Housing projects stall across Bloomington-Normal, with some optimism for 2025

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Bloomington-Normal in 2024 spent more time talking about building housing than actually building housing. 

Projects stalled all over the community. Fewer permits for single-family home construction were issued in 2024 than the year before. Rents increased, and the average price of a sold home rose to a staggering (for us) $274,000. About 45% of those working in manufacturing in McLean County don’t live here, according to one estimate, limiting the economic ripple effects of their jobs. 

And don’t expect a construction boom in 2025 either. 

“It’s probably not going to be a huge year for building because we’re still looking at, most likely, similar interest rates and costs of construction,” said Mercy Davison, director of planning and zoning at the Town of Normal. 

The 2024 bright spots are a short list, especially at price points middle-income earners can afford. 

Villas at Prairie Vista in south Bloomington, with 48 duplexes for low-income tenants, progressed and is expected to open some units next month. A small 12-unit apartment building near Bloomington High School is nearly done. The Weldon Reserve neighborhood in north Normal added more homes, which rent for $2,500/month or higher.

The list of projects that stalled is longer. The City of Bloomington’s Coachman property near downtown lost a second suitor, and then an adjoining church property was sold that could make redevelopment even more difficult. Construction never began at the Archer apartment complex on Raab Road near Linden Street, or the mixed-density Infiniti Pointe in west Normal. A massive housing project planned for the far west side dubbed Bloomington 77 has apparently stalled out, and the property is now back on the market. Developers of The Essex apartment project near Shelbourne Avenue and Beech Street in Normal withdrew it from town consideration soon after it went public, due to “private side issue with some covenants on the land that the town had nothing to do with,” Davison said.

“You see a lot of news about new projects coming on, but it seems like those projects come and go and don’t really ever make it across the finish line. That’s a little alarming,” said Mark Fetzer, president and managing broker at Core 3 and head of the commercial real estate company SVN Core 3. 

That’s not unique to Bloomington-Normal, said Mike Doyle, a developer whose Holladay Properties just went public with plans for 180 apartments on Empire Street in Bloomington. Construction costs and interest rates remain high, and some investors would prefer to just park their money in a high-interest savings account rather than a riskier real estate development, Doyle said.

“It was almost the perfect storm of things that made, over the past few years, these projects very, very hard to launch,” Doyle said.

That inaction comes at a price. 

The average price of a home sold in Bloomington-Normal has jumped 44% in just four years, local Realtors data show. Rent per square foot has increased 36% in that time, according to the real estate data company Costar. Around 44% of renters here are cost-burdened, meaning they spend more than a third of their income on housing costs, regional planners found.

The community needs around 4,500 additional housing units to meet demand, according to an analysis commissioned by the Bloomington-Normal Economic Development Council [EDC]. As we get closer to 2030 and 2035, we would need 16,000 more. 

We’re barely making a dent. In 2024, Bloomington and Normal only issued permits to 124 single-family homes. Bloomington only permitted 22 multifamily (apartment) units. Normal permitted 271, but only four of those units actually got done in 2024.

“We’re actually seeing more people commute into town and take that money back to their locations, like Peoria and Champaign, instead of being here, and it is at an insane rate,” said EDC chief Patrick Hoban.

The EDC is now pushing for Bloomington-Normal leaders to create a standardized incentive package for housing developers, to reduce uncertainty and the amount of time it takes to strike a deal. But those same municipal leaders are already facing tight budgets and pressure to hold the line on taxes. 

“There are still (people) with the mindset of, we’ve never done this before, because Bloomington-Normal has traditionally just grown steady on its own. We have not seen this rapid growth that Rivian and Ferrero have created. So it’s getting past that mindset,” Hoban said. 

Of the few projects that have advanced, many received taxpayer help. 

One is Carden Springs, a massive complex with 477 units across 40 acres planned in northeast Normal. After running into delays related to financing, the developer Fairlawn started sitework last fall only because the Normal Town Council gave them around $1.4 million in incentives – mostly fee waivers, plus picking up the cost of street and trail work in the area – so long as the project meets certain construction deadlines. 

It’s harder to attract banks and investors for projects in smaller communities like Bloomington-Normal, said Jason Barickman, a principal at Fairlawn. Forecasting and delivering a return on their investment is easier if there are fewer fees and costly mandates on a given project. 

“So if you can work with the government and remove some of those obstacles, the prospective performance of the investment gets better, and maybe it gets you over that hurdle,” he said.

Infrastructure work is now underway, and the first Carden units are expected to be ready this fall – as required by the incentives deal. 

“I give the town credit. They’re on the forefront of a conversation that is going on around the country,” said Barickman.

Emily Bollinger

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WGLT

Infrastructure work is now underway, and the first Carden Springs units are expected to be ready this fall – as required by the incentives deal.

The City of Bloomington is trying too. Two groups went public with plans for apartments or townhomes at the city-owned Coachman site at 408 E. Washington St. near downtown. Both ran into financing problems and construction never began. One challenge is the site is small (less than 1 acre) and recently got smaller, after the adjacent church was sold and is no longer being marketed with the Coachman site. 

“That has kind of lessened the footprint for developers to ideate on what they could do,” said Samantha Mlot, the City of Bloomington’s economic development advocate. “It definitely adds to the challenge.” 

City of Bloomington staff has done a good job being aggressive and are open to ideas, said Fetzer with SVN Core 3. He said it’s going to an “all-encompassing approach” to build more units – softening labor costs, zoning and code changes, and perhaps some municipal participation in projects. 

“I’ve always just kind of been on the fence with incentives. As a developer, yeah, you like to see them. But I don’t think that’s the whole answer, but it could certainly be a piece to the puzzle,” Fetzer said. 

Good signs

There’s some reason for optimism in these first few weeks of 2025. 

For renters, vacancy rates for apartments are starting to inch up again, after plummeting to just 2% in 2021, according to Costar, suggesting the market may be settling. New rentals are expected to come onto the market this year at Villas at Prairie Vista, Carden Springs and Weldon Reserve.

More units are also coming at The 300 Spot in Normal this year. That’s the former Illinois State University off-campus housing that’s being converted into traditional apartments. So far, 22 of the 100 renovated units are already done and rented, at $999/month. The next batch will be one-bedroom apartments at $925/month – which developer Mike Mapes says is a big need in the community. 

They too have run into delays – mostly underestimating what it would take to get things like mechanicals and sprinklers done the right way. Now, Mapes expects they’ll be done in the next 12-14 months. 

“It was a little bit of a learning curve,” Mapes said. 

In summer 2025, developers hope to break ground on infrastructure work on the as-of-yet unnamed 58-unit townhome development along Fox Creek Road in southwest Bloomington, followed by groundbreaking on the first townhomes in summer 2026. Those would likely be priced between $300,000 and $350,000, said developers Rajkumar Thirupparkadal and Rathnakumar Ramachandran

They’re doing engineering infrastructure work now, and then will work on securing a lender. But given the modest number of units and a “very high” equity component, Ramachandran said they’re confident they’ll secure the money they’ll need. They’re also not in a hurry. 

“We are kind of fingers crossed,” said Ramachandran, who has built homes here before.

Ryan Denham

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WGLT

Villas at Prairie Vista in south Bloomington, with 48 duplexes for low-income tenants, progressed and is expected to open some units next month.

Getting creative 

Like most problems, the housing shortage has sparked some creative thinking, such as:

  • The Bloomington-Normal Community Land Trust [CLT] is trying to rally local support for an idea that’s been tried elsewhere. People buy homes, but they could only lease the land from the CLT. By doing so, the purchase becomes cheaper, though the homebuyer faces restrictions on how much they can sell the home for later, to keep it affordable. The CLT recently earned its nonprofit status.
  • Fairlawn recently bought and converted an underperforming college-student apartment complex into a traditional apartment complex. Heartland Village near Raab and Parkside roads in northwest Normal has been turned into the 144-unit Harvest View, with two-bedrooms renting for $1,200-$1,300/month. Barickman said it’s performed very well. “The cost of constructing something new is incredible today, with inflation and interest rates. So we’ve really looked at how we might bring new units to the marketplace without building them brand-new,” he said.
  • Things have moved slow at the planned mixed-density Infiniti Pointe development near Hovey Avenue at Parkside Road in west Normal. In consultation with the Town of Normal, developer Krishna Balakrishnan is now looking to break the infill project into five smaller phases to spread out the infrastructure cost and improve the project’s ability to get financing. They’re now planning to start with apartments on the western and southern side of the property, leaving single-family homes for later. Infrastructure work could begin this spring. Incentives are also possible, Balakrishnan said. “The Council has been helpful. They definitely want housing in town. They’re definitely entertaining different options for how to approach this,” he said.

It wasn’t that long ago that housing was a backbone of the Bloomington-Normal economy. We built over 600 units per year, on average, from 2000 to 2010. Some argued we overbuilt. Then the financial crisis hit. 

One explanation for why we haven’t done more to address the housing crisis is that not everyone agrees there’s a housing crisis. It’s not impacting everyone equally. If you bought your home before COVID with a low interest rate, you may enjoy seeing your home’s value soar (albeit with slightly higher property taxes). If you live in a quiet single-family neighborhood, you may not be eager to see a 200-unit apartment complex go up nearby. Yes, 32% of people who work in McLean County live somewhere else, but that’s about the same as it was a decade ago, according to inflow-outflow data from the Census

One check on how the community feels about the issue is the upcoming local election, when Bloomington and Normal mayors and several city council members – the same ones who decide things like incentives and fees and zoning – are on the ballot. Election Day is April 1.