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Sunday, 09 July 2017 14:34

DeVos-held firm gets loan deferment on GR facility amid struggle to fill retail space

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The Michigan Strategic Fund approved an 18-month deferment on loan payments for state incentives provided to RDV Corp. for The Morton redevelopment in downtown Grand Rapids. The investors cited struggles in leasing the building’s retail space in requesting the deferment.  The Michigan Strategic Fund approved an 18-month deferment on loan payments for state incentives provided to RDV Corp. for The Morton redevelopment in downtown Grand Rapids. The investors cited struggles in leasing the building’s retail space in requesting the deferment. Courtesy Photo

GRAND RAPIDS — After running into challenges with leasing retail space at a prominent downtown redevelopment, a DeVos-held entity got permission from the state to delay its incentive loan repayments.

The company behind The Morton, which was redeveloped and managed by Grand Rapids-based Rockford Construction Co. Inc. in 2015, has struggled to lease ground-floor and lower-level retail space in the facility, according to documents filed with the Michigan Strategic Fund.

While the developer has successfully rented commercial offices and market-rate apartments in The Morton, it has leased only 38 percent of the 38,000 square feet of retail space and has no negotiations underway currently with possible tenants, according to the MSF briefing documents.

That struggle to lease the retail space led DeVos family company RDV Corp., the investors in the project, to request an 18-month deferment on the loan repayment related to state incentives.

The MSF board approved the request in late June. The entity previously had awarded the $27 million project more than $4.3 million in incentives in February 2015.

For its part, Rockford executives attribute the challenges to the site’s original design.

“The Morton ground floor is a unique space and very well located along Monroe Center,” Mike Mraz, managing partner of real estate development for Rockford Construction, said in an email to MiBiz. “As a renovated former hotel, the available retail and restaurant opportunities are large spaces … that are original to the building. We continue to receive interest, and it will take the right operator to utilize the location most effectively.”

Lease rates for the available spaces are listed at between $12 and $20 per square foot and tenants are responsible for all utilities and upkeep of their spaces.

Additionally, the MSF documents note that 82 of the 99 residential units in the 13-story building have been leased.

According to commercial real estate sources, a combination of the low visibility related to the building’s original design as a hotel and the need for upfront investment from any new tenants serve as key challenges to getting the retail space leased up.

“It’s a unique space just waiting for the right user or concept,” said Chris Prins, an associate at Grand Rapids commercial brokerage Colliers International Inc., who currently has the listing for The Morton retail space. “But it’s going to take quite a bit for a build-out.”

In late May, boutique retailer Apothecary Off Main moved into 779 square feet of space on the ground floor of The Morton building along Monroe Center. The company previously occupied space in the Rockford Construction-managed retail incubator known as MoDiv.

While retail as a whole has suffered in recent years as more consumers have turned to e-commerce for their shopping needs, many sources still say that small, specialty retail — particularly in urban environments — can have a bright future.

Mraz shares that sentiment with regard to space at The Morton.

“We continue to be confident in downtown retail,” he said.

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Nick Manes

Staff writer

[email protected]

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