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Saturday, 18 August 2018 17:34

Stately quarters or royal mess? Polarizing Grand Castle embodies developer’s dream for luxury living

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The polarizing Grand Castle apartment complex in Grandville features 522 units and amenities including free parking, a pool and fitness center. The concrete structure’s modular construction and scale allowed developers to deliver units at rents in the range of $1-$1.40 per square foot, well below the rates for newer apartments in and around downtown Grand Rapids. Executives at property management firm Land & Co. say they have about 325 people on a waiting list for the property, while about 50 people have put money down on an apartment at the Grand Castle. The polarizing Grand Castle apartment complex in Grandville features 522 units and amenities including free parking, a pool and fitness center. The concrete structure’s modular construction and scale allowed developers to deliver units at rents in the range of $1-$1.40 per square foot, well below the rates for newer apartments in and around downtown Grand Rapids. Executives at property management firm Land & Co. say they have about 325 people on a waiting list for the property, while about 50 people have put money down on an apartment at the Grand Castle. PHOTO: KATY BATDORFF

GRANDVILLE –– Amid an apartment building boom across West Michigan, the Grand Castle stands out in ways few other projects do.

Standing 198 feet tall –– just shy of the 200-foot threshold that would require additional approvals from the Federal Aviation Administration (FAA) –– the Grand Castle dominates the skyline along I-196 southwest of downtown Grand Rapids. Indeed, the precast concrete structure, which weighs an estimated 200 million pounds, serves as a marked departure from the boxy mid-rise buildings that have become commonplace in modern apartment development.

Inspired by Castle Neuschwanstein in Bavaria, the building’s overall appearance, size and scale have made it the butt of numerous jokes on social media and have led some commercial real estate executives to privately question how the project ever secured financing, let alone whether it will be able to attract tenants.

As developer Roger Lucas brushes aside jokes about jousting and mead swilling, he concedes that he’s banking on the Grand Castle’s excess as a selling point. He cites a yet-to-be-installed multi-tiered water fountain in the facility’s courtyard as one example.

“If you lived here, wouldn’t you like that stuff?” said Lucas, principal with The Grand Castle LLC.

Lucas is also a co-owner of Wyoming-based multifamily property management firm Land & Co., which is handling leasing and management of the project but is not involved in developing it.

“I might not make money as quick, but I’ll be smiling,” Lucas said of the expensive features he has planned for the project. “If this was my first project, I’d be really nervous.”

While Lucas relishes in the project’s grandiosity and excesses, the design has riled the ranks of architects in West Michigan.

Ted Lott, a principal with Grand Rapids-based Lott3Metz Architecture LLC, described the Grand Castle as “Brutal Disney by the freeway” and “post-capitalist absurdism.” Others who spoke on background referred to the project in terms ranging from “provocative” and “gaudy” to “ill-conceived,” “misguided” and “gimmicky.”

Still, even a harsh critic like Lott can find some silver linings in the project. While calling it a “roadside oddity,” he said the Grand Castle could “be an actively used part of our regional culture, so it won’t be passive. It’s bringing new and needed housing to our community and that’s good.”

The project’s architect, Matthew Gove, a managing member at Winter Park, Fla.-based Fugleberg Koch LLC, did not respond to a request for comment.

A different approach

Built along a retention pond on the site of a former mobile home park, the apartment complex also includes a handful of multi-story penthouse units, one of which measures approximately 10,000 square feet and features a ballroom.

Close observers of the West Michigan apartment market tend to agree that going all in on amenities can help drive demand for a project. They also believe in the old adage that all publicity is good publicity for attracting attention to a project like the Grand Castle.

“Nothing like this has been built, but having some unique features can’t hurt,” said Matt Jones, an associate vice president in the Grand Rapids office of commercial brokerage Colliers International Inc. who specializes in multifamily investments. “Everyone knows what the Castle is, so from a PR perspective, they’re not doing bad.”

The Grand Castle’s bevy of amenities, such as free parking, a pool and fitness center, could also work in its favor, according to Jones.

“As tenants have more choices, it’s coming down to an amenities arms race,” Jones said.

Land & Co. executives say that they’ve received interest from about 400 people who want to live at the Grand Castle. The company maintains a waiting list with about 325 names, while about 50 people have put money down on an apartment, according to Troy Zapolski, executive vice president at Land & Co.

The leasing and management company had been hesitant to take deposits from more prospective tenants because of some construction delays, but it now believes that people will be able to begin moving into certain units by Sept. 14. Additional units should be ready for occupancy in the following weeks as build-out continues at the site.

‘Reasonable’ luxury

The total cost of the 522-unit Grand Castle project remains unclear. Lucas would only say the project costs more than $50 million, but declined to get more specific on overall construction and development costs.

The developer is financing the project with a mix of his own equity and debt from Minneapolis-based U.S. Bancorp.

Lucas also is serving as the Grand Castle’s construction manager, which he notes results in a significant cost savings for the project. As well, the Grand Castle’s scale and modular construction, known as Outinoord, allow the developers to deliver apartment units at a much lower rate than many of the other newly-built developments in the market, according to executives.

Asking rents for new units at the Grand Castle fall in the range of $1-$1.40 per square foot, which includes a range of amenities not always found in smaller apartment developments.

By comparison, newer apartments in downtown Grand Rapids and the surrounding areas rent for $1.50 to $2 per square foot or higher, according to various commercial real estate reports.

“We’re affordable castle living. We’re building something that everyone can afford to live in,” said Zapolski, adding that the Castle’s rents –– which cost $700 at the low end for a 530-square-foot studio –– could still be out of reach for some tenants. “But the majority can live (here) at a reasonable price for luxury living.”

Adding capacity

Quantifying the impact of a massive new suburban apartment project — castle or otherwise — can prove tricky. Jones at Colliers International said it’s still too early to tell what the influx of hundreds of new units could mean for the overall market.

He pointed to an April report from Colliers that determined occupancy for apartments in the Grand Rapids area continues to hover above 90 percent, even as hundreds of new units have come online in recent months.

An analysis by MiBiz of apartment listing services found that only a handful of landlords are pitching incentives to would-be tenants to get units filled.

The existing dynamic of high demand and limited supply has at least one long-time West Michigan real estate executive thinking the project could have a chance for success.

“We’re in an extraordinary period of boom. We’ve got incredible inward migration, and the development is bringing more residential units to the region,” said Sam Cummings, managing partner at Grand Rapids-based CWD Real Estate Investment Inc., which owns and manages a mix of office and retail holdings, as well as some residential properties. “There is more than likely a price by which that thing is full. I don’t pretend to know what that is.”

Catalyst project?

Local officials hope the Grand Castle could have a more holistic impact on the 28th Street corridor near the I-196 interchange.

“I’m hoping it will be a catalyst for more redevelopment in that area, which would be a real benefit,” said Grandville Mayor Steve Maas, noting the project could house 1,000 new residents in the suburban community. “28th Street would benefit from some reinvestment in that area.”

For his part, Lucas said the project was designed to draw more people into the community.

“One of the goals is that you have … something that is unique,” Lucas said. “Second of all, I think we’ll have a tourism problem because when they come down the (I-196) freeway and they see this thing in the middle of the freeway, they’re like, ‘What is that?’”

As he shrugs off criticism about the project’s design, Lucas is betting that there’s truth in his frequently used marketing line: “Every girl wants to be a princess.” Living in a castle — the Grand Castle — offers that opportunity, he said.

“I just think there’s a big group of people (that want to live here) and I think it’s even in the back of our minds as Americans — even though we don’t have that many castles — they’re kind of cool. They exude power, strength,” Lucas said. “I’m just trying to tap into some different ideas. I’ve filled quite a few apartments in West Michigan for 33 years; I know what the boxes look like. Why not do something different?”

Read 11879 times Last modified on Sunday, 19 August 2018 19:30

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