GRAND RAPIDS — Moving into a larger ground-floor space in the prominent Harris Building on South Division Avenue gave a boost to business at Little Space Studio LLC.
The company, which offers membership-based co-working spaces, as well as space for public events like networking and workshops, grew out of its 700-square-foot location on Hall Street, necessitating the move to 111 S. Division Ave., according to owner Alysha Lach White.
Although not a traditional retail use, Little Space Studio’s business is thriving because of its ground-floor accessibility to the public, White said.
“It’s fabulous because we can not only show the activation in the Harris building, but to actually show that a business is being built out, it’s allowed us to be very front-facing and connect with potential members, or for our workshops and meetups,” White said.
Little Space Studio operates in a corridor where the city has prioritized adding ground-floor retail space for stores or restaurants, particularly for new construction projects. However, Division Avenue has the highest vacancy rate of any street downtown at 21 percent, according to a count downtown ambassadors completed in March. The ambassadors counted whether a ground-floor storefront was active, regardless of its use.
Given the number of vacancies, some developers are starting to question the Grand Rapids ordinance that mandates ground-floor retail along some streets in traditional business districts. Instead, they’d like an easier path to activate space more creatively.
Among the developers calling for an easier path to activate ground-floor spaces is Brent Gibson, president of Grand Rapids-based Construction Simplified.
He cites his company’s proposed mixed-use project at 706 Wealthy St. SE at the former site of the Wild Bunch Motorcycle Club. Plans call for three apartments on the upper floor and 3,000 square feet of new street-level retail space.
Gibson says the new development with ground-floor retail works in the burgeoning Wealthy Street corridor, noting potential retailers already have shown interest in the space. But the same project would struggle in other areas with higher vacancies.
“Since the cost of construction can be assumed the same across all the city, if I have to put retail in a development per ordinance but my confidence in filling it quickly isn’t there, the project will never go, as the carrying cost of vacant storefronts don’t support the development,” Gibson said.
He highlighted Fulton Place at 616 W. Fulton St. and the mixed-use apartment building at 234 Market Ave. SW as prominent locations in the city with ongoing ground-floor vacancies.
Vacant by choice?
The Grand Rapids ordinance that requires ground-floor retail affects five main corridors in the city:
• Pearl Street between Division Avenue and Monroe Avenue
• Monroe Center Street between Division Avenue and Monroe Avenue
• Ionia Avenue between Monroe Center Street and Cherry Street
• South Division Avenue between Fulton Street and Wealthy Street
• Bridge Street between Seward Avenue and Turner Avenue
The city gives developers and landlords within the ordinance zones the opportunity to apply for a special land use permit for uses other than retail, like an office.
Kurt Hassberger, chief counsel at Grand Rapids-based Rockford Construction Co. Inc., told MiBiz recently that developers are beginning to speak up about first-floor retail requirements because the localized market does not always support the use. Moreover, retailers cannot always afford to pay the necessary rents, he said.
The pricing concern was echoed by Suzanne Schulz, planning director for the city of Grand Rapids.
“What people see as vacant retail may be more of a choice of the developer, either by the price points they are asking for or whether or not they’ve white-boxed the space so it’s truly usable without a tenant having to make significant investments in the building,” she said. “If you just look at a building on Fulton or Ionia and say, ‘We have a glut of vacant retail,’ it’s not necessarily because of the zoning ordinance.”
Joe Marogil, principal at Green Cane Property LLC, a commercial real estate developer in Grand Rapids, said during a recent MiBiz retail roundtable that developers need to be selective with ground-floor retail tenants because of the financial risk involved in preparing the space.
“The most obvious example is the ground floor at 38 Commerce,” Marogil said at the roundtable. “It’s been empty ever since they redeveloped that. It’s not because no one wants to move in there. It’s because it’ll cost them $700,000 to put it into shape. In order to recoup that, they have to be very confident with whoever wants to rent it.”
Schulz believes some spaces sit vacant even though developers could apply to put another use in the storefront. However, if the ordinance didn’t exist, office spaces for a dentist, an accounting firm and a law firm — three uses the city denied — would be located in ground-floor spaces on Monroe Center, she said.
“If you have voids where you don’t have any active (retail) use in between, you’re less likely to walk down to the next store,” Schulz said. “If you start flipping out retail uses with offices, it’s going to diminish the attractiveness and the economies that are really working well in that neighborhood business district.”
The city approached all the business districts about two years ago to see whether they wanted to define retail and office uses within districts, but there was “not a lot of energy or interest” to do so, Schulz said.
In the entire downtown, not just the corridors that require ground-floor retail, Commerce Avenue was second with 15-percent vacancy after South Division Avenue, according to the downtown ambassador survey. On the lower end, Pearl Street had no vacancies, according to the March count, while only 3 percent of the ground-floor space on Ionia Avenue was vacant.
The city did not intend for its zoning to create vacant storefronts in the affected areas and could look “more creatively” at corridors like South Division that have the highest vacancies, said Tim Kelly, president & CEO at Downtown Grand Rapids Inc.
While clusters of retail on certain streets are necessary to create the traditional downtown experience, stakeholders have discussed other ways to activate those storefronts, including uses such as pop-up shops, art galleries or other entrepreneurial opportunities, Kelly added.
The end goal remains activating the ground-floor storefronts in some way, since not every street can support an active retail industry because of demographics, he said.
“Even if it’s not having a space open, even if it’s just doing treatments in the windows, lighting or other elements, it could give the feel of activity and activation, particularly at night just to create that vibrancy people want to see in the downtown district,” Kelly said.
Gibson wants to see the city of Grand Rapids adapt more creatively in some corridors, encouraging incremental development and working through non-conforming uses like office, small hotels, Airbnb and other nontraditional uses for space.
“I think our city forces us into the ordinance of retail, and I don’t think that’s the best use in all areas,” Gibson said.
The city currently is looking into the Heartside neighborhood, where it recently completed a quality of life study. Schulz does not think the vacancies on Division Avenue are tied to whether retail is required.
“I would say Division is struggling because there is not enough there to draw people to the area,” she said.
That’s something White with Little Space wants to change. She thinks South Division is the perfect spot to test the waters for some nontraditional uses, including her business.
“(Division Avenue) has been doing this for a while, and other parts of Grand Rapids could probably learn from it because of all the experimentation and incubation that’s happened here,” she said.
EDITOR’S NOTE: This story has been updated to correctly identify the section of Bridge Street that’s affected by the ordinance.