Arbor Update

Ann Arbor Area Community News

South U gets high

3. January 2008 • Nancy Shore
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The Ann Arbor Business Review just posted an article on a new plan to build a 26 story student high rise in South U.

Story here: South University Poised for Transformation

The U-shaped “University Village” would go over where the Bagel Factory and the Village Corner are (actually, it would go right on top of them—they’d be demolished).

Some other notable project features:
“University Village is also expected to include a 14,000-square-foot green roof and a 20,000-square-foot raised courtyard that would open up to the west. It’s also aiming for Leadership in Energy and Environmental Design certification and would include passive solar technology, advanced water systems and air quality monitoring.”

The buildings would house 850 students and have 380 parking spaces and 302 bicycle spaces (not bad).

The City will decide to accept or reject the project this Thursday.

The article goes on to discuss the changing nature of South U as more high rise student developments go up, like the in process Zaragon Place.

Could South U lead the way in created a dense and resident-heavy downtown? Time will tell.

  1. Does anyone know whether the Village Corner will be incorporated into the new building? It has been an institution. Also, where will all those new residents shop for groceries if it is vanished?

       —Vivienne Armentrout    Jan. 3 '08 - 06:26PM    #
  2. That seems like a lot of parking spots. Maybe the developer can be encouraged to give VC a favorable long term lease on space in the new structure, or is there space nearby they could relocate to to continue to serve that need?

       —Scott T.    Jan. 3 '08 - 08:50PM    #
  3. Vivienne, As far as the article says, both the Village Corner and the Bagel Factory would be demolished. It doesn’t say anything about if they would still be able to be in the new buildings or not. But it seems to make sense to have some sort of grocery store in the area if more and more students start to move in.

       —Nancy Shore    Jan. 3 '08 - 09:38PM    #
  4. The story refers to retail space in the proposed new building, but says nothing about whether VC and Bagel Factory would be part of the mix. Indeed, the story doesn’t even mention VC and BF. Seems an extremely odd omission, since both are local businesses with long histories. You could even call them institutions.

    Did the reporter not even inquire? That would be a major oversight by him and his editor. Did the reporter ask about VC and BF and not get an answer? If so, that should have been reported in the story.

       —jvwalt    Jan. 3 '08 - 09:47PM    #
  5. There is one reference in the article to the two shops:

    “It’s also expected to qualify as a brownfield site, and all existing buildings, including the Village Corner shop and Bagel Factory would be demolished, according to city materials.”

    That’s pretty much the extent of the mention. I guess some of it depends on if the new owners of the development will drive up rents and try to get a chain to move in to the retail space or if they will make efforts to retain both shops.

       —Nancy Shore    Jan. 3 '08 - 10:13PM    #
  6. BF in that location is hardly an institution anymore. How long has it been vacant? Almost ten years, maybe? And I love VC but I do not think that a developer of a project of that magnitude is even thinking about the implications for VC. When they look at the property, it most likely doesn’t even register that there is a store there. It’s pie in the sky to think VC will be preserved. Where will the residents shop if VC is closed? They will shop at a supermarket with a big parking lot in front of it. Hence the 380 parking spots.

       —Eric    Jan. 3 '08 - 11:09PM    #
  7. Hasn’t the Bagel Factory been empty for several years now?

    But it’d be nice to have a place to go for groceries around there, yep.

       —Bruce Fields    Jan. 3 '08 - 11:13PM    #
  8. I seem to recall reading recently that Barry Bagels was going to open a retail store in the Bagel Factory building, which I think they still own.

    That said, we discussed this to some extent two years ago.

    At that time, I mentioned that a “source” close to the former Bagel Factory people told me that the Barry Bagel people were interested in redeveloping that whole parcel, including VC. Maybe that’s finally coming to fruition.

       —Parking Structure Dude!    Jan. 3 '08 - 11:41PM    #
  9. Hmm… that’s the only grocery store on that end of town. I mean, walking to White Market isn’t THAT far… but still.

       —Brandon    Jan. 4 '08 - 12:02AM    #
  10. I’ll be sad to say good-bye to Village Corner. When I was in high school I rode down to VC and Community Newscenter almost every day.

    I am not sure that increasing the density on South U will do much to help State Street and Main Street. We need the 26-story buildings over there …

       —Fred Zimmerman    Jan. 4 '08 - 12:28AM    #
  11. Thanks for posting this Nancy! And welcome as a new AU poster.

    It is still really early in the project so I’ll reserve too much judgment on the buildings themselves. My guess is that if the project does get built (and that is a big if given the current economic climate), it will end up being somewhat shorter, with fewer amenities, and minimal LEEDs certification.

    I’m not sure there is the kind of demand for this sort of housing that they hope, especially with so much of it going up. A lot of developers think of the student market as a never-ending cash cow, but building these large apartment complexes for one type of tenant seems risky. University Towers is not 100% rented and anything new will be far more expensive. With Zaragon Place and at least two big new student-geared apartment complexes going in on North Campus, plus the student apartments on Washington, there is going to be a lot of new competition. Then you have the reduction of rental rates on most nearby off-campus housing, University Housing now really struggling to compete, and the ring apartments on the outskirts of town that are renting to students and their cars. If you talk to landlords/co-op management/University Housing downtown, lack of parking is their number one problem in luring residents. Location is less of an issue, especially if there aren’t services (like grocery stores) nearby. It is going to be interesting.

    I doubt Village Corner will go under, but I would be very surprised if they remain on South U. They are essentially a wine store with a grocery store attached to serve their local neighborhood. The wine is really their main interest and their main income. Truthfully, South U is probably not the best location for them anymore and they are unlikely to move to a temporary location for two years while this building is being built or move back in at quadruple the rent. Plus, if the express clientele of the building is undergrads (complete with a resident advisor on each floor), putting a wine store as the first floor retail would be, well, ill-advised. Most downtown retail is going to probably be too expensive for that size store. Although I could see them moving in to the retail space at Liberty Lofts, as long as the price was right. It would be a good fit there. I also doubt that any grocery store would move in to the retail of this new building on South U because it will be too expensive and not big enough. I’m guessing a chain restaurant like Buffalo Wild Wings is the prime tenant. As people point out though, that will diminish the value of living on South U, where one of the advantages is having the Village Corner nearby.

    I bet the Middle Earth building and then the Village Apothecary building will be next. Then they will have successfully removed any reason for anyone to go to South U. Yippee for progress.

       —Juliew    Jan. 4 '08 - 01:46AM    #
  12. I expected to see John Stegeman’s name on this project. 8-)

    What part of the “City” was supposed to be deciding on the fate of the project this morning? It wasn’t the Planning Commission, plainly.

       —David Cahill    Jan. 4 '08 - 02:42AM    #
  13. I interpreted that as meaning the staff review. It says later in the article that they expect the project to be ready for consideration by the Planning Commission in eight weeks.

       —Vivienne Armentrout    Jan. 4 '08 - 03:32AM    #
  14. How sad.South U was once a pleasant campus locale. Does it bother anyone else that A2 is seen as some sort of endless cash cow for out of town speculators? Is this proposed building really needed?

    Are we willing to let those looking to make a buck completely alter the look of our city? I support any one wanting to make money.But I also want Ann Arbor to look like Ann Arbor.
       —WILLIEC    Jan. 4 '08 - 07:17PM    #
  15. The building I live in was also built by people out to make a buck.

    If they think there’s money to be made, then they think there’s a bunch of people like me that would be willing to pay rent to live there. For obvious reasons, few of those people can participate directly in any debate over the development. So for better or worse, the speculators’ desire to make a buck is one of the only representatives we have of the interests of those future residents.

       —Bruce Fields    Jan. 4 '08 - 08:32PM    #
  16. Such modern dorm-style student housing may indeed have a market. Let’s face it – presently student housing near campus is slummy. Those old houses were never designed for groups, there is no parking, etc.

    If this modern housing succeeds, the student slums may empty out, as students seek the higher-quality housing they deserve. This is a Good Thing. The big dorm under construction at Murphin and Plymouth Road will be the big test of this market.

    But 26 stories? In your dreams, developers! Haha! I was also amused to see that these folks are going to claim brownfield tax credits for cleaning up a contaminated site. What is the contamination, spilled wine from Village Corner?

       —David Cahill    Jan. 5 '08 - 07:21PM    #
  17. Murph has is take on this project (and others) on his blog

       —Nancy    Jan. 5 '08 - 08:07PM    #
  18. Re “If this modern housing succeeds, the student slums may empty out, as students seek the higher-quality housing they deserve.”

    Based purely on anecdotal reports from friends who live in Bloomington, Indiana (Indiana University), that trend is attested there over the last five years. Namely, construction of several taller, dorm-like accommodations by private developers targeting the student rental market in Bloomington has had the effect of some larger houses near the IU campus (that were split into multiple rentals) sitting unrented or rented at reduced rates for some number of semesters. And some of those houses have then been converted back to single-family, owner-occupied houses.

       —HD    Jan. 5 '08 - 08:28PM    #
  19. I think this is a great development. David I think you are completely wrong that it would empty out the adjacent neighborhood. If this building adds residency for 1000 students then the University’s enrollment will go up by the same amount. I will keep saying this until everyone understands what is happening. For every new dorm built by the university or privately will mean an increase in enrollment by the same amount.

    No one seems to understand that the long term plan of the university is to double in size. UM wants to be bigger then Ohio state, that has been obvious but unspoken for 10 years. In twenty years UM will have a student body of 50,000.

       —Dakota    Jan. 5 '08 - 08:34PM    #
  20. David is right that the student rental houses near campus are pretty slummy. He is exactly right that they were never designed for student groups. The students live in them because of proximity only. There would certainly be a market for new private dorms. This development will also force an interior renovation of University Towers across the street—perhaps one of the ugliest buildings in Ann Arbor. 26 stories seems high though.

    I hope that the trend continues to reclaim Lower Burns Park and even the Old Fourth Ward as residential neighborhoods.

    I hope Dakota is wrong about the UM continuing to grow as it will simply dilute the academic reputation of the University.

       —sometimes reader    Jan. 5 '08 - 09:11PM    #
  21. Dakota, I don’t buy your causality. Do you really think that the housing market drives UMich enrollment? That the University is keeping tabs on rental vacancy rates in town, and saying, “Hmm – vacancies are up this year; that means we can admit more students next year”?

    I’d say it’s exactly opposite – that the University is going to keep on adding enrollment regardless of what does or does not get built. Michigan’s enrollment has been going up, up, up, for at least the last decade. (I remember people sleeping in dorm lounges well before this construction boom started because of enrollment increases…) I don’t think that UMich is paying any attention whatsoever to the housing market when they make their enrollment decisions – on the contrary, I think there’s ample evidence that UMich pays too little attention to housing.

       —Murph    Jan. 5 '08 - 09:29PM    #
  22. sometimes reader,

    reclaim Lower Burns Park and even the Old Fourth Ward as residential neighborhoods.

    Sorry, I need to have a little pet peeve time: are rental residences not residences? Do renters not, in fact, reside in their homes? The implication of that would be that renters aren’t people, or are, at best, a subclass of people.

    I lived in “Lower Burns Park” as a renter – I certainly thought of my home there as my “residence”, in a “residential” neighborhood. Now, I own my home, but I’m the only owner-occupant on my block (this was a conscious choice). Does that mean I do not live in a residential neighborhood, despite the fact that it’s all houses?

    A place where people live is a residence, whether rented or owner-occupied, and whether it stands alone or shares walls with another residence. A neighborhood made up predominantly of places where people live is a residential neighborhood, regardless of what their financial situation is.

    Renters are not sub-human – the places that renters live are still residences, and neighborhoods made up of rental residences are still residential neighborhoods.

    I’m perfectly happy if you want to complain about irresponsible residents not respecting the neighborhoods, whether they’re renters or owners. I’m happy if you want to complain about neglectful absentee landlords, or about neighborhoods that don’t have children (my own ‘hood has a mere 4% of its population aged 17 or lower), but none of these things cancels out the residential nature of an area.

    Please be clear about what it is that you’re seeking.

       —Murph    Jan. 5 '08 - 09:39PM    #
  23. Excuse my naive econ 101 optimism, but I’m having trouble reconciling the “greedy developers” thing with the fact that everyone commenting here considers it obvious that this development would, in fact, lose huge quantities of money.

    I’d normally give the benefit of the doubt to the people that are betting a gazillion dollars on the outcome under the assumption they’ve probably done more homework than me. But assuming the comments here are correct, is the problem that:

    - the people betting the gazillion dollars are not actually the same people as the ones doing the homework, and the latter are hoping to get their cut before the former realize they’ve been had, or

    - they still want to build something vaguely like this, so they figure they might as well float this proposal they already sunk a lot of money into, on the theory that there’s no sense undertaking costly revisions until they’ve gotten some feedback, or

    - they really do have more money than sense and are less informed than the average blogger, or

    - something else I haven’t thought of?

       —Bruce Fields    Jan. 5 '08 - 10:38PM    #
  24. HD, I’m pleased that my theory of emptying out student slums is borne out by the experience at Indiana University! I was a grad student at IU, and I say good riddance to that housing. I’ll never forget my “apartment” at 509 E. Cottage Grove.

       —David Cahill    Jan. 6 '08 - 06:31PM    #
  25. Interesting responses and ideas I see here. I think the developer is obviously targeting the student market because it is better to do so in this economy. My dad is a dean at Michigan, and I have discussed student enrollment with him in the past. In response to Dakota’s post, the housing market is certainly led by the university, but increased housing does not mean an increased number of students. It’s very much the other way around. When there are more students enrolling, then there is a greater need for student housing.

    Michigan has no interest in becoming larger than Ohio State. In fact, where I grew up (University of Illinois), they are in a similar predicament. U of I is trying to control their student enrollment and not become too large. The Universities of Illinois and Michigan have many similarities both size and economy wise. Check out this proposal from my hometown:

    There is also another apartment building going up even larger than this one. Anyway, the point is both cities are practically run by the educational institutions. I am sure there is a lot going on in many university communities with relevance to high-rise construction.

       —Ryan Munson    Jan. 7 '08 - 01:43AM    #
  26. Relevant to the discussion of groceries, I just caught a legislative tidbit – SB 294 (tinyurl b/c Mich Legislature links don’t work right in AU), which passed the MI Senate in December and is now in House Committee, would extend Commercial Rehabilitation Act eligibility to any project including a retail grocery store. (Defined as selling fresh meat, poultry, produce, and dairy products.)

    “Murph, what the heck does that mean?”

    Well, the CRA allows a local community to set up a Commercial Rehabilitation District; within that District, owners of eligible (obsolete commercial) property can apply for a tax freeze to rehabilitate it – they can dump money into the rehab without the property taxes going up to reflect that work for up to 10 years. Currently, a district has to be at least 3 acres in size, which is pretty darn big in a place like A2. This proposed amendment would basically say, “If it’s going to be a grocery store, the district can be as small as just that property, and it can include new construction – not just rehab.”

    This would therefore be a tool that the City could use in cooperation with a developer to ensure that a particular project includes a retail grocery store, by freezing the taxes on whatever portion of the property is to be used for the grocery. If it ends up not-a-grocery-store, they lose their tax freeze.

       —Murph    Jan. 7 '08 - 07:34PM    #
  27. I think Murph gets at least half a star for his initial skepticism about this project. The developers are already scaling it back:


       —John Q.    Jan. 25 '08 - 06:30AM    #
  28. Not only is the building already scaling back, but Middle Earth is for sale.

       —Juliew    Jan. 25 '08 - 08:09AM    #
  29. I wonder how the CRA would go over with the DDA, since they would otherwise get the increased taxes. Our city council has also seemed to be dazzled by increase in tax base due to development. This would have to be a case of working together toward a commonly recognized good. And could someone please explain what was apparently a proposed TDR? That wasn’t included in previous stories, was it? I didn’t think that we had a mechanism in place for that.

       —Vivienne Armentrout    Jan. 25 '08 - 07:08PM    #
  30. I don’t recall reading about the TDR aspect in the previous stories. Since the story said that the sending site was adjacent to the parcel, would there need to be any kind of formal mechanism to transfer the density? Couldn’t the developer just include the parcel in the overall site for the purposes of calculating density and just not develop it? If they were retaining the existing development on the sending site, they probably would need to bring it up to current ZO standards. But I don’t see that as a major obstacle.

       —John Q.    Jan. 25 '08 - 07:40PM    #
  31. I don’t know enough about the property that was to be a sending site to know what was up. John Q – it could be that the owner was willing (probably thrilled) to sell the development rights to the extra height, but didn’t particularly want to partner on the development. In order to have the parcel considered as part of the same development, you typically have to have an interest (ownership or option) in place over it. I’m guessing that owner was happy not being a part of the project, but just having money thrown at him by it.

       —Murph    Jan. 26 '08 - 02:39AM    #
  32. So back to Vivienne’s question, is there any kind of mechanism for doing that?

       —John Q.    Jan. 26 '08 - 03:05AM    #
  33. From the Ann Arbor Biz Review story on the reduction ,

    “Unfortunately, we realized that although there was general support for the concept of transfer of development rights specific to our project, the city does not have a policy in place to allow this process to take place, and the amount of time required to establish a policy was uncertain,” he said.

    From this and a few other tidbits I’ve caught, it sounds like the developers were hoping the city could have a policy in place in time for the project to use it, but decided to move forward on the project without waiting for that to happen.

    My current understanding of TDR is that, while the State enabling legislation doesn’t explicitly set up a particular framework for it, it is possible for local governments to set up TDR systems through various convoluted maneuverings. Which makes it a really gray area that any local government is going to be moving slowly towards, despite its being a very useful tool.

       —Murph    Jan. 26 '08 - 09:10PM    #
  34. And potentially good for preservation.

       —Dale    Jan. 26 '08 - 09:32PM    #
  35. The recent overhaul to the zoning act did include some language that some have interpreted to allow TDR. But the only specific language deals with open space, not any other uses. The Huron Watershed Council issued a report recently about TDR as it applies to farmland and open space preservation. It’s a good overview for planning and zoning folks. But as far as TDR generally, I don’t know of any Michigan communities that have implemented it.

       —John Q.    Jan. 26 '08 - 10:06PM    #