Developers will break ground Tuesday on an upscale apartment and retail complex in Portland’s West End.

Located on the corner of Brackett and Pine streets, the $7 million West End Place will feature 39 apartments and two retail spaces in a four-story building. The project by developer Redfern LWS was endorsed last year by both the Portland Planning Board and the city’s Historic Preservation Board, which reviewed the proposal because it is located in the West End’s historic district.

Tuesday’s groundbreaking also marks a potentially significant shift in the rental market in Portland, where demand for upscale or “market rate” housing is rising.

With units renting for $1,300 to $2,500 a month, the West End Place project is the first new apartment complex in Portland in more than 20 years in which all of the tenants are expected to pay the full market rate for their housing. Apartment complexes built in Portland in recent years have included subsidized housing units reserved for lower-income individuals or families.

Portland’s rental housing vacancy rate has hovered around 2 percent – well below the 7 percent vacancy rate that is considered healthy. Housing officials have said that adding new rental units for Portlanders at all income levels is important to help moderate the city’s rental rates, which have risen by double-digit percentages since 2010, according to a recent market survey.

Portland Mayor Michael Brennan and City Manager Mark Rees are expected to attend the groundbreaking ceremony.

West End Place is a joint project between Redfern Properties and LWS Investments LLC.

Jonathan Culley of Redfern said Monday that they hope that tenants can begin moving into the completed building in April 2015. Culley said they hope to find a neighborhood grocery store to fill one of the retail spaces.

Redfern Properties has developed at least five prior projects in the city, the most recent of which was a seven-townhouse Harborview project near Portland Harbor. The company is building an upscale, 29-unit townhouse or condominium complex on Walnut Street on Munjoy Hill.