GRAND RAPIDS — With more than 530 new apartments and at least $115 million in new investment, the pipeline for mixed-use development remains strong along the Michigan Street corridor east of the Medical Mile.
The newest proposal for the area comes from Grand Rapids-based Third Coast Development LLC, whose principals plan a mixed-income and mixed-use $42 million project called Diamond Place on the north side of Michigan Street, just east of Diamond Avenue.
Included in those plans: Attracting an urban grocery user to the ground floor of the development.
“Grocery is something we’ve always wanted to bring to the corridor and would set us apart if we had a new urban grocer,” said Third Coast principal Max Benedict, who added that the firm is in talks with an unnamed grocery tenant to occupy the approximately 15,000-square-foot space.
Besides bringing in a needed grocery option to an area the U.S. Department of Agriculture describes as a “food desert” because of its lack of options, Third Coast will offer a mix of market-rate and rent-subsidized housing at the site. The property is currently occupied by Proos Manufacturing Inc., which will move operations to its other facility on Oak Industrial Drive.
While the rest of the development occurring along the corridor consists of market-rate residential space, Third Coast focused on the affordability of the new housing in its project based on the primary concerns it heard from existing neighborhood residents, Benedict said.
Principals at Third Coast worked closely with the Michigan Street Corridor Plan, a public-private initiative that sought to guide development for the stretch of Michigan Street spanning from the East Beltline to downtown Grand Rapids.
The plan, formally adopted by the Grand Rapids City Commission in June 2015, sought to map out development nodes and encourage mixed-use projects and long-term transit plans.
Third Coast’s proposed development was used as a demonstration project of the types of development the plan sought to encourage.
“During the process, we took the goals and actually took the pro forma and had citizens design what it would look like,” said Suzanne Schultz, director of the Grand Rapids Planning Department. “The developers took it seriously. The community was very clear on wanting mixed-use and mixed-income, as well as wanting retail.”
Bringing the desired affordable housing options to the corridor has not been an easy task, according to Benedict.
The development firm has layered multiple tax credits and financing on top of one another to get the project closer to the finish line.
Most recently, the development project was awarded federal Low Income Housing Tax Credits (LIHTC) from the Michigan State Housing Development Authority (MSHDA). The project will receive $1.4 million annually over 10 years to subsidize the rent of 123 of the 168 units. An additional 98 units will be income-restricted.
To assist with the cleanup of the manufacturing site, the city’s brownfield authority awarded about $10.4 million to the project, pending state approval.
The developers also plan to make use of federal New Market tax credits, PILOT (payment in lieu of taxes) and the state’s Community Revitalization Program (CRP).
Third Coast Development partnered with Okemos-based PK Housing and Management Co. for assistance with the LIHTC and New Market credits.
Some of the financing programs still need approval from the Michigan Economic Development Corp. (MEDC) board of directors, which could come in the next month, Benedict said.
Once all the financing gets approved, the firm hopes to begin demolition work on the Proos facility and break ground in June or July. Benedict expects the buildout to take 18 months. Third Coast is working with architecture firm Progressive AE and Pioneer Construction Co.
Moreover, the developers had to alter some of the original plans for Diamond Place. Initially, Third Coast wanted to buy the Proos site and the adjacent party store located at the northeast corner of Michigan and Diamond. However, principals at Third Coast Development and owners of The Party Cooler Inc. could not come to terms on price, making the acquisition cost-prohibitive for the developers.
“With this project, we had a very grandiose vision,” Benedict said. “We view this as a bookend, with the Medical Mile on the other end. This is the eastward frontier of Michigan Street.”
Other developments underway along the corridor suggest continued growth in the area.
In the barely one-mile stretch between the Diamond Place site and the cluster of medical and scientific research buildings on the Michigan Street hill, there are at least three other residential and mixed-use projects in various stages of development.
The nearby projects include:
- Lofts on Michigan, a 616 Development LLC project at 740 Michigan St. NE that will offer 54 new market-rate apartments, underground parking and unnamed ground-floor retail tenants.
- A $50 million, 287-unit, market-rate apartment complex aimed at students and young professionals that Valdosta, Ga.-based RISE Real Estate is building between Grand and Benson Avenues just north of Michigan Street. The development will include a parking ramp.
- Third Coast Development’s two-building, $7.4 million project at 555 and 601 Michigan St., which will feature a total of 26 market-rate apartments and 5,900 square feet of retail.
The new buildings are expected to open this spring and follow previous developments from the last several years along the corridor, such as Lumberyard Lofts and MidTowne Village, both of which are Third Coast Development projects.
Many in the city’s urban planning and development community have been following the growth of the Michigan Street corridor for a long time. The stretch’s proximity to downtown and the health care infrastructure to the west make the location ideal for adding new housing and retail amenities, according to commercial real estate sources.
“For the Michigan Street corridor, there’s something for everyone,” Benedict said. “It’s all different economic classes. We’re working toward having all different types of amenities, from restaurants to dry cleaners to hopefully a grocery store. The cliche thing to say is ‘live, work and play,’ but that’s exactly what we’re going for and we think we’re getting closer with each announcement we make.”
Editor’s Note: This story has been updated from its previous version to add that Third Coast Development partnered with PK Housing and Management Co. on the LIHTC and New Market credits. It has also been updated with comment from The Party Cooler’s owner.