KANNAPOLIS — Housing construction has picked up in Kannapolis, a sign that residential developers may feel more optimistic about the economy and the future of the N.C. Research Campus.

The city is issuing more residential zoning permits, and about 25 housing developments are underway, said Ben Warren, Kannapolis Planning Director.

"Everybody is still counting on what's going to occur on the North Carolina Research Campus," Warren said.

The fledgling biotechnology hub founded by billionaire Dole Food Co. owner David Murdock suffered several setbacks during the recession, but Warren said the $1.5 billion endeavor is still an economic driver for Kannapolis.

"I do feel optimistic," said David McDaniel, who chose Kannapolis for a luxury apartment complex because of the Research Campus. "The improvements they've already put in place are leading a path toward future growth."

McDaniel's Orlando-based Integra Springs will build a 312-unit upscale apartment project in a gated community in Kellswater Commons. Located on Rogers Lake Road just off the Kannapolis Parkway, site work has begun on the 20-acre parcel, and units should open in early 2010, McDaniel said.

The city's first luxury apartments, Integra Springs plans to market directly to the Research Campus.

"We chose this location because of the influx of new jobs and the potential for new job growth," McDaniel said.

The number of residential zoning permits issued in Kannapolis has increased steadily since December 2008, when it hit bottom at 13.

"Since March they've really taken a drastic increase," Warren said, up to 39 permits in June.

The city issued 339 residential permits in 2008-09, less than the 492 issued the previous year.

"Even though this year's numbers are less than those posted last year, the recovery rate is greater," Warren said.

The Research Campus, which includes 17 private companies and eight universities, lost a major tenant in June when Pharmaceutical Product Development Inc. pulled out and took 300 potential jobs.

Murdock said this summer that food and beverage giant PepsiCo's plans to join the campus are in flux.

And the state froze hiring and spending for the public universities at the campus.

But after several stagnate months, construction at the campus is underway on a 60,000 square-foot Rowan-Cabarrus Community College building, and the city is preparing to build a new public health department nearby.

When jobs come, new homes will follow, officials predict.

"Residential construction is boosted by economies that have strong job growth, and that is one of our goals at the NCRC," Lynne Scott Safrit, president of campus developer Castle & Cooke North Carolina, said in an e-mail. "As the campus continues to develop, residential construction should be a very strong component, both on the campus and in the surrounding community."

Castle & Cooke put its own luxury residential development on hold when the economy soured.

South Village Townhomes would have occupied the south end of Cannon Village, where Cannon Mills Plant 4 once stood.

The Research Campus already rises on the ruins of Cannon Mills Plant 1 at the other end of downtown.

Despite the summer's setbacks and possible layoffs this month at the University of North Carolina Nutrition Research Institute due to budget cuts, Safrit said the Research Campus has momentum.

"With the RCCC building under construction and the progress underway in the core lab with getting the various labs up and running, we are quite pleased with our momentum, particularly as compared to other areas of the state and the country," Safrit said.

Developer McDaniel has followed the ups and downs of the Research Campus. His enthusiasm hasn't waned.

"The downturn didn't only affect them, it affected everybody. Ultimately, it will turn around," he said. "If you believe in a location and you believe in the principles that drove you there to begin with, with time and patience it will bear fruit in the end."

With a 6,000-square-foot clubhouse, sports entertainment center, movie room, pool and 1,000-square-foot exercise room, Integra Springs could help Research Campus employers attract young professionals, McDaniel said.

Construction has begun on another large apartment complex in Kannapolis, The Grand on Orphanage Road with about 500 units, city planner Warren said.

Two developers recently sold subdivisions to new owners who have downsized as a response to the economy, he said.

RiverPointe on Shiloh Church Road, with about 200 homes in development, will offer starter homes at $150,000. A second phase plans homes in the $250,000 range.

The sale of Castlebrooke Manor on Jim Johnson Road is still in progress, Warren said.

Originally planned for one-acre lots with $800,000 homes, the new owner wants to decrease lot sizes to about a half-acre and offer from 100 to 250 homes in the $350,000 range, Warren said.

"Developers see a need for housing in Kannapolis," he said.

Newly annexed subdivisions in western Kannapolis are attractive to people in nearby Huntersville and Mooresville. And planners see the Kannapolis Parkway as host to Research Campus spin-offs like pharmaceutical and medical companies, Warren said.

"Those people will need somewhere to live," he said.

After developers requested annexation by Kannapolis, the city won legislative authority in 2007 to annex land in western Cabarrus County from north of N.C. Highway 73 to the Mecklenburg, Iredell and Rowan county lines.

Previously, like other cities, Kannapolis couldn't annex land more than three miles away, or land closer to another municipality.

The city has voluntarily annexed four subdivisions since then, Warren said.

Many residential developments are still in early stages. Build out will take from five to seven years, depending on the economic recovery, Warren said.

Eventually, Kannapolis could see more than 7,000 new single-family homes and hundreds of new apartments become available in the next decade.