With a commercial real estate development pipeline that stretches into 2019, the forecast for the industry in West Michigan remains bright. MiBiz periodically checks in on the status of proposed developments. This report highlights several projects from around West Michigan and examines where they currently sit in the development pipeline.
601 Bond Project
The delayed 16-story mixed-use tower in Grand Rapids’ North Monroe neighborhood could be moving forward in the coming months.
Brad Gordon, director of national residential acquisition for New York City-based real estate firm Time Equities Inc., confirmed to MiBiz that the company’s proposed $53 million mixed-use tower at 601 Bond St. NW will likely break ground in August, with an anticipated build-out of 18-24 months.
More than a year ago, the company proposed the project for a vacant site east of Monroe Avenue and kitty-corner from the existing Icon On Bond, an apartment building Time Equities acquired out of foreclosure in 2013.
Gordon said the company had some “obstacles” getting the project off the ground, notably that Time Equities had capital tied up in a Chicago project it was building. However, he now fully expects the Grand Rapids development to move forward.
Plans for the 601 Bond project include about 200 market-rate apartments, ground-floor retail space and a parking ramp.
Concept Design Group PC is serving as the architect on the project, while Pioneer Construction will handle general contracting.
Developers in the Grand Rapids area have begun expressing some caution when it comes to adding new apartments, particularly in the immediate downtown area, where more than 1,000 units are slated to come online in the near future.
Still, Gordon believes that Time Equities’ timeline for the project as well as its location in close proximity to major job centers make it stand out.
“In terms of the new jobs that are being created relative to the permits for new apartments, that ratio is still very strong, and it’s very strong relative to the rest of the country,” Gordon said. “And after 2017 and 2018, if you look at the pipeline after that, it’s not very much. We’re looking at (opening) in 2019, and at that point, a lot of the supply will have been absorbed.”
Responding to a dearth of industrial space in the current market, Robert Grooters Development Co. hopes to add another 1.1 million square feet of manufacturing and industrial space by early next year.
The Grand Rapids-based development company is in the process of developing the four-building Area 52 industrial park just east of Patterson Avenue and immediately south of Gerald R. Ford International Airport.
Wolverine Building Group is currently building the second building totaling 330,000 square feet that’s expected to be completed by the fall, according to Kyle Grooters, marketing manager for Grooters Development. Two more buildings will follow, he said.
“We can’t put them up fast enough,” Grooters said, adding that while no tenants have signed leases as of yet, the company is in discussions with numerous interested companies.
To that end, most current real estate market reports put the vacancy rate for industrial space in the region at around 5 percent.
The Grooters buildings at Area 52 will be split up into suites of about 50,000 square feet with lease rates advertised at around $3 per square foot.
“It’s a very flexible building and very cost effective,” Grooters said. “We’re getting a lot of interest for 100,000 square feet and a lot of interest for 30,000 square feet.”
Grooters was unable to disclose the total project cost.
201 Market St. SW
Atrimmed-down pool of developers will submit plans for redeveloping a major riverfront site on the south end of downtown Grand Rapids.
After going through a Request for Qualifications (RFQ) process that began in April and elicited interest from five firms, the city of Grand Rapids has invited three developers to submit plans for the publicly-owned 15-acre site at 201 Market St. SW. The plans are due by late August.
The city invited Grand Rapids-based Rockford Construction Co. Inc., Indianapolis-based Flaherty & Collins Properties and Southfield-based REDICO LLC to submit proposals for the site.
The companies all demonstrated technical and financial capabilities to acquire and redevelop the property, according to a statement from the city.
Two firms were eliminated from consideration as part of the RFQ process.
Following the Aug. 25 deadline to submit proposals, a broad coalition of public and private organizations will evaluate the submitted plans and make a recommendation to the Grand Rapids City Commission.
The city has tried to take a new approach to disposing of public properties with the 201 Market site, as MiBiz previously reported. Specifically, city leaders hope the site development will consider a broad and “equitable” range of uses.
“I think in the past, the city has been very reactive and responded to a developer’s idea for a site,” Grand Rapids Mayor Rosalynn Bliss told MiBiz for a previous report. “I would say in the future, we should be much more proactive and we should be identifying what the needs of the community are, what the values are. And then say: ‘This is what we see as the best redevelopment of the site.’”
Downtown Muskegon’s long-awaited market-rate apartment project has started to take shape.
The seven-story Highpoint Flats, located in a former bank building at the corner of 1st Street and Western Avenue, will offer 47 apartments and three floors of commercial space when it opens next summer, according to Jon Rooks, principal with Parkland Properties LLC.
Rooks — whose early development projects are often credited with revitalizing a mostly industrial area north of downtown Grand Rapids — has turned his focus to the downtown Muskegon market in recent years, acquiring and operating hotels, restaurants and marinas.
But while those projects remain successful, Rooks and other investors believe the market now requires a variety of housing options.
“There’s a pretty big influx of new capital (in the downtown Muskegon area),” Rooks said. “There’s demand for both commercial and residential. It’s great to have multiple options. It’s marketing 101. It’s just better to have multiple housing options.”
Rooks specifically credited investments made by Muskegon Community College — to which he and two other entrepreneurs donated the Masonic Temple building in 2015 — as well as the emergence of craft breweries and distilleries in the downtown with helping drive demand for market-rate housing.
Upon opening Highpoint Flats, Rooks said he expects rents for the apartment units to be in the range of $1.25 to $1.50 per square foot, increasing over time.
Those lease rates fall significantly below what developers of market-rate housing are getting in the more mature Grand Rapids market, where rents range from $1.75 to $2 per square foot.
The project has received nearly $8 million in tax credits, Rooks said.
When asked how he can make the project economically feasible, Rooks said it will take some time, “but the community needs it.”
“It won’t pencil until rates go up, but we got a great deal on the building,” he said.
After about five years in the making, one of the largest recent mixed-use projects in Kalamazoo has started to take shape.
Two Kalamazoo-based developers and a well-known Grand Rapids contractor started work earlier this spring on The Exchange, a $52 million, 15-story project being built along West Michigan Avenue in the city’s central business district.
Developers Phoenix Properties LLC and PlazaCorp Realty Advisors Inc. — along with general contractor Orion Construction Co. Inc. — will offer about 60,000 square feet of office and commercial space, 133 market-rate apartments and a 300-space parking deck.
The partners anticipate construction will take about two years.
In January of this year, the project received a $6.4 million loan through the state’s Community Revitalization Program (CRP) fund, which developers say was necessary to bridge a financing gap.
“Demand has always been high for housing in downtown Kalamazoo,” Phoenix Properties principal Gregory Taylor told MiBiz for a previous report. “The difficulty is the equation of cost versus rental (rates). We’ve had to be patient and very creative about how we secured incentives because the costs haven’t gone down and rents haven’t appreciated. We couldn’t assemble the adjacent land so we decided to go vertical. All of that has helped our numbers.”