Construction crews on Thursday were starting ground work on a new apartment and retail complex going up on the southwest corner of Ninth and New Hampshire streets.

In 12 to 14 months, the US Bank Tower will have company up there in the blue sky of Downtown Lawrence.

Construction crews started work Thursday on a seven-story, $10 million mixed-use building at the southwest corner of Ninth and New Hampshire streets that will rival the height of downtown’s tallest building.

Lawrence businessman Doug Compton, who is the lead developer on the project, said construction will be completed by late 2011 or early 2012.

“We believe in the future of downtown and this really furthers our commitment to downtown,” Compton said.

Area leaders gathered for a ground-breaking ceremony Thursday morning and praised the project.

“It is going to change our view,” said Matt Hoy, the chair of the Lawrence Chamber of Commerce and an attorney in the adjacent Bank Tower, “but I think it will be a better view.”

Downtown leaders said they were most excited about the apartment component of the project. The top five floors of the building will be a mixture of studio, one-bedroom and two-bedroom apartment units.

“This is a big deal for Downtown Lawrence,” said Mayor Mike Amyx, who also owns a downtown barber shop. “As somebody who is in the service business downtown, I know I’m excited about new residential coming to downtown.”

Compton, who owns multiple properties both on and off Massachusetts Street, said the residential component was the driving force for him as well.

“Every healthy downtown I’ve seen lately has quite a bit of housing in it,” Compton said.

The bottom two floors of the project will contain a mix of office and retail space. Compton plans to move the corporate headquarters for his business, First Management Inc., to the second floor. That move would bring about 40 employees to downtown.

On the ground floor, he said a lease for a 9,000-square-foot fitness center is being finalized. A wine bar also is slated for the ground floor.

Although construction is underway, a portion of the project is still working its way through City Hall. The development group has sought financial incentives from the city to improve the project. Specifically, the group wants to have 65 parking spaces reserved in the adjacent public parking garage, and is seeking about $280,000 in city funding to pay for several upgrades to public infrastructure.

Compton said the project obviously isn’t contingent upon the incentives, but he thinks the incentives are appropriate because they’re consistent with what the city envisioned when the garage was first proposed in 2000.

“The garage can clearly handle what we’re asking for, and the garage was built here to spur development in this block,” Compton said. “That’s what it is doing, even if it is a few years later than people expected.”

City staff members currently are analyzing the request for incentives and will present a report to commissioners in the coming weeks.

The project will have an impact on pedestrian traffic. Sidewalks along the site have been closed. The city several weeks ago also moved its bus stop to accommodate the project. The stop for routes 1, 3, 4 and 7 is now on the east side of New Hampshire Street, north of Ninth Street. The stop for routes 6, 10 and 11 is on the north side of Ninth street east of New Hampshire Street.