GRAND RAPIDS — Faced with difficulty in attracting tenants, a Grand Rapids developer will halt plans for a proposed high-amenity office tower in downtown’s Heartside neighborhood and explore other options for the project.
Charlie Secchia, a partner at Grand Rapids-based development and property management firm Sibsco LLC, confirmed to MiBiz that the 12 Weston office tower is now on hold indefinitely.
“Leasing didn’t go as well as we would have liked,” Secchia said of the efforts to attract more tenants to the proposed 12-story mixed-use building he announced in May 2015.
At the time of the announcement, the project was slated to consist of ground-floor retail or restaurant space, a parking deck and an eight-story office tower.
Digital marketing firm Adtegrity Inc. was the building’s only announced tenant. In an email, Adtegrity President and CEO Scott Brew declined to offer any additional comment on Secchia’s decision to stall groundbreaking on the project.
Secchia said his partners completed the vast majority of the remediation and environmental work at the site. If other tenants committed to take space in the project, Secchia said he could break ground almost immediately. However, given the current economics for building new amenity-driven office space, Secchia believes breaking ground remains unlikely in the short term.
“There’s a reason not much Class A space is being built,” Secchia said, referring to the high cost of new construction, high rents and the difficulty in securing tenants for unbuilt buildings.
Secchia’s assessment of the current is largely in line with what commercial real estate brokers say they’re finding in West Michigan.
Given the amount of buildings under renovation and transitioning to Class A office facilities, developers have a hard sell with new construction currently, said Jason Makowski.
The principal and office adviser at Grand Rapids-based commercial brokerage NAI Wisinski of West Michigan said there’s still a good amount of Class B space available.
“I don’t think you’ll see much new Class A construction,” Makowski said in a conversation on the general state of the office sector in Grand Rapids.
While Secchia’s plans for a high-amenity downtown office tower may be halted, he’s not giving up on the location. The developer said he’s in the process of “looking at other options” for the vacant northwest corner of Weston Street and Division Avenue, adding that he believes the site would be successful with a housing component.
“I think the core use is going to go residential,” he said of the proposed 12 Weston project, while declining to provide any specifics at this time.