High-rise plan would transform South University

Note: This is an expanded and updated version of a story that first appeared Jan. 2 on MLive.com

It took more than a year to assemble the six parcels of land for University Village, a proposed student housing complex that could rise as high as 26 stories and redefine Ann Arbor's South University district.

Developers Dan Ketelaar and Ron Hughes had to reach agreements with five separate property owners to control the site, which spans 2.05 acres and has an assessed value of $4.42 million.

Plans for University Village, a 582,390-square-foot structure with two connected towers, were submitted to the city Jan. 2. The towers are expected to be 26 and 21 stories high and have room for 1,700 students in 515 rooms. There would also be 16,000 square feet of retail.

If approved, the project will be among the largest and most ambitious in the city outside of Lower Town.

Letters on file with the city indicate the owners have agreed to sell the land or development rights to Ketelaar and Hughes.

The site is at the southeast corner of South Forest and South University, across from the University Towers apartment building.

Jim Chaconas, managing director of McKinley Commercial Brokerage, represented the developers and three of the sellers in the transactions of the University Village assemblage. He didn't disclose the prices, but the collective market value of the site, based on assessments, is $8.84 million.

"It's tremendous for both sides," he said.

By comparison, land for Zaragon Place, a 10-story apartment complex two blocks to the west at 619 E. University, sold for $5.45 million, according to county records. It's 0.35 acres.

Complex project raises bar on South University

The scope and complexity of University Village eclipses that project, though both would set a new tone for the South University corridor.

"We're very excited about the potential that this project would have," said Ketelaar, of Omena Real Estate Investments in Ann Arbor. Hughes' entity is Hughes Properties Inc. of Bingham Farms.

Beyond the housing on the site, University Village is also expected to include a 14,000-square-foot green roof and a 20,000-square-foot raised courtyard.

The location will qualify as a brownfield site, prompting a cleanup effort. 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.

"This is a very unique, exciting, and noteworthy project - we are committed to building a state-of-the-art residential complex on a brownfield infill site that incorporates sustainability best practice," Hughes said in a statement immediately after the filing with the city.

He also expects the environmentally friendly practices will find a niche among University of Michigan students.

"Everyday, students will see how green systems work through live exhibits installed throughout the building, and they will come to understand how their actions impact the environment as we post monthly energy consumption and recycling reports on the intranet and in the cafe," Hughes said.

The land deal

The most valuable parcel is owned by Philip Sotiroff, of 1320 South University Ltd. Its assessed value is $1.85 million, and an apartment complex is currently there. It's also the largest parcel, at 0.81 acres.

The second-most-valuable parcel is owned by Thomas and Fred Gruber. It's worth $897,800 and sits on 0.44 acres. There is a three-story apartment building and a two-and-a-half-level house on the site.

The Grubers are giving Ketelaar and Hughes the development rights to the property, but aren't actually selling it and say they don't plan to. Their buildings are expected to remain standing.

The Grubers are supportive of University Village and say their buildings will make a smooth transition from the high rise to the surrounding neighborhood. "I think its going to be a positive impact because it'll identify the neighborhood as a nice, new, clean area," Fred Gruber said.

A spokeswoman for the developers, Tracy Koe Wick, declined to comment.

Harry Hawkins, the owner of a laundry facility, bicycle shop and party store on the site, is expected to get space in the new development under a condo arrangement, said Chaconas, his broker. Hawkins' land is assessed at $302,800.

Also on the site of University Village are Tom Clark Apartments, Village Corner and the Bagel Factory.

University Village is the second major project to be proposed after Ann Arbor rezoned the area near the border of the U-M's Central Campus to allow for taller buildings, joining Zaragon Place.

Rick Perlman, principal of Zaragon Holdings Inc. in Chicago, said there is room for another student development in that area, as the housing stock is aging. "I think it's great for the South U. side of town," he said.

Another local developer, Peter Allen of Peter Allen & Associates, said more options for students would increase pressure on landlords who haven't renovated their properties recently in other areas, including Burns Park and Kerrytown. Gruber said he had previously been approached by another developer, so the offer from Ketelaar and Hughes wasn't a surprise.

"We just took a cautious approach to it," he said.

Contact Greg Migliore at (734) 302-1721 or gregorym@mbusinessreview.com.