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Sunday, 25 November 2012 23:28

Parkland takes the lead in Muskegon investment

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Parkland Properties’ plans to develop the former Comerica building into apartments Parkland Properties’ plans to develop the former Comerica building into apartments
MUSKEGON — As urban development gains momentum across the country, one veteran developer plans to lead the charge in getting others interested in investing in downtown Muskegon.

Jon Rooks, president of Parkland Properties of Michigan, is about to bite off an ambitious chunk of development in and around downtown Muskegon.

Building off his successful turnaround of the Shoreline Inn & Conference Center, Rooks is planning to add between 50 and 60 homes to an adjacent piece of property that was part of the original hotel purchase in 2009.

The plan also includes the nearby HighPoint Flats, a 72-unit high-rise apartment complex at the former Comerica Bank building and a connected new two-story structure in downtown Muskegon.

The third piece: Parkland is also set to buy an unspecified building in downtown Muskegon, where the company plans to locate a new leasing, construction and sales office, Rooks said.

“It’s a cool building,” Rooks said. “It’ll be a fun one to own.”

While the plans are far from concrete, Rooks is optimistic the project would be a good step for his company. Once the purchase is complete, he said Parkland would like to find some other tenants to help fill the building.

Along with redeveloping neglected industrial properties, Parkland’s other specialty is waterfront development connected to Lake Michigan. Having grown Shoreline Inn’s revenue from $900,000 to $5.5 million annually and building the staff from 12 employees in 2009 to more than 120 employees in 2012, Rooks has a lot of faith in the Muskegon market.

His bullishness is leading him to try to get others investing in the area.

Earlier in his career, Rooks said he avoided Muskegon and focused on places like Grand Haven, Montague and Whitehall, which were more attractive at the time.

“I skipped over Muskegon the first part of my career because it had the big mall downtown,” he said. “It really wasn’t as attractive as other downtown lakeshore locations, but when the mall was torn down and then the (Sappi) paper mill, it really took the two biggest problems away from Muskegon.”

The entire downtown started over as a blank slate and the city is relentlessly pushing to relocate businesses and attract developers to do projects in the city, said Rooks, who earlier this month received the Developer of the Year award from the Urban Land Institute of Michigan.

“I know the people pushing the community economically and it’s really positive,” he said. “We have momentum with our company and our staff and (property) owners in Grand Rapids, and we think we can take advantage of that momentum with our properties in Muskegon.”

With the cost of the Muskegon development expected to climb into the tens of millions, there is a hefty upfront barrier with capital. However, Rooks is determined to see the projects through.

“Either I am going to work with investors and share some of the profits and risk to bring other people into Muskegon and give them a taste of what has been good to me with the hotel, restaurant and marina — or if I don’t find investors, then I’ll use my bank line of credit,” he said. “Either way, I’ll do it.”

Rooks’ confidence in the Muskegon market is buoyed by his similar experience developing properties in the Grand Rapids market. Over the last 10 years, Parkland has sold about some 470 units in Grand Rapids, which equates to more than $100 million in closings, $15 million of that occurring after 2008.

At the beginning of the year, Parkland’s Boardwalk property in Grand Rapids had 20 units and has since sold out, he said. Only four units remain at the company’s Union Square development, also in Grand Rapids.

With some clients, Rooks was able to cross-sell multiple properties, and he hopes to do the same with the lakeshore offerings.

“In Muskegon, we expect a similar situation where we might meet someone who is looking to rent an apartment at HighPoint Flats, and if it’s not big enough, maybe they’d rather buy a home from us in our development three blocks away,” he said. “In somewhat the same way, people who come to look for a house and might not be able to get a loan because of new restrictive guidelines that many banks have, we could help them find an apartment with us.”

In addition to building off the synergies of offering both apartments and homes, Rooks said he expects many will be interested in HighPoint Flats because the property has a Renaissance Zone designation through 2023, meaning that residents would be exempt from various state and local taxes.

Parkland has been able to make the project happen thanks to local tax increment financing and brownfield credits, the combination of which helped make the project feasible as well as competitive in pricing for rentals, Rooks said. Parkland is also walking through the final stages for receiving Community Revitalization Program funds through the state as well.

The HighPoint project is slated to start in 2013 with a finish date before the end of 2014.

The home sites, which is called Terrace Point Peninsula and is adjacent to the Shoreline Inn, are expected to have early discount pricing. Since Rooks said he purchased the land from the bank for close to 40 cents on the dollar, he’ll be able to pass on that deal to buyers.

Creating the home sites is the best way to realize the value of the land and accomplish what he thinks Muskegon needs, which is close-to-downtown living, he said.

“Housing drives retail and entertainment,” Rooks said. “It will be the least expensive way to live on the water connected to Lake Michigan that the state has seen in 15 years.”

The project is currently in the permitting phase, and while the city could still say no, Rooks believes they’ll be on board. Parkland’s previous experience with home sites included the 46-unit Bayou Meadows development in Spring Lake.

“There’s not much market-rate housing around downtown Muskegon, and there is demand for it, in our opinion,” he said. “I don’t think we need to create a market. It’s already there, just no one has taken advantage of it yet.”

If the fiscal cliff is a concern for some developers going forward, Rooks said he is putting his trust in the nation’s leader that they’ll figure out how to avoid another recession.

“I’m assuming it will get handled and I’ll be willing and able to take risk in 2013,” he said. “Obviously, if it didn’t go the right way, I’d put my plans on hold.”

Looking ahead, Rooks also has his eye on creating a 40,000-square-foot convention center on property near Shoreline Inn fronting Shoreline Drive. The project would likely involve a public-private partnership for its long-term use.

Rooks said he also plans to redevelop Grand Haven’s Wharf Marina into a 96-unit condominium or apartment complex.

Read 4200 times Last modified on Sunday, 25 November 2012 16:53

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