An ambitious vision to turn the Northland Center site in Southfield into a bustling residential hub — in fact, the state's largest apartment community — is being met with skepticism in some quarters.
The core issue facing Bloomfield Hills-based Contour Companies LLC, run by David Dedvukaj, as it attempts to turn 97 acres of the site into thousands of residences and 337,000 square feet of commercial space in a two-phase redevelopment is demand.
The question becomes whether it's actually there in Southfield, and multifamily experts are torn over how much of the project will actually get built.
The redevelopment, if completed as currently envisioned with 2,885 units, would bolster the apartment supply by nearly 24 percent in the city of about 73,000, based on data from CoStar Group Inc., a Washington, D.C.-based real estate information service.
The city, known for its robust office market and central Oakland County location, currently has 12,136 apartments across 64 buildings, according to CoStar, with a market value of $1.2 billion, sixth-highest in the region.
The vacancy rate in Southfield is 4.7 percent, compared with 5.4 percent for the region, and rents across studios, one-bedrooms, two-bedrooms and three-bedroom units generally have a higher asking rent than the metro region as a whole.
"We are confident in what we have planned for the redevelopment of the Northland site and are glad to have the steady support from the City of Southfield," Dedvukaj said in a texted statement. "We believe in the growth of Southfield and in the revival of a historic site, one that is a landmark for this city. Our first phase of development includes 1,500 plus units, with the second phase currently being finalized."
Some have reservations.
"From our sense of the market, it would seem to go way beyond current demand for that product type, particularly in that location," said Larry Goss, partner at Bingham Farms-based Dominion Real Estate Advisors LLC, a commercial real estate firm, referring to the site near Eight Mile Road and Greenfield. "That being said, if the plan was rolled out over an extended period of time, it might be possible to absorb that many units, but the timeline would be difficult to predict."
Goss, who specializes in multifamily housing for Dominion, said in some of the region's top-tier markets like Royal Oak, Troy, Plymouth and Birmingham, the demand is only "a few hundred units in each."
Jeffrey Kaftan, president of Southfield-based Kaftan Communities, which owns and manages about 2,400 apartments in the region including a Detroit complex across from the Northland site, said even the $285 million first phase of the project, which envisions around 1,500 apartments in 14 five-story buildings and 254 loft-style residences in the mall's former retail space, would be testing the upper limits of what could be absorbed.
"I don't think that'll happen," he said of the full 2,885-unit vision. "I don't think there is enough demand in the market, which is a big one, but I don't think there is enough demand to finish all the phases and absorb that many units, especially at the price point you're going to have to be in today's market. Sixteen hundred or 1,700 is probably the top."
According to a third-quarter market report from the Southfield office of Berkadia, a multifamily real estate firm focusing on brokerage and lending, not one apartment has been built in the city this year, and while 44 more apartments were occupied in the third quarter, the city still has 14 fewer apartments filled total than it did at the beginning of the year.
But if the development is spread out over time and paced accordingly, there could be a reason for optimism about the project's likelihood of success.
Saab Grewal, director of asset management for West Bloomfield Township-based multifamily developer Singh Development Co., was more optimistic in an email.
"The project will be a great addition to the area — there is a need for infill and affordable housing in all of our communities," Grewal said. "(It's) very astute of the developer to recognize the need and put this project together. Southfield is forward-looking and we are glad to see them working well with the developer. A strong public/private partnership is key to this and all successful developments."
However, he noted, the scope of the project "may be a stretch."
"It's well needed," said Cary Belovicz, executive managing director for Greystone Bel Real Estate Advisors in West Bloomfield, a multifamily real estate company. "If you were somewhere else, I'd say filling it up might be an issue, but look at the city of Southfield's position and freeway infrastructure, where it could pull from and the amount of businesses in the city. It could support this."
And Kevin Dillon, a senior managing director in the Southfield office of Berkadia, said there is pent-up demand for new multifamily construction since much of the region's apartment product is aged.
"There's a bright future for a development of this magnitude when delivered in a timely manner to the marketplace," he said. "This has been an extremely well thought-out development that will significantly bolster the Southfield housing market."
He noted that the region's apartment market is 97.6 percent occupied as of the third quarter.
If the Contour proposal for Northland Center doesn't materialize, it would join a long list of previous visions and possible suitors that didn't make it across the finish line.
Mayor Kenson Siver said in an interview last month that there have been myriad uses proposed for the 120-acre site.
He said a plan for what the Southfield Sun reported in August 2019 as 10.4 acres of Greenfield land that involved a retail development by Bloomfield Hills-based AF Jonna Development LLC fell apart earlier this year. That was around the time that discussions with Contour began, Siver said.
"When the deal collapsed, (City Administrator) Fred Zorn suggested they look at developing what Arkan Jonna and his partners walked away from," Siver said. "They said, 'Yeah, we are very interested.' They said, 'We can do more than 10 acres. How about 33 acres?' Anyhow, today they are taking 97 acres. Not only are they developing our vision, but they are exceeding it."
In addition, a plan for medical office space for Acension Providence ultimately fell through, although about 5 acres of the site has been reserved for a parking lot, Siver said.
The Southfield Sun also reported in August 2019 that Northland Renaissance Place Development was to pay $8 million for about 80 acres of the site that would be turned into "a medical campus, housing, retail and a medical marijuana facility."
Among the other suitors that never panned out: Costco Wholesale Corp. (NASDAQ: COST), which was considering a Costco Business Center location at the property, and Emagine Entertainment Inc., which toured the property, according to Siver.
Paul Glantz, founder and chairman of Emagine, said in an email last month that his company looked at the site but nothing materialized.
"We look at lots of sites and we considered the Northland opportunity several years ago," he said. "The most promising location was in the former Target building that the city ultimately razed. Apparently, we didn't move fast enough, but the additional challenge was finding others to join us at the time."
City Council President Lloyd Crews said in a statement last month that various proposals have also been "turned away," including "factories, light manufacturing, medical marijuana, big-box retail, warehouses and logistics centers." Instead, he said, the city "held out for development that would grow our tax base and population."
In an interview, Siver added: "It was worth the wait as we went through a lot of ideas and proposals. It paid off to keep selling our vision."
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