GRAND RAPIDS, Mich. (WOOD) — The tallest building ever proposed for downtown Grand Rapids won’t be scraping as much sky as originally planned. 

The 42-story building proposed two years ago for a site near Van Andel Arena has been reduced to 13 stories.

While you’ll no longer be able to rent an apartment in the building at 10 Ionia Ave. NW, you will be able to rent a hotel room in the modified project.  

Changes to the project proposed in 2016 are outlined in the Portage-based company’s request to the city’s Historic Preservation Commission, which has a say on how a project fits into a neighborhood. 

It includes lopping off 29 of the original 42 stories and eliminating apartments.

In a statement to 24 Hour News 8, The Hinman Company says they’ll add a hotel at the site instead of apartments.

The reason for the change: the city has too many units.

“With thousands of apartment units recently built, under construction, or planned, it was necessary to revisit this part of the project in response to market pressures,” the company stated.  

So has Grand Rapids’ recently red hot rental market reached its saturation point?

“I think that in certain areas of Grand Rapids, yeah, we’ve reached a point where it would be wise of us all to take a step back,” said Jason Wheeler of Orion Construction.

Wheeler, who is not involved with the Hinman project, says one of those areas is downtown. Construction cranes have dotted its skyline in recent years, as developers tried to keep up with the demand for downtown living. 

 Orion has added hundreds of new rental units in recent years, and Wheeler says the rental market in Grand Rapids is still strong.

“We’re not losing interest in the downtown. What we’re trying to do is just diversify our apartment portfolio in general. So we’re looking at near neighborhoods, like this at Heritage Place,” Wheeler said, referring to the nearly completed project in the 100 block of College Ave. SE.

Orion made as similar move a few years ago with their Warner Building project on Ottawa Avenue. Originally designed with office and apartments, they nixed the apartment in favor of a hotel before ground was broken.   

“We’re feeling very confident with that move,” Wheeler said.

“We love the hotel market because it sustains and it complements the convention… that whole movement that we’ve got going on and supporting the convention district,” he added.

It’s not just demand driving changes. In some cases, financing can play a role in what gets built and where.

“Some of what I say comes from the lending community and where they feel we should be focusing,” Wheeler explained.

There is still a shortage of affordable housing in the area, which is an issue the city and many developer like Orion are focusing on.

But when it comes to market-rate housing, changes in market conditions are keeping developers on the their toes.          

“It’s very challenging,” said Wheeler. “And it takes a full team of guys who are more well-versed than I am, and folks that have been around maybe a couple of cycles of this, as the housing market goes from apartments  to ownership, and it dips, and how the lending market is affected by that.”

The following is the full statement from Roger Hinman of  The Hinman Company:

“We continue to be committed to developing a great project on the 10 Ionia site.  Many factors impact the potential development of any property and 10 Ionia is no different. 

After several years of planning and due diligence, the apartment portion of the 10 Ionia project is being removed from the building.  With thousands of apartment units recently built, under construction, or planned, it was necessary to revisit this part of the project in response to market pressures.  We evaluated a reduction in apartment floors or alternate uses, but the size and shape of the site does not work well for office and we lost the benefit of cost efficiencies of providing a second set of infrastructure (elevators and building systems) when we reduced the number of apartment floors.

Our focus today is on developing a thirteen-story building for a hotel with ground floor retail.  The building’s exterior design will be slightly adjusted to better fit its revised scale but the building will fill the property’s unique and iconic “flatiron” shape.  The parking garage at 30 Ionia will remain for now.

We remain committed to developing the site and doing our part to positively impact downtown Grand Rapids.”