By Chase Castle
Developers behind mixed-use buildings that opened in an historic part of Coralville this month are banking on demand for new housing interest, while the search continues for prospective commercial tenants.
Among the new additions to the Old Town neighborhood is a three-level, 44-unit condominium on Fifth Street, just west of First Avenue. The building developed by the Watts Group is made up entirely of single-level units, and range from 840-square foot studios to 1,500-square-foot three-bedrooms, the majority of which are single bedrooms. All the units were leased by April and began to house tenants this month.
Realtor Brian Watts said the location’s proximity to public transportation and destinations such as the Iowa River Landing should continue to push demand into 2017, when the Watts Group plans to open a second, 72-unit condominium just south of the new condos. Construction on that building should begin next summer, he said.
“The nice thing about that building is it’s close to First Avenue, it’s close to the university [and] it’s close to the strip … but it’s not like there are cars racing by it 24/7,” Mr. Watts said.
He said only about a third of the 10,000 square feet of commercial space on the Old Town Condominiums’ first floor has been rented, but he’s confident the space will become occupied when construction along Fifth Street finishes. Public construction surrounding the new buildings is scheduled to near completion this month as the city concludes about $2.8 million in improvements and reconstruction.
The work includes finishing raising Fifth Street over Biscuit Creek between Third and Fourth avenues, which is the final flood mitigation measure planned for the neighborhood and should be complete late this summer. City engineering staff said the city will complete street paving on Fifth Street between First and Tenth avenues late this month, and open the street to traffic soon after. Sidewalk, lighting and landscaping work should be completed by the end of September.
“That will help drive the rentability of that project, but it’s just now to where people can see how it looks,” Mr. Watts said. “So hopefully soon, but it’s not full yet.”
The Watts Group is also is poised to build additional townhouses just west of the condominiums site. The company currently owns six townhouses there, with construction on additional townhouses to begin later this year.
About four blocks west of that site, the first of at least two mixed-use buildings also officially opened its doors to tenants this month. The 808 on 5th building has 72 residential units, which are fully occupied. In addition, the five-story building has eight commercial bays totaling about 18,000 square feet along the first floor, some of which have been leased to an unidentified tenant.
Ground was broken earlier this year on a second, identical building just east of 808 on Fifth, with completion targeted for July 2016. Tentative plans are in place for a third, four-story building, the specifications of which haven’t been finalized and could change as Blue Sky Developers gauges the interest of prospective tenants or buyers.
Like the Old Town Condominiums, the 808 on 5th project was built without tax incentives from the city, though city-owned land at the development space was sold to Blue Sky for $1 in exchange for a minimum property value assessment of $6.6 million for each of the two buildings.
Coralville City Administrator Kelly Hayworth said the city reviewed multiple proposals for the site, but ultimately selected the proposal from Blue Sky because of the developer’s plan to build multiple buildings.
“They were willing to do multiple projects on the land, and it really met the visions of what we were looking for in that area,” Mr. Hayworth said. “We wanted mixed-use … and they came to us with a project and an opportunity that really fit the vision, so the council was willing to move forward with it.”
Mr. Thomas said the upfront investment required for the project comes with risk, but expects the new residences to stir up interest among tenants currently living in older housing stock.
“We’re creating demand,” Mr. Thomas said. “What I mean by that is, yes, there is a limited number of people in any county, and limited influx into a community. But our goal is and has been … that we are the most value for the dollar.”
Dennis Cronk is a partner with Cook Appraisal in Iowa City, which completes biannual housing trend surveys for the Iowa City area. In the company’s 2013 survey, the most recent available, Cook Appraisal reported that housing in Coralville had an average vacancy rate of just 0.33 percent, compared to 9.05 percent the same year throughout in the Midwest. Rental vacancies for the greater Iowa City area, including North Liberty, averaged 0.62 percent.
Despite the strong occupancy levels, Mr. Cronk said it’s difficult to predict demand given the absence of a recent rental history along Fifth Street. He said it’s unlikely the buildings will struggle to find tenants, however, reiterating that newer residences typically draw existing residents out of older buildings.
“I don’t think they’re going to have any trouble,” Mr. Cronk said. “There’s just no history there yet that we could go one way another.”