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Sunday, 14 September 2014 22:00

Retail development activity heats up in greater GR

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The Cabela’s store in the Bucktown development near RiverTown Crossings mall spurred several ancillary developments, including a strip mall with restaurants including Chipotle, Sweet Yo, Potbelly Sandwich Shop and Five Guys. The Cabela’s store in the Bucktown development near RiverTown Crossings mall spurred several ancillary developments, including a strip mall with restaurants including Chipotle, Sweet Yo, Potbelly Sandwich Shop and Five Guys. COURTESY PHOTO

Continued development activity around the new Cabela’s Inc. store in Grandville serves as a microcosm of a larger trend in big-box retail development in greater Grand Rapids.

The 80,000-square-foot Cabela’s store off 44th Street that opened last year created a ripple effect as more than a dozen other retailers and restaurants have moved to new ancillary facilities on outlots near the outdoor merchandise store.

Co-anchored by Target, the Bucktown development currently features a strip mall with higher-end fast food chains Chipotle, Potbelly Sandwich Shop and Five Guys, as well as other retailers. Grand Rapids-based Triangle Associates Inc. currently is building another strip mall on the site that will include Chinese fast food chain Panda Express.

“We’ve had consistently tremendous leasing activity,” said Scott Wierda, managing partner of Grand Rapids-based CWD Real Estate Investment, the developer for the project. “We don’t have any vacancies there.”

There is room at Bucktown for three additional buildings, Wierda said.

CWD’s continued build-out of the Bucktown development falls in line with the findings of the second quarter market report released last month by the Grand Rapids office of Colliers International.

The report noted that occupancy rates in the “traditionally in-demand submarkets of 28th Street SE, Alpine Avenue and Rivertown Parkway” were currently at 93.4 percent.

Those so-called “hot zones,” as Colliers referred to them, are getting the bulk of the attention from national retailers. Along 28th Street and primarily east of East Beltline Avenue, construction continues on myriad projects ranging from strip malls around the newly renovated Centerpointe Mall to Fox Motor Group LLC’s new Subaru dealership adjacent to its current Delta Imports store.

Developments on Alpine Avenue north of Four Mile Road are also seeing the addition of chains such as Tim Horton’s Cafe and Bake Shop and Firehouse Subs, as well as another Five Guys location.

Further south, however, the corridor still has some vacancies. For example, Grand Rapids-based independent bookseller Schuler Books Inc. closed its Alpine Avenue location last winter, and the 23,000-square-foot space near I-96 still sits empty. Nearby, the Wild Chef Steakhouse closed abruptly in June, but that building is being currently remodeled to house a Vitamin Shoppe and Mattress Firm store, said Tim Musser, a city of Walker building inspector.

LANDLORDS HAVE OPTIONS

Much of the activity over the next quarter or two should focus on stores opening additional locations in the area, particularly for those companies that have only recently entered the West Michigan market, Mark Ansara, an associate at Colliers, told MiBiz. As an example, he pointed to Nebraska-based department store Gordmans, which this year opened facilities in Muskegon and near RiverTown Crossings on Wilson Avenue in Wyoming.

According to Colliers’ latest report, sales and lease volumes in the West Michigan retail sector didn’t change significantly from the first quarter. However, what is most notable is the tightening inventory in those major corridors that’s leading to higher rental rates, Ansara said.

“We expect landlords with Class A locations to have more freedom to select tenants,” Ansara said in a video that accompanied the Colliers report. “Landlords with B and C tenants won’t have that same flexibility, but they will still see activity and new tenants.”

That situation played out at CWD’s Bucktown development, Wierda said. Getting Cabela’s to Grandville was largely the result of luck, he said, noting that the development was done speculatively because CWD had faith in the 44th Street corridor.

“(CWD is) pretty disciplined and we make sure we buy ‘A’ locations,” Wierda said. “We felt (RiverTown Crossings) was always a dominant location.”

While Cabela’s had considered a location in Walker off I-96, the deal never came together in the depths of the recession. Securing Target as the anchor of the Bucktown development helped spur Cabela’s to consider the site even though the Nebraska-based retailer typically builds stores that are visible from the highway, he said.

“They changed and wanted to be in an established retail corridor,” Wierda said. “They loved our anchor and what we were doing.”

UPSCALE SHOPS, NEW ENTRANTS

While reports suggest the strongest retail activity is in those traditional retail corridors, Wierda also pointed to the Breton Village Shopping Center at the corner of Breton Road and Burton Street, where CWD has attracted designer fashion retailers such as Anthropologie and Lululemon Athletica, a Canadian seller of yoga wear. The latter company was previously in CWD’s development in East Grand Rapids’ Gaslight Village.

The concentration of designer fashion and lifestyle stores at Breton Village could help create the beginnings of a fashion corridor that could eventually lead into downtown East Grand Rapids, Wierda said.

“A lot of cities have places where they get a lot of the lifestyle-type tenants, and we are starting to get that at Breton Village,” Wierda said. “And then you weave down into East Grand Rapids and get to some of those unique shops — Breton Village is kind of the anchor for fashion and that will start filtering right toward downtown, in my opinion.”

Nearby, CWD announced last month that upscale grocer Fresh Thyme Farmers Market — a chain with funding from Meijer Inc. — will anchor a new development across the street from Breton Village on the site of the former Michigan Athletic Club.

Many in West Michigan anxiously await the entry of Trader Joe’s and Whole Foods Market into the region, but Ansara said he would not expect to see either of the chains in the area for at least a couple of years.

One noteworthy company that’s expected to enter the West Michigan market soon is Georgia-based fast food restaurant Chick-Fil-A, said Ansara, whose firm worked with the chain.

Last year, the Chick-Fil-A confirmed its intention to come to West Michigan but never discussed the locations it was considering, according to reports. A spokesperson for Chick-Fil-A did not respond to a request for comment by the time this report went to press.

While Ansara did not have a definite opening date for the restaurant, he said the chain’s entry into West Michigan is notable because it would be its first location in the state.

Typically, chains target Southeast Michigan before looking at this side of the state, said Ansara, who speculated the decision was a reflection of Chick-Fil-A’s conservative Christian values aligning with West Michigan’s culture.

Additionally, Tanger Outlet Mall broke ground in late-August on its planned 80-store outdoor mall near 84th Street and U.S.-131 in Byron Township, the site of the former Dome World. Tanger operates two other malls in the state, one in Howell and one in West Branch, according to its website.

LESSONS LEARNED

While CWD remains committed to its numerous holdings in Grand Rapids’ downtown area, the firm believes there is still no shortage of opportunity in the prime suburban areas, some of which were hit hard during the recession, Wierda said.

Like many other developers, CWD was forced by the recession to learn some lessons about overbuilding.

“The one thing that was positive out of the recession is that it slows growth,” Wierda said. “Now there’s a lot of pent-up demand. … I know there are still some pockets that are hurting, but maybe some of that shouldn’t have been built in the first place.”

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