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Sunday, 13 April 2014 21:40

Developers plan extended-stay hotel, apartments for Waters Building

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Developers plan to convert one of Grand Rapids’ oldest office buildings into 40 market-rate apartments and an extended-stay hotel — and maintain some of its existing commercial tenants.

Visser Brothers Inc. plans to overhaul roughly 150,000 square feet of the six-story Waters Building after buying the building from C-III Asset Management LLC, President Bill Mast confirmed to MiBiz.

Visser is partnering with retail developer and manager EdMark Development Co. on the redevelopment project, he said.

“The building is fantastic,” Mast said. “It’s historically significant and a significant piece of downtown, but it’s been a victim of the economy with sagging rents. It’s a good time for it to have something new and different done with it.”

MiBiz reported in December that Three Oaks Group LLC and an undisclosed partner were under contract to buy the Waters Building out of receivership after Three Oaks lost the building to foreclosure in 2012. At the time, the purchase price was said to be around $13.3 million, or less than half of what Three Oaks originally paid for the facility, which they bought for $27 million in 2006.

Visser was the undisclosed partner and ended up being named on the purchase agreement, Mast said. Three Oaks is still associated with the project, but is no longer a partner on the deal, he said.

Two tenants — law firm Rhoades McKee and insurance brokerage Hylant Group — are vacating their offices in the coming months for space at 55 Campau Avenue and 85 Campau Avenue, respectively. Visser is also building out those spaces. Once both companies move, the Waters Building will be less than 60-percent occupied, Mast said.

“The first thing we’ll have to do is make room for the new uses and consolidate office uses,” he said. “Right now, the tenants are fairly dispersed, so we’ll be working on the configuration and consolidate most of the office layout on the lower floors.”

Work on the office reconfiguration is anticipated through 2014 with major construction starting toward the end of this year, Mast said.

“There won’t be any further (reductions in office space), but we’re adding new uses to current vacant space,” he said.

The hospitality space will take up a large block of the building’s south end. The hotel will be operated by a national brand with a long-time interest in downtown Grand Rapids, said Mast. He declined to disclose which company will manage the hotel operations, but said that an announcement is forthcoming.

Most of the apartments, a proposed mix of one-bedroom and two-bedroom units, will occupy the upper floors of the building’s north end. The designs for that portion of the redevelopment project are still in the planning phase, Mast added.

With a 1-acre footprint, the facility has a number of design challenges that make redeveloping the property difficult, sources familiar with the space told MiBiz. Internally, the building has poor natural lighting and isn’t an efficient use of space, sources said.

Plans from the firms partnering on the project address both these issues, Mast said. Steve Fry and Tom Tooley of Grand Rapids-based Concept Design LLC are providing the architectural work for the redevelopment.

“This project is a chance to fill a missing niche in the hotel market — which studies have shown is needed — and it’s a chance to bring a building that deserves to be full and vibrant back to where it should be,” Mast said.

With a number of hotels already in development and an influx of new residential units also on the way in Grand Rapids, the project still isn’t in danger of saturating the market, Mast said. The developer said he believes not all of the proposed hotel projects are viable and that the incremental addition of
residential units should not affect the marketability of his project.

“We don’t think we’re tipping the scales with anything we’re doing,” Mast said.

Read 9363 times Last modified on Sunday, 13 April 2014 21:42

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