GRAND RAPIDS — Sturgeon Bay Partners continues to actively pursue redeveloping the sprawling Sligh Building just south of downtown Grand Rapids, but will likely scale back the number of residential units as construction-related costs escalate.
The Detroit-based developer has yet to finalize its plans for the Sligh Building, but is engaged with the Grand Rapids Planning Department “to figure out what the right fit is,” Sturgeon Bay Partners co-founder John Gibbs told MiBiz.
Gibbs cited the large scope of the project and the “challenging” state of the construction market as factors leading to delays involving the project.
“Like every other developer, we’re experiencing higher interest rates. Certain line items are coming down, like lumber, but other materials are going up (in price),” Gibbs said. “But it’s still full speed ahead for the project. We’re excited about it and still looking forward to delivering a couple hundred units of much-needed housing.”
Sturgeon Bay Partners purchased the building at 446 Grandville Ave. SW in February 2022. The company’s original conceptual site plan, unveiled in May 2021, called for 753 apartment units across three buildings, plus commercial space, a cafe and a five-story parking garage.
However, the total number of apartments included in the project will likely be a little lower than the initial proposal, Gibbs said, noting the company also is exploring whether to add more uses to the project, such as light manufacturing.
“We’re still working through the plan,” Gibbs said. “We are exploring all options for the space, but are still planning on doing a couple hundred apartments, retail and we’re looking at some other options with different uses as well. We are charging ahead on the project and starting work next year.”
The Sligh Building recently served as the backdrop for The Right Place Inc.’s Developer Day event, which drew commercial real estate executives from across the state to the greater Grand Rapids area in late September.
The event also invited attendees to tour the former industrial building’s upper floors, during which an old freight elevator creaked open to reveal a sprawling, wide-open floor plan with seemingly endless rows of paint-chipped support beams.
A Sturgeon Bay Partners executive explained during a tour that repurposing the former industrial building requires working around the support beams and making sure each unit has access to windows. The facility’s size also comes with positives, including having extra space to add more amenities for tenants.
The development team has engaged in “pretty in-depth conversations” with well-known local and national tenants that are interested in moving into the commercial space, Gibbs said.
“We’re just excited about cleaning up and restoring the project in the right way,” he said. “It’s a bit of an eyesore right now. It’s the last adaptive reuse project of its size that hasn’t been rehabbed. I think when it’s completed, it will really make a statement.”
Additionally, Sturgeon Bay is currently weighing whether to apply for federal historical recognition for the Sligh Building, which would unlock the potential to apply for federal historic tax credits for the project. The company expects to hear back in the next couple of months about the feasibility of placing the site on the National Register of Historic Places, Gibbs said.
Executives are engaging in conversations with the federal government to decide if it makes sense because of the added construction costs that come with adhering to the historic requirements, Gibbs added.
Adding the historical designation could also lead to additional project changes. The original site plan called for demolishing a portion of the Sligh Building, but Sturgeon Bay would likely need to keep the whole building intact if it pursued tax credits, according to First Holding Management, the building management company.
Sturgeon Bay currently is involved in a historic project near the Fox Theatre in Detroit, but has yet to pursue a project at the scale of the Sligh Building, according to executives.
Boston-based Touloukian Touloukian Inc. is serving as the project architect, while attorneys in the Grand Rapids office of Barnes & Thornburg LLP are acting as the developer’s legal adviser.
The Sligh Building will mark the developer’s first project in West Michigan, as Sturgeon Bay Partners focuses mostly on the east side of the state and in the Carolinas, Gibbs said. He added that the company is excited about the high level of development activity happening around Grand Rapids, including the outdoor amphitheater along the river.
“This district will really be thriving,” he said. “We’ve been really pleased with working with the city and various organizations in the last year or two and how progressive the market has become. We’re really excited to dive into hopefully other projects in Grand Rapids as well.”