AP NEWS

Report shows demand for 6,800 more homes in downtown Cleveland by 2030

September 26, 2018

Report shows demand for 6,800 more homes in downtown Cleveland by 2030

CLEVELAND, Ohio – Developers could build – and expect to fill – 6,800 more residences in downtown Cleveland by 2030 without oversaturating the market, a new study asserts.

Research by Urban Partners, a Philadelphia-based consulting firm, lays to rest concerns about a potential overabundance of housing in and near the central business district. There’s ample demand, the consultants say. But Cleveland must find ways to add more for-sale homes to the rental-heavy market and to turn more downtown workers into residents.

The study, funded by civic and nonprofit groups and released Wednesday, evaluates the opportunities for housing in downtown Cleveland and portions of six nearby neighborhoods. By plumbing Census data, evaluating growth trends and comparing Cleveland to more developed cities, Urban Partners concluded that downtown could approach – or possibly surpass – 30,000 residents by 2030, up from an estimated 17,500 renters, owners and students today.

“We were latecomers to the national generational shift toward downtown living,” said Michael Deemer, executive vice president of business development at the nonprofit Downtown Cleveland Alliance, which represents property owners. “We’ve made a lot of progress, but one of the things this report is telling us is that there’s still a lot more that we can do.”

The alliance commissioned the report after more than a year of talks about demand, affordability and housing diversity in the core city and adjacent neighborhoods. Cleveland Neighborhood Progress; Enterprise Community Partners, a nonprofit that champions affordable housing; the Greater Cleveland Partnership; and its finance affiliate Cleveland Development Advisors also contributed to the $50,000 effort.

The consultants defined downtown as four Census tracts between the Innerbelt and Lake Erie, including portions of the west bank of the Flats and all of Burke Lakefront Airport. That area spans more than 6,500 households whose residents are 57 percent millennials, the generation born between the early 1980s and the mid-1990s. Nearly a quarter of downtown residents were born between the mid-1960s and early ’80s; 12 percent are older.

The key findings:

* Only 1.8 percent of downtown workers actually live downtown, according to the most recent Census data. That’s up notably from the early 2000s, but still modest. Consultants found an average of 4.4 percent of downtown workers living downtown across nine other major cities with more robust central housing markets.

“You’re just sitting in a position where you have a lot of capacity to grow compared to other downtowns, period,” said James Hartling, a partner with Urban Partners.

He and colleague Isaac Kwon argue that the 97,000 or so people working downtown are obvious targets of a campaign for residential growth.

The report recommends that Cleveland preserve existing incentives and explore new methods to pay for homebuilding and development, while focusing on ways to make downtown and nearby neighborhoods more appealing through better pedestrian access, transit, green spaces, stores and service businesses. Those amenities could include playgrounds and daycare facilities to cater to families with children.

“How do you make the downtown more attractive to corporations moving down here as well as people moving down here?” asked Tom Starinsky, who participated in discussions about the research as associate director of the Historic Warehouse District Development Corp. “I think we shouldn’t lose sight of the softer things.”

* Downtown Cleveland’s homeownership rate is a paltry 5.1 percent, compared with an average of 22.7 percent across more developed cities Urban Partners studied.

Even cities with smaller downtown populations, notably Columbus and Cincinnati, have homeownership rates in excess of 20 percent.

Builders in downtown Cleveland, with rare exceptions, have gravitated to rentals due to financing challenges, land and construction costs, heavy reliance on historic-preservation tax credits that limit the uses of rehabbed buildings, lingering anxiety from the housing crisis and a lack of seasoned condominium developers in the region. There are fewer than 900 for-sale homes downtown.

Hartling said it’s common in cities for the apartment market to grow first, with for-sale housing following. And ownership growth often starts with townhouses, small condo buildings and conversions of existing structures – possibilities the Downtown Cleveland Alliance and some developers are cautiously exploring.

The report suggests that Cleveland consider homeownership incentives for downtown and close-lying neighborhoods, similar to programs used in Philadelphia, Detroit and, closer to home, University Circle. The Greater Circle Living program, for example, offers forgivable loans of up to $10,000 for a down payment or closing costs to employees at certain University Circle institutions, through a partnership between nonprofit groups and employers.

Such a program, if implemented, is likely to span a broader footprint than downtown. Urban Partners talks about encouraging residential investment across a “center city” area stretching from West 85th Street to East 55th Street, roughly bordered by freeways to the south.

* Downtown apartments are filling up, with a net gain of 35 units each month. There’s good reason to expect that trend to continue, and developers are sure to focus on higher-end projects – at higher prices.

But the consultants, based on input from neighborhood nonprofits, caution that Cleveland also needs to consider ways to preserve and augment affordable housing. The study points out that there are many low-income apartments in the center city, though most of them sit just outside of the central business, particularly to the east.

Community groups in Cleveland should establish a clear goal for the share of income-restricted homes needed in and near downtown, the researchers said.

They suggested a few paths toward meeting that goal: Targeting publicly owned land for affordable-housing development. Using tax credits, tax-exempt bonds, grants and expedited permitting to encourage mixed-income projects. Proactively working to ensure that existing apartments for low-income families, senior renters and disabled residents aren’t converted into higher-priced housing. And exploring new tools, such as special taxes and fees on real estate sales, higher-cost rentals or development, to create a dedicated fund for affordable housing.

Joe Marinucci, the alliance’s president and chief executive, said the findings will help his organization and its partners shape discussions about their own priorities and broader public policies.

“We’re pleased that the study has reinforced the fact that there continues to be a strong market,” he said of demand for downtown-area housing. “There seems to be the ability to continue the momentum, to enhance the momentum. It’s good to have that affirmed by a national firm.”

AP RADIO
Update hourly