordable housing.
The most recent survey by Housing Next, a regional collaboration of housing advocates in West Michigan, done in 2022, found that of the 11,514 market rate level units available in Grand Rapids, only 244 of these were vacant. This means nearly 98% of market-rate rentals in the city are filled, which is an increase of 1.2% since the last Housing Next survey in 2020.
“While the market-rate rental inventory maintains several hundred available units and experienced an increasingly high occupancy level over the last two years, all surveyed affordable rentals that operate under either the Low-Income Housing Tax Credit program or with a government subsidy are now fully occupied and many of these affordable housing alternatives maintain wait lists,” wrote the authors of the 2022 Housing Next survey. “As a result, there is clear pent-up demand for rental housing that serves households with incomes of up to 80% of Area Median Housing Income (earning up to approximately $71,600 for a family of four).”
The city of Grand Rapids reports that as of April 2024, 80% AMI for a two-person household is $64,450, while a three-person household is $72,500.
The U.S. Department of Housing and Urban Development (HUD) defines affordable housing as households that spend 30% or less of their gross income on housing and utilities.
In response to the lack of affordable housing in Grand Rapids, some developers have utilized tax incentives such as the Brownfield Tax Increment Finance (TIF) to help subsidize affordable housing projects to create more units.
Brownfield TIF uses tax dollars to fund projects that restore or rehabilitate facilities in ruin, vacant, functionally worthless, contaminated or that serve as a historic resource. Properties also qualify if they sit next to properties that meet one of these requirements. These projects are initially financed by the developer who will only receive Brownfield TIF funding after the project is completed.
“This is a national trend that we’re seeing across Urban Cities that have to repurpose large commercial spaces to residential,” said Grand Rapids City Manager Mark Washington during the June 4 City Commission meeting.
The President Joe Biden administration is encouraging a multifaceted, nationwide effort to convert commercial buildings to residential as the pandemic changed how many Americans work and live, according to reporting from the Associated Press. Many of these developments also hope to encourage the use of public transportation, and Secretary of Transportation Pete Buttigieg noted his department will be providing guidance to states, as well as “over $35 billion in lending capacity.”
111 Lyon St. NW
One of the projects currently being redeveloped in downtown Grand Rapids is the 10-story Fifth Third Bank building on 111 Lyon St. NW.
On June 4, Executive Director of the Grand Rapids Brownfield Redevelopment Authority Jonathan Klooster stated that $23 million of the project’s subsidy will be used to renovate the historically commercial space to be apartment units.
The City Commission accepted the proposal from the Brownfield Authority for an additional $15 million to be reimbursed for the project over the next 20 years.
Washington said he hopes this project will succeed and provide a strong example for future commercial-to-residential projects in the city.
Klooster stated the developers of the 111 Lyon project plan to create 140 apartment units, which will include one and two-bedroom apartments. The developers will ensure that 28 of these units are restricted for households with incomes that fall at or below 100% of the AMI for Grand Rapids.
The Seymour
Across town, in the Alger Heights neighborhood, the vacant Seymour Christian School is being transformed into a two-story, 27-home condominium association. ICCF Community Homes, based in Grand Rapids and the oldest nonprofit affordable housing provider in Michigan, is overseeing the development located at 2250 Eastern Ave. SE, aptly named The Seymour.
Real Estate Development Manager Dakota Riehl shared that ICCF acquired the property from Tabernacle Community Church in 2020, just 16 days before COVID-19 shut down the state. On Aug. 8, the nonprofit broke ground and began the construction project.
While the project was still in the planning phase, ICCF hosted multiple community conversations where locals were able to speak up to their input shape the final result.
“We have tried to balance the feedback from neighbors and an understanding that sometimes change is always hard,” said Riehl. “So there's some things that we absolutely have changed such as entrance into the property and avoiding driveways off of Nevada Street.”
While the interior will be redone, the exterior of the building will keep the same look. Nineteen of the 27 new homes will be built in the original structure and the other eight will be added as an addition. A variety of two and three-bedroom units will be available, and of the 27 new units, 14 will be sold to households at or below 80% of the AMI, while the remaining 13 are at 120% of the AMI.
Total cost of the renovation is expected to be around $14 million, with ICCF acquiring over $6 million in grants and utilizing Brownfield TIF funds to get about $3 million, in addition to other funding efforts.
“One thing about affordable housing is that it's not cheaper to develop, it's not cheaper to build; it costs the same amount of money,” said Riehl. “So you really have to have partners who are willing to, quote unquote, take a risk and believe in your final product and also are committed to serving neighbors just as much as ICCF.”
As these types of development become more common around town, Deputy City Manager of Grand Rapids Kate Berens says the goal is to attract Grand Rapidians to all different sectors of the city.
“We position Grand Rapids as a place to stay… ensuring people a high quality of life,” Berens said.
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