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Sunday, 28 October 2012 16:27

Steelcase’s pyramid hits market at clearance price

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Steelcase’s pyramid hits market at clearance price Courtesy photo
GRAND RAPIDS — The hunt is on for a buyer for one of West Michigan’s signature buildings, but some developers caution the process could drag on for a long time.

Steelcase’s Corporate Development Center, commonly known as the pyramid building, is officially on the market as the Grand Rapids-based office furniture company completes the move of all its office operations to its 44th Street headquarters building, an effort it announced in 2009.

CB Richard Ellis listed the nearly 664,000-square-foot pyramid, which sits on 125 acres at 60th Street and East Paris Avenue in Gaines Township, for a mere $19.5 million, a far cry from the $111 million it cost the company to build the facility in 1989.

The asking price could seem like a steal, but developers say the building’s unique amenities and shape limit the number of potential buyers.

“It’s a very unique building,” said Van Martin, chairman and CEO of CBRE. “It doesn’t lend itself to a traditional office. When you get into institutional users like education or life sciences, then many of its attributes become positives.”

The property is recognized as a modern edifice with corporate offices and design and product development space. It features:

• 333,000 square feet of office space

• 242,000 square feet of research and development space

• a nearly 15,000-square-foot cafeteria

• a 12,500-square-foot data center

• and an 8,351-square-foot photo studio, plus exercise rooms and locker rooms.

The pyramid has 16-foot ceilings, exterior balconies and expansive windows that make for an enormous work environment. Four elevators and four escalators serve the six-story building. The facility’s center atrium features a unique, five-story pendulum that swings over a reflective pool.

But the Steelcase property isn’t the only pyramid-shaped project in West Michigan to face redevelopment. On a much smaller scale, Portage-based The Hinman Co. faced similar challenges in redeveloping Terrace Point in Muskegon, which served as the former headquarters of SPX Corp. The facility was built the same year as the Steelcase project and was vacated when SPX moved to North Carolina in 2001.

MiBiz previously reported that Hinman wanted to sell the building outright, but given the market conditions, decided to divide up the building and look for a number of tenants.

About 40 percent of the building couldn’t be used because it had atriums and oversized hallways, so Hinman closed in the atriums and created an extra 10,000 square feet of usable floor space. It took Hinman a year and half of looking for a tenant to take over the entire space before moving forward with the renovation.

Dividing up the former SPX building was a complex process, but it was a matter of finding the right initial tenant, said Kirk Driesenga, regional director of leasing for Hinman.

His take on the Steelcase building: “You have to sell that type of building on uniqueness. It’s not right for everyone, but there are tenants out there looking for that type of building.”

He said one main challenge with the Steelcase pyramid is its large common area.

“How you would efficiently divide that space up so there are no clumsy and awkward spaces would be difficult,” he said.

Another developer with a history of redeveloping challenging projects is not too optimistic about the pyramid’s redevelopment prospects.

Don Shoemaker, principal of Franklin Partners that has worked on a number of industrial and commercial projects in Grand Rapids, including a handful of former Steelcase buildings, said the pyramid has a number of issues that make the property a challenge.

The building is too big to divide and its design is inefficient for trying to makes sense of how to fill it up, he said.

“I don’t see it being traditional office,” he said. “To find a large enough user for it is going to be challenging.”

Another issue Shoemaker has with the building is its location. While its proximity — about three and half miles — to the Gerald R. Ford International Airport and its easy highway access to M-6 are positives, Shoemaker said more companies are looking to urban areas. The pyramid’s suburban location makes the property a little less interesting to him, he said.

But CBRE’s Martin said many stakeholders have an interest in getting the pyramid occupied.

“When we went out to do the marketing for this property, we took a broad-based campaign nationally and internationally to see what kind of occupiers are out there,” he said. “Combined with the fact (Steelcase) will be vacating the building at the end of this year, we’ve been aggressively marketing it.”

Still, Martin said finding the right type of occupier that can take advantage of the space is like finding a needle in a haystack.

CBRE continues to host a number of prospective buyers to tour the facility, primarily because of interest in the building’s uniqueness, but serious activity is more reserved, Martin said.

He said his company is also in talks with The Right Place Inc. and the Michigan Economic Development Corp. about the potential to use the facility in attracting a new company to West Michigan. According to a Site Selection Magazine report, Steelcase said all of the Fortune 100 companies have visited the facility at some point.

“This is an institutional-grade facility priced well below replacement cost,” Martin said, noting he’s open to “creative ideas” for the site. “It’s an opportunity to get a lot of space at a pretty attractive offering price.”

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