Ann Arbor DDA report shows rapid downtown growth with more to come

The Ann Arbor Downtown Development Authority released its annual State of Downtown report Monday, highlighting the area’s growth and anticipating further residential and commercial expansion.

With Ann Arbor residents and elected officials engaged in a discussion over the future of the city’s downtown areas, the report focuses on changes in the district over the past decade and looks forward to future developments that will have significant impact on the city’s character.

• See the full Ann Arbor Downtown Development Authority State of Downtown Report.

According to the DDA, the population of downtown Ann Arbor increased by 56 percent since the 2000 census and 19.2 percent between 2010 and 2012. By comparison, Ann Arbor’s population grew by 1.9 percent and the state of Michigan’s population only increased by 0.1 percent over the three-year span.

“Despite new supply, the downtown housing market is tight,” the report said, noting that the price per square foot for residential real estate rose 12 percent in 2012.

“With low inventory available and a recent focus on constructing high-end student rental units, a significant opportunity for workforce housing remains. As more units are built, options for downtown living will continue to expand.”

According to the DDA report, 337 housing units are under construction in the downtown area with approximately 460 additional units proposed.

Any future residential housing developments will likely be subject to strict scrutiny from the planning commission and city council. Recent housing projects such as the City Place Apartments and the 413 E. Huron St. development have been highly contentious and the city is soliciting citizen participation in a review of the A2D2 zoning regulations adopted in 2009.

One reason the DDA is convinced of the need for further residential construction is that while the downtown area is home to just more than 4,800 people, nearly 30,000 work in the district every day. Employment in the downtown core accounts for approximately 26 percent of the jobs in Ann Arbor and 15.5 percent of the jobs in Washtenaw County.

According to the report, downtown Ann Arbor’s job density is 65,033 jobs per square mile. By comparison, a recentstudy of greater downtown Detroit found a job density of just 18,805 jobs per square mile in the 7.2 mile area incorporating the central business district, midtown and the surrounding neighborhoods.

Restaurants occupy 11.6 percent of downtown commercial real estate, while retail and wholesale stores draw approximately even at 13.2 percent.

Nearly one third of downtown’s commercial space is taken by offices, many of which house the 14,212 employees of the University of Michigan, by far the area’s largest employer. A number of office spaces not snapped up by the university have been taken by the 185 information technology companies that employ 2,400 workers in the area.

Led by Google and Barracuda Networks, which combine for approximately 500 employees, other companies such as PRIME Research, the Inovo Group, DeepField and Camis have signed leases to join the “tech hub” along East Liberty Street in the past year.

With the addition of the DDA-sponsored underground parking lot at Library Lane, downtown employees and visitors have a total of 8,249 public parking spaces to choose from. With parking at a premium, the Ann Arbor Transit Authority set a single-year ridership record in 2012 with more than 6.3 million rides.

Nearly 10 percent of those rides were completed using the go!pass, an unlimited use transit pass sponsored by the DDA and available to all downtown employees.

The report closes with an eye toward the coming year, which is expected to include the opening of Ann Arbor City Apartments and The Varsity housing complexes as well as a number of new restaurants including The Lunch Room, a new Knight’s Steakhouse and Slurping Turtle.

The Downtown Development Authority is a city agency with the stated mission of strengthening the downtown area and attracting new private investments. The authority consists of a twelve-member volunteer board nominated by the mayor and a four-person staff. The DDA is funded by a combination of tax increment funding and public parking revenues from the downtown area.

Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Get in touch with Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2