GRAND RAPIDS — The largest bank headquartered in Michigan wants to increase its profile in downtown Grand Rapids in the years ahead.
For Midland-based Chemical Financial Corp. (Nasdaq: CHFC), that could include establishing a “substantial” office presence at a recently proposed twin-tower development in downtown Grand Rapids, MiBiz has learned.
Officials at the bank and at developer Orion Construction Co. Inc. confirmed the two parties are in discussions for Chemical to relocate its regional operations to the development, but said a deal has yet to be finalized, pending the project securing state incentive financing in early 2017.
With Chemical Bank “maxed out” at its present office on the south side of downtown Grand Rapids, it needed more space, according to Regional President Joel Rahn. Chemical has signed a letter of intent to occupy 20,000 square feet in the building, including a ground-floor branch and administrative offices, he said.
“We just simply do not have enough space here,” Rahn told MiBiz. “There are staff members that we would like to have a presence in downtown but we simply don’t have the space for it today.”
Should a variety of factors come together, Chemical Bank could take on a co-anchor role in the proposed mixed-use towers planned for an existing surface parking lot at the southeast corner of Ottawa Avenue and Lyon Street, sources said. In that case, the bank will have a high-profile spot in the heart of the central business district and join anchor tenant Warner Norcross & Judd LLP, the Grand Rapids-based law firm that serves as the bank’s corporate counsel.
The long-standing business relationship with the law firm “just made it a very compelling opportunity for us,” Rahn said.
In downtown Grand Rapids, the bank currently operates from the former offices of The Bank of Holland — which it acquired in 2015 — at 51 Ionia Ave. SW, just south of the Van Andel Arena.
Chemical’s consideration of a beefed up presence in downtown Grand Rapids appears to have been in the works for quite some time. Commercial real estate sources told MiBiz they’ve shown bank executives other downtown Grand Rapids properties over the summer, but deals for those locations ultimately failed to come together.
“We were looking for options anyway and this opportunity presented itself. We pursued it quickly. We just think it’s a great location,” Rahn said. “We knew we needed to do something longer term in downtown to give us a little bit more flexibility on space. The opportunity presented itself at perfectly the right time for us. It lined up very well.”
‘MAKES PERFECT SENSE’
Such a move makes sense for a financial institution like Chemical Bank, according to Rajesh Kothari, managing partner of Southfield-based investment bank Cascade Partners LLC.
“The need for a more substantial presence in a metropolitan area, to me that’s not surprising,” Kothari told MiBiz. “If you’re trying to attract 100 employees, that’s one thing. But they have to get the best talent and put them where they can meet the needs of their customers. Historically, they’ve been a rural bank … so from a growth perspective it makes perfect sense.”
Sources cautioned that the developer has yet to break ground on the $60 million proposed development. To move ahead, Orion still requires state support in the form of brownfield incentives from the Michigan Strategic Fund, according to past statements from John Wheeler, president of Orion Construction’s development arm.
“We do have one user on the main floor that’s identified, and it’s a user that’s taking a substantial portion of the building,” Wheeler said at a public meeting in October. “It’s a lending institution, out-of-market, that’s coming here and going to make Grand Rapids their home, or a portion of their home. So that’s really exciting for us.”
Orion hopes to present the project to the MSF in early 2017 and then proceed on an anticipated two-year construction period.
Seeking to become what Chairman, President and CEO David Ramaker has called the “pre-eminent Midwest community bank,” Chemical Financial has quadrupled in size this decade through a series of acquisitions that include the $1.7 billion deal for Talmer Bank & Trust that closed Aug. 31. Since the end of 2009, Chemical Financial has grown to $17.4 billion in assets from $4.3 billion and has become the largest bank headquartered in the state.
The Talmer acquisition gave Chemical Financial a presence in the Southeast Michigan market, as well as in Ohio and Indiana. The bank overall has 255 offices in the three states, mostly concentrated in Michigan.
Chemical Financial previously acquired Holland-based Lake Michigan Financial Corp, the parent company of the former Bank of Holland, in May 2015 for $188.1 million.
MiBiz reporter John Wiegand contributed to this report.
Editor’s note: This story has been updated from its original version.