That office lending prerequisite is par for the course, said Dennis Bernard, founder and president of Southfield-based Bernard Financial Group Inc.

"Unless you're a really big player, you need at least 50 percent pre-leasing before you're going to get a construction loan," said Bernard, whose company originates debt for real estate deals.

That's when the multifamily development, the first phase of which is expected to cost $24 million, became the project focus.

Construction loans for those projects are typically issued based on market demand and expected rental rates.

There are 68 units with an expected average rental rate of $2.07 per square foot in The Mondrian's first phase, which would also include a 150-space parking deck and the first-floor retail space. (About 10,000 square feet remains after expected leases by Huntington Bank and a pharmacy, Jackson said.)

A second phase would be built with an additional 36 units on top of the attached parking deck with about 150 spaces, Jackson said. The second phase would be about $4 million, bringing total project cost to $28 million.

First-phase financing is expected to come from a $14 million first-position mortgage; $1.7 million from Invest Detroit; $3.5 million from the Michigan Strategic Fund's Community Revitalization Program; $2.2 million in owner equity; and $1 million in U.S. Department of Housing and Urban Development HOME Investment Partnership Program funds, according to Jackson. The financing stack is expected to close in July, he said.

Jackson is minority owner of Queen Lillian Development. Jim Jenkins is majority owner of the company and is president and CEO of Detroit-based Jenkins Construction Inc., which will be the construction manager on The Mondrian.

Detroit-based Hamilton Anderson Associates LLC is the project architect for Queen Lillian, which takes its name from Jackson's mother (Lillian) and the mother (Queen) of its other founder, the late Don Davis, who co-founded Detroit-based First Independence Bank in 1970 and also had a distinguished career as a record producer and musician.

First Independence was founded to provide mortgage and commercial loans to the area's underserved black community at a time when redlining made it difficult for them to buy homes.

Richard Hosey, a former senior vice president for Bank of America NA who now owns Detroit-based Hosey Development LLC, said finding financing for projects $10 million or less is easier than more expensive ones because of what he called "active social lenders. Invest Detroit, the Detroit Investment Fund and Capital Impact Partners, for example, are more active in that space.

"Once you get above that $10 million level, now you need to be working with one of the large banks like J.P. Morgan Chase; Fifth Third is starting to get active in the market, and Bank of America is returning to the market," he said. "And it's a longer walk making sure that all of their concerns are satisfied."

He said The Mondrian should fill an ongoing need for residential units along the Woodward Avenue spine through downtown, particularly along its western side south of MLK. In Midtown, the multifamily occupancy rate is around 98 percent, according to a December 2015 Midtown Detroit Inc. report, which surveyed 6,072 units in 149 properties in the area.

"It's good to see him on that side of the block, and I expect it to spur activity," he said.

Kirk Pinho: (313) 446-0412. Twitter: @kirkpinhoCDB