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Sunday, 09 July 2017 14:26

As real estate market surges, West Michigan creatives ponder their place

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Professional photographer Brian Kelly moved out of studio space at 401 Hall St. SW and into a turnkey facility on Broadmoor Avenue in Kentwood. Professional photographer Brian Kelly moved out of studio space at 401 Hall St. SW and into a turnkey facility on Broadmoor Avenue in Kentwood. Photo by Katy Batdorff

When Brian Kelly first heard about a suburban space to move his Grand Rapids-based photography studio, he ignored the idea for one simple reason: It was in Kentwood.

A professional photographer over nearly the last two decades with a book of business ranging from U.S. Senators to automakers and architectural shoots, Kelly remained unconvinced that he even needed to move his studio from 401 Hall St. SW south of downtown Grand Rapids, where he’d worked for the last five years.

The 190,000-square-foot building off U.S. 131 — formerly a Steelcase Inc. manufacturing plant — has morphed into a hub of sorts for a variety of creative firms including photographers, boutique PR companies and software developers.

But with Brian Kelly Photography LLC’s lease nearing the end of its term, he decided it was a good time to begin exploring the market. He considered renting or buying in Grand Rapids, but failed to find a suitable option.

“There’s a lot of space downtown if you want to dump $100,000 into a building just to get it ready,” Kelly said of the current real estate market. “Those aren’t opportunities to own, those are just to take a building in moderate to poor condition and get it to your standards. Anything new going up, it’s priced way out of the market.”

As a business owner with nearly 20 years under his belt, Kelly admits he has advantages that startups and other newly minted artists lack. However, he’s far from alone among creatives and artists today in paying attention to the commercial real estate market and the challenges it brings to the industry.

The issue has been top of mind for policymakers and advocates who see artists and creatives as helping to propel local economies forward.

“Since 2008, we’ve seen this commercial upswing,” said Joe Voss, director of strategic partnerships for Creative Many, a Detroit-based statewide nonprofit organization focused on the Michigan’s artistic and creative sectors. “There’s always concerns about affordable spaces for artists.”

FINDING THE SPACE

While some creatives have complained in recent months about being forced out of the Grand Rapids market because of rising rents, that was not the case for Kelly. Rather, after surveying the current market, he concluded that a move to the suburbs made practical sense for his business, even though it “gutted” him to leave the city.

Kelly’s experience differs from other entrepreneurs looking for space for their creative endeavors.

Among them is Joe Anderson, who hopes in the coming weeks to finalize a lease at an undisclosed location in downtown Grand Rapids for The Comedy Project LLC. The company will function as an improvisational comedy theater and also plans to offer a variety of classes and other events throughout the week.

In his search, Anderson found many downtown or near-downtown sites to be out of his price range. However, he believes the nature of his venture offers him some advantages.

“People are culturally open to comedy locations being in weird locations, like basements,” Anderson said. “And they’re cheaper because they don’t work for a lot of businesses, but they work for us. We’ve found some and no one else really wants them.”

INSTITUTIONAL SUPPORT

Attracting and retaining a variety of creative industries to core urban areas has become a priority in the last couple of decades for civic and business leaders in Grand Rapids and statewide.

Earlier this year, the Michigan Film and Digital Media Office, which is housed within the Michigan Economic Development Corp. (MEDC), announced that Grand Rapids, Detroit, Ann Arbor, Traverse City and Marquette had been awarded in the first round of “Creative Chambers” grants. The funding aims to attract and retain creative jobs and industries in Michigan.

Grand Rapids will receive $250,000 over the next three years, with the funds administered locally through the Grand Rapids Area Chamber of Commerce.

Over the coming months, the group will pull together and facilitate an advisory board consisting of people from different creative industries, according to Dante Villarreal, vice president of business services at the Grand Rapids Chamber. The board will be tasked with steering how the funds get used, he said.

“The chamber will facilitate the discussion and the initiatives, but the creatives are in the driver’s seat,” Villarreal said. “We’ll bring the entrepreneurial resources to the table. It’s the same opportunities any other business gets through a chamber. But now we want to do it with creatives because sometimes they don’t realize they’re a business owner.”

That public-private partnerships are emerging to support the region’s creative industry comes as welcome news to Creative Many’s Voss, who said he believes that public investment in affordable spaces for artists and creatives can pay off in the long run.

“I think, personally, there’s room for (some) kind of market manipulation on that front. Put some tax dollars toward affordable, creative spaces,” Voss said, adding that it will take time to pay off. “To me, it takes (long term investment). If you want (artists and creatives) as a component, you need to create things that create long-term stability for creative industries, and those dividends will pay off.”

UNCERTAINTY LOOMS

Many artists moved into the downtown Grand Rapids area in a wave that started in the late 1990s, largely concentrated in the Heartside neighborhood located along South Division Avenue south of Fulton Street.

While many artists located in the area in part because of the availability of live-work spaces, other pockets have since popped up, largely in formerly industrial sections of the city. However, artists and other creatives say they’re starting to wonder how long they’ll be able to stay there.

Case in point: The more than 116,000-square-foot Tanglefoot Building at 314 Straight Ave. on the city’s southwest side was recently listed for sale for $1.2 million. The building is a base of operations for numerous artists and startup businesses.

Wolf Tanglefoot LLC — an entity registered to D.J. Vander Slik, president of D.J.’s Landscape Management in Grand Rapids — acquired the building last year for $200,000, according to Kent County property records. The aging building currently has a fair amount of space that can’t be leased, but stands at about 80-percent occupied, according to spokesperson Kevin Schafer with Byron Center-based E5 Ventures LLC, a family investment office.

Lease rates vary in the building but average around $2 per square foot, Schafer added.

Commercial real estate executives marketing the property think the building will continue to accommodate creative industries in an increasingly popular corner of the city.

“It’s marketed as a redevelopment (opportunity),” said Jeff Hainer, a senior research analyst at Colliers International Inc., the Grand Rapids-based brokerage marketing the building.

Hainer doesn’t envision that a new owner would tear down the more than century-old, four-story brick building.

“There’s a good opportunity to keep that creative mix there,” he said.

Tenants of the building contacted by MiBiz largely declined to comment on the record for this report. However, some noted that they believe the Tanglefoot Building stands as one of the last hubs for creatives in the city, in particular because the current ownership offers its tenants favorable lease terms.

PART OF THE CYCLE

While the future of the Tanglefoot Building remains unknown, it serves as a microcosm of the role that artists and creative industries play in cities. Artists often are open to taking cheap space in undesirable, older buildings. In turn, that lures in more people, which eventually attracts investors, and in many cases, the artists themselves end up getting displaced.

“The artists are always the vanguard (of displacement),” said Voss of Creative Many. “The only thing worse than gentrification is no gentrification. (Artists) are the ones creating this (cultural) environment and then it sort of happens ‘to’ them as opposed to ‘with’ them.”

If cities like Grand Rapids truly want artists and the broader creative sector to thrive, it will require a diverse group of artistic talent, business leaders and government all to sit at the same table, according to Voss.

Photographer Kelly tends to agree, but adds that it’s the artists who can have the greatest cultural impact.

“These are great talking points for downtown developers, for civic leaders, to talk about the creative space and vibrancy,” he said. “But artists make places cool.”

While creatives often are drawn to urban areas, Kelly’s move to a nondescript building in Kentwood offered him myriad advantages, including a 3,000-square-foot turnkey space he currently leases with an option to buy down the road. At the new space, he’s able to serve all of his existing clients, as well as open up new opportunities for corporate clients, given the cluster of manufacturers in the vicinity of his studio.

“I think it’s like the old days of downtown (Grand Rapids),” he said of his new location, noting that one of his original studio spaces was along Ionia Avenue in the early 2000s, before the wave of development came to the area. “There’s a lot of space. Per foot, it’s much cheaper. But you have to make some compromises, as you would anywhere. You compromise a perceived ‘cool’ location for something that’s very practical, very affordable and still very convenient.”

Read 4042 times Last modified on Friday, 07 July 2017 14:29
Nick Manes

Staff writer

nmanes@mibiz.com

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