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Sunday, 02 August 2015 22:00

Plans for BC’s Heritage Tower take shape as other mixed-use projects emerge in Southwest Michigan

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Grand Rapids-based 616 Development says it will cost about $25 million to renovate the Heritage Tower in downtown Battle Creek and convert it into a mixed-use facility with apartments, offices and ground-floor retail. Grand Rapids-based 616 Development says it will cost about $25 million to renovate the Heritage Tower in downtown Battle Creek and convert it into a mixed-use facility with apartments, offices and ground-floor retail. COURTESY PHOTO

Officials in Battle Creek believe they have found the $25 million cure for what ails the Cereal City’s downtown.

Nearly two years after announcing plans to redevelop the “iconic” 19-story Heritage Tower at 25 West Michigan Ave., Grand Rapids-based 616 Development LLC says it has a timeline in place to transform the long-neglected building into a desirable mixed-use facility.

The developer’s concept include 80 market-rate apartments and offices, as well as ground-floor retail and restaurant space. However, they’ve scrapped plans for a hotel at the site because the numbers just didn’t pan out, said Mark Harmsen, the director of real estate at 616 Development.

“It’s the most iconic property in downtown,” Harmsen said, adding that work done by the city such as streetscape improvements in the downtown area make the property very desirable.

The Heritage Tower “is the crown jewel and the last piece of the puzzle” in restoring confidence and vibrancy in downtown Battle Creek, he said.

616 Development is currently in the process of making the building suitable for construction, as parts of it had been condemned. The developer is also working with the state on incentive packages and with the banks to secure financing, Harmsen said. The total project cost is expected to be about $25 million, with $2 million to $3 million in gap financing coming from the state.

Officials with the City of Battle Creek and economic development agency Battle Creek Unlimited overwhelmingly support the project.

Assistant City Manager Ted Dearing and new BCU President and CEO Marie Briganti told MiBiz they see the project as a catalyst to bring more people and businesses to the downtown area.

Under the current timeframe, 616 Development expects to begin work on the project in March, said Harmsen, noting that construction could take from 12 months to 16 months. The developer hired Grand Rapids-based Integrated Architecture LLC and Nederveld Inc. for architecture and engineering services, respectively.

616 Development had not yet selected a general contractor for the project at the time this report went to press.

FILLING A GAP

The proposed Heritage Tower redevelopment comes at a time when officials in Battle Creek and Kalamazoo — approximately 30 miles apart — claim they are seeing increasing demand for housing options in their respective downtowns.

For proof, officials point to recently released reports that show more residential inventory is needed in each community.

According to a May report from the Calhoun County Land Bank Authority, the downtown Battle Creek area “could absorb between 375 and 455 new rental and for-sale market-rate dwelling units that are either newly constructed or developed through adaptive reuse of existing space.”

Meanwhile, the findings in Kalamazoo show even greater demand. The immediate downtown area and the surrounding neighborhoods could absorb 1,000 new rental or for-sale units, as well as 375 to 460 affordable or workforce housing units, according to a December 2014 study from New Jersey-based Zimmerman/Volk Associates Inc.

“For us, the key to growing downtown Kalamazoo isn’t available space, it isn’t being hip or cool — it’s retaining college graduates,” said Ron Kitchens, president and CEO of Southwest Michigan First. “(If) we get college graduates in or near downtown, we will see a growing, vibrant downtown. If we don’t, then we have to maintain the status quo and then at some point you’ll see decline.

“We clearly understand that we have to focus on creating an environment where jobs can be created downtown for the 25,000 people who annually call Western Michigan (University) home.”

The jobs in and around downtown will come predominantly from the law, accounting and health care sectors, Kitchens said.

FINDING NEW USES

While several projects to add vibrancy in Kalamazoo are already underway, a group of community partners believes the most notable opportunity for the city is the redevelopment of Arcadia Commons West, a four city block area just north of the downtown central business district.

A consortium that includes Western Michigan University, the Kalamazoo Community Foundation, the City of Kalamazoo, the Kalamazoo Downtown Development Authority and Downtown Tomorrow Inc. received proposals in mid-July from two developers for a potential revitalization project at the site. The group’s request for proposals sought developers with experience in urban mixed-use development.

Presenters included Valdosta, Ga.-based Rise Real Estate Co. and a joint venture of Kalamazoo-based AVB Inc. and Hinman Co.

Officials at Downtown Kalamazoo Inc. expect the group will select a proposal in the next one to two months.

Meanwhile, in the near downtown area, Kalamazoo-based NoMi Developers LLC has plans for a mixed-use, 45-unit project at 508 East Frank St., as MiBiz first reported in May. The company expects to offer 16, 300-square-foot “micro-apartments” that rent for around $500 per month, NoMi Partner Jon Durham said at the time. The company hopes to target recent college graduates and young professionals at the site.

INVENTORY SHORTAGE

Despite the large demand for mixed-use developments and more housing options, economic developers say a key growth opportunity in the Southwest Michigan market remains in building out facilities for the industrial sector, particularly automotive supply chain manufacturers.

In Kalamazoo specifically, the best manufacturing space has already been absorbed.

“We continue to see huge shortages,” said Kitchens of Southwest Michigan First. “Interestingly, what’s driving it is existing company expansions. It’s not this idea that if we build it, we will get this great, new savior to come. It’s good, solid companies in the region saying, ‘Our business is growing.’”

The shortages are leading to some new building. Kitchens pointed to Midlink Business Park in Comstock Charter Township, where crews have started building a new 100,000-square-foot speculative industrial facility. The space is being built in a flexible, condominium-style development that allows end users to lease space in a variety of sizes, he said.

MiBiz reported in March that occupancy at Midlink was around 90 percent.

Likewise, every building in Battle Creek’s Fort Custer Industrial Park is occupied, although some facilities do have underutilized space, said Doug Voshell, BCU’s marketing manager.

“That’s a good thing, in my mind, because we still have 1,400 acres out of our 3,000-acre industrial park that we can market,” Voshell said. “That’s new investment, in addition to the investment of (expanding companies in the park). … They may come to us saying, ‘We are looking for a 50- to 100-acre site.’ We can do that. We have them available.”

BCU’s Briganti added that the economic development group has had conversations with a number of companies interested in locating at Fort Custer.

“I’m in a hurry to get the word out about our great assets,” Briganti said. “I know there are companies that should be here. I can’t control that, but I think we can do a better job letting people know about our assets.” 

Read 4705 times Last modified on Sunday, 09 August 2015 09:39
Nick Manes

Staff writer

nmanes@mibiz.com

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