rss icon

Sunday, 19 February 2017 18:05

Ada businesses concerned over building costs, parking in redevelopment project

Written by 
Rate this item
(3 votes)
A new 14,000-square-foot location for Kingma’s Market, currently being built by First Companies, is just one of many projects included in the $13 million redevelopment of Ada’s downtown. But as new buildings take shape, small business owners say they’re worried about escalating rents and a lack of parking. A new 14,000-square-foot location for Kingma’s Market, currently being built by First Companies, is just one of many projects included in the $13 million redevelopment of Ada’s downtown. But as new buildings take shape, small business owners say they’re worried about escalating rents and a lack of parking. Courtesy Photo

ADA TOWNSHIP — More than a decade into the “Envision Ada” planning process, stakeholders can now see construction activity on new mixed-use buildings they hope will attract new retailers, restaurants and residents to the village. 

But the slow progress on the $13 million public-private project has revealed unique challenges for a redevelopment that encompasses an entire village downtown. In particular, the project has been dogged recently by concerns over a lack of parking and the escalating costs of commercial space, which are on par with high-traffic retail corridors in greater Grand Rapids. 

Small business owners in Ada tell MiBiz they’re worried about being priced out of the village, which has become known for its locally-owned shops and restaurants, the very businesses the redevelopment hopes to attract. 

“We’re still negotiating, but we’re not to a deal yet,” said Matt Michiels, owner of Ada-based Gravel Bottom Craft Brewing & Supply, who had previously announced plans to expand to a new, larger location in the village. “We’re trying to figure out costs for a new building and land and make sure it all makes economic sense. If the costs don’t make sense, it would hinder us.” 

As a major property owner in the village and a key developer of the project, Amway Corp. executives say they’re paying attention to price sensitivity. 

“The market usually sets itself,” Amway Vice Chairman Bill Payne said during a recent public hearing on the project. “But at the same time, I do think we have to watch and make sure we’re enabling businesses that are here so they can continue to be here and survive, coupled with new businesses we bring in. We’re going to have ebb and flow on this.”

A key concern for Amway and other business owners — the lack of communication and coordination on the part of the village — appears to be getting better. The January public meeting Payne attended brought together township administrators, Ada’s Downtown Development Authority, and the township’s Planning Commission. 

“The momentum for Ada is incredible, but let’s not lose this opportunity,” Payne said.

Ada business leaders say Payne’s warning to township officials seemed to strike a chord, noting that work in the downtown has progressed since the January meeting.

“All these entities had worked in silos. It’s kind of been no one’s full-time job,” said Ashley Jolman, who took the role of executive director of the Ada Business Association in October. “But communication has improved … since that meeting.” 

According to Ada Township Supervisor George Haga, the municipal government has heard the concerns and is trying to improve its role in the project. 

“We just have to work through these matters,” Haga said. “The public continues to be supportive, but they’re concerned about changes to their business.” 

PARKING DILEMMA

Direct-selling giant Amway has been a key driver in the Ada redevelopment project, which is located across Fulton Street from its 80-building, 3.5 million-square-foot headquarters. The privately-held Amway, which had sales of $8.8 billion in 2016, owns 35 parcels in the village redevelopment. 

The company is developing its part of the project through Geld LLC, a subsidiary. Payne typically serves as the main liaison between Amway, the township government and the downtown business owners, according to several sources contacted for this report.

While most Ada business owners praise the company’s involvement in the redevelopment, the company’s business decisions have also complicated the project. Early iterations of the redevelopment project included plans for an Amway-funded parking structure with more than 300 spaces to be built within the new downtown. But when costs came in at approximately $12 million, Amway backed out of its plans to pay for the ramp. 

Without the parking structure, visitors to the destination village will have limited options, given that Ada is only a few square blocks in size. The downtown is bounded by the Thornapple River and Fulton Street/M-21 with only narrow streets leading out to traditional suburban sub-developments.

The Envision Ada plan called for the village to compete with other upscale downtowns around West Michigan, including cities like Rockford and East Grand Rapids, but those communities have neighborhoods surrounding them with plentiful on-street parking. Without parking capacity, Ada will struggle to support a walkable downtown with a mix of shopping, service-oriented companies and dining options, according to current business owners.

“When we talk about other communities … they have outlying grids for people to park in,” said Sarah Andro, a DDA member and owner of Saburba, a downtown Ada restaurant. “We don’t have that. We have a river and a highway. People can’t walk in and bike in safely, so families are driving cars to get here.”

At the January meeting, Payne said a parking ramp remains a possibility, but the stakeholders need to explore other options and consider the results of an updated parking study that’s planned for release later this year. Following the January meeting, the township appointed a subcommittee to evaluate options for studying other parking options. 

“Decisions are based on options,” Payne said at the meeting. “I hear a lot of chatter, but I don’t know the facts and data on what my options are.” 

COST CONCERNS

In addition to parking concerns, small business owners say the standards in the redevelopment plan have led to escalating building costs that could affect the types of tenants the village will be able to attract. 

Although construction costs have escalated nationwide, the new commercial buildings in downtown Ada will have rents in excess of $30 per-square-foot, sources said. By comparison, top retail corridors in high-traffic areas like 28th Street and the East Beltline Avenue have similar asking rents, according to a recent report from the Grand Rapids office of Colliers International Inc., a commercial real estate brokerage firm.

While the region’s commercial corridors typically attract large national chain retailers, stakeholders in Ada said they want to maintain the village’s locally-owned small businesses. 

A list supplied to MiBiz by Ada Township Supervisor Haga showed more than 40 businesses that have stated a desire to remain in the redeveloped village, while a handful of companies indicated they plan to leave or move to other parts of Ada, mostly along Fulton Street west of the village. 

However, some business owners, including Gravel Bottom’s Michiels, say they’re still evaluating costs and have yet to make a final decision on whether they can afford the increased rents.

Still, Michiels noted that Amway has been very patient and accommodating as the craft brewery has gone through multiple iterations of its expansion in an effort to reduce costs. 

While costs remain a concern for a multitude of stakeholders, some businesses with plans to expand to the village said they’re paying below-market rents. 

Alan Hartline, president of Grand Rapids-based Kingma’s Market, said that as an anchor tenant for the redeveloped village, he was able to negotiate a competitively priced lease relative to the $30-per-square-foot asking rents elsewhere in the village. 

The specialty grocer with a flagship location on Plainfield Avenue plans to open a 14,000-square-foot store in Ada later this year. 

Hartline told MiBiz he believes the presence of a reputable grocer like Kingma’s will make the village a destination and help out all the other businesses in the area. 

“Each situation is unique and the Geld group is sensitive to existing rents, so they’re doing what they can to bridge that,” Hartline said. “But businesses need to recognize that particularly with Kingma’s (as an) anchor, they’re going to get more traffic. At the end of the day, they may pay more and be better served.” 

--
Editor’s note: The original version of this story described the rent for Kingma’s Market in Ada as “partially subsidized,” which some readers may have misconstrued to mean that a local unit of government was supporting the business. That is not the case. President Alan Hartline said he was able to negotiate a competitive lease for the store, which he hopes to open later this year. We regret the confusion.

Read 3993 times Last modified on Tuesday, 21 February 2017 11:49
Nick Manes

Staff writer

nmanes@mibiz.com

Breaking News

December 2017
S M T W T F S
26 27 28 29 30 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 1 2 3 4 5 6

Follow MiBiz