47 replies to this topic

[x99]

I've got to ask:  Who is going to propose a mixed office/commercial development in this space?  Assuming you could build out to the 75,000 square feet, and get $15 a foot for it, with no vacancies or other expenses, you would net $1.125 million per year in some sort of obscenely perfect, non-existent world (where, to top it off, the City gives the property away for free).  At an 8% cap rate, you would be justified in spending only 14,062,500.00.  Granted, this is really back-of-the-napkin, but I can't imagine any bank would lend on that.  It's too tight, and the market (I suspect) will not sustain another $15/ft officeplex at full occupancy.  Plus, it doesn't hit the City's minimum investment price.  So either this thing has to go substantially bigger, or it just ain't gonna go without some other sort of incentive.  I suppose bigger is a good thing, but for those suggesting there is already a proposal on the table that the RFP was tailored to accommodate, I'd like to see a little more proof in your pudding.

Edited by x99, 04 October 2011 - 08:08 PM.

[GRDadof3]

x99, on 04 October 2011 - 08:07 PM, said:

I've got to ask: Who is going to propose a mixed office/commercial development in this space? Assuming you could build out to the 75,000 square feet, and get $15 a foot for it, with no vacancies or other expenses, you would net $1.125 million per year in some sort of obscenely perfect, non-existent world (where, to top it off, the City gives the property away for free). At an 8% cap rate, you would be justified in spending only 14,062,500.00. Granted, this is really back-of-the-napkin, but I can't imagine any bank would lend on that. It's too tight, and the market (I suspect) will not sustain another $15/ft officeplex at full occupancy. Plus, it doesn't hit the City's minimum investment price. So either this thing has to go substantially bigger, or it just ain't gonna go without some other sort of incentive. I suppose bigger is a good thing, but for those suggesting there is already a proposal on the table that the RFP was tailored to accommodate, I'd like to see a little more proof in your pudding.

I agree. I don't think it's being tailored for anything specific. I think it's just exactly as the city explained, an opportunity to put some city land up for its next best use, and see if they get any bites.  I think the language actually is to prevent flippers or some company to buy it and use it for surface parking.

[jas49503]

I can't really see this being only 75k square feet. I would imagine something in the 8-10 floor range at the least which would give you around 150k square feet.  it should be relatively easy to hit a development cost of 15 million with that size.

Edited by jas49503, 05 October 2011 - 07:18 PM.

[walker]

Jippy, on 24 August 2011 - 10:55 AM, said:

For the City to choose issuing the RFP now (in a depressed real estate climate), the City has almost certainly been approached with a credible development proposal. It will become evident by the fact that one proposal will be significantly more advanced than the remaining.

Not that it matters but I wonder which really came first, the RFP or the credible development proposal:
http://www.mlive.com...ing_lot_wo.html

Cummings knows a lot more than me but I think he may be getting way ahead of the market.

[Jippy]

x99, on 04 October 2011 - 08:07 PM, said:

I suppose bigger is a good thing, but for those suggesting there is already a proposal on the table that the RFP was tailored to accommodate, I'd like to see a little more proof in your pudding.

As I mentioned, it will become evident (in time) that the City was approached with a credible development proposal. While having no involvement on this project, I have had sufficient experience working on PPPs to read what the City was doing. This is a common practice (which I support if done in an open and equitable process) that will lead to a great new project downtown.  The negative alternative would be a closed sale to the developer, an abbreviated RFP response deadline to rig the process, or no sale at all. The City handled this in the appropriate manner.

[metrogrkid]

Some thoughts on this from "GRsuperCity" and myself over at MLive's GR Blog:


GRsuperCity   December 07, 2011 at 2:30PM

Grand Rapids is the central hub or west Michigan. Building downtown will not only bring in more jobs to downtown but also create jobs. This would be a positive move to GR and to downtown.

GRSuperCity:

Your insight is in-line with proper urban planning logic.  The conservatism of the proposal itself flies in the face of this same logic however.  Said another way, with such a small footprint that has such a relatively pricey rate attached to it, the developers - and downtown in general - would maximize their investment to a far greater degree by making their plan capable of vertically containing more rent-paying uses that strengthen the entertainment/housing/retail/office synergy of the Arena District and that attaches itself to the strongest theme of that area - VANANDEL ARENA (i.e. - go in that location with 15 or more stories).

A dynamic example for this would be the analogy of Boston's Back Bay district and its Prudential Center/Copley Place area.  With GR's Arena District standing in as our Back Bay, Van Andel Arena would supply the requisite icon structure as Prudential Center provides for Back Bay.  In such an analog, the Fulton/Ionia lot of this article along with the Fulton/Ionia/Louis lot and former Michigan National Bank ramp site would provide complimentary footprints to be the sites of a unified three-tower mixed-use high-rise development that could be built over time in multiple phases.

The CWD Real Estate lot (Phase One) would be the analog of Copley Place (One Arena Tower?) with an atrium mall of 20-30 shops NOT FOUND ANYWHERE BETWEEN CHICAGO AND DETROIT on the bottom five floors with appropriate mix of housing/hotel/office space on the upper floors up to 15-40 stories.  It would skywalk across Ionia into a Phase Two on the Fulton/Ionia/Louis lot (Two Arena Tower?) that would be an analog to the Shops at Prudential Center and likewise contain another atrium mall of 20-30 shops NOT FOUND ANYWHERE BETWEEN CHICAGO AND DETROIT on the bottom five floors with another appropriate mix of housing/hotel/office space on its upper floors up to 15-30 stories.  This second phase, in turn, would skywalk across Louis Street into a Phase Three (Three Arena Tower?) on the former Michigan National Bank ramp site that would be an all-department store analog (Nordstrom, Lord & Taylor, Dillard’s or Von Maur - all stores that have been looking at GR for since 1998) to the Neiman Marcus multi-story base of Copley Place.  A 5-story branch of any of those lurking stores on the bottom five floors of a third tower with another appropriate mix of housing/hotel/office space on its upper floors up to 15-20 stories would round out a MUCH more impactful and super-regional anchor for the Arena District and the crossroads between South Downtown and Monroe Center/Rosa Parks Circle.

Such a three-tower concept in such a tight area – once fully realized – could become a phenomenal southern downtown hub with an incredible density of workers, residents and visitors.  I suspect that it would become a spark for the third and fourth waves of Arena District development along West Fulton, Ionia and Commerce Avenues as well as the Area Four & Five Lots behind VanAndel Arena and even up the street at the SE corner of Metropolitan Center at Division and Fulton.

-Metrogrkid    December 07, 2011 at 5:59PM

[RegalTDP]

metrogrkid, on 07 December 2011 - 05:12 PM, said:

Your insight is in-line with proper urban planning logic.  The conservatism of the proposal itself flies in the face of this same logic however.  Said another way, with such a small footprint that has such a relatively pricey rate attached to it, the developers - and downtown in general - would maximize their investment to a far greater degree by making their plan capable of vertically containing more rent-paying uses that strengthen the entertainment/housing/retail/office synergy of the Arena District and that attaches itself to the strongest theme of that area - VANANDEL ARENA (i.e. - go in that location with 15 or more stories).

A dynamic example for this would be the analogy of Boston's Back Bay district and its Prudential Center/Copley Place area.  With GR's Arena District standing in as our Back Bay, Van Andel Arena would supply the requisite icon structure as Prudential Center provides for Back Bay.  In such an analog, the Fulton/Ionia lot of this article along with the Fulton/Ionia/Louis lot and former Michigan National Bank ramp site would provide complimentary footprints to be the sites of a unified three-tower mixed-use high-rise development that could be built over time in multiple phases.

You sound like Duane Faust.  Where's the market for all this retail and office space?  

Remember, Back Bay is a highly dense and extremely affluent residential neighborhood that can support the Prudential Center.  Though the trends are moving in a positive direction, downtown GR still has a long way to go before it has a dense low-to-medium income population, let alone an affluent one.  I The only real similarities between GR and Back Bay are (1) the Convention Centers and (2) the hotels, both of which bring in out-of-town traffic.  However, Boston has a lot more out-of-towners than GR does.  That's not a slight on Devos Place; Boston's just a busier city.

I like CWD's proposal; I like how its ultramodern look slides right in, next to a dark red historic building.  I don't think it's conservative at all; it fits with the size and scope of offices relocating downtown right now.  If anything, I hope it's not too much of a gamble.

Edited by RegalTDP, 08 December 2011 - 06:48 AM.

[SupercityGR]

BUMP! So whats going on with this proposal?

[joeDowntown]

I heard from a reliable source that nothing is going on. The have some preliminary renderings but it is going to take a major tenant to move anything forward. Could be a while.

Joe

[SupercityGR]

I think they should make it a mix use. Apartment/office/retail

[joeDowntown]

I agree it should be mixed use (which I think the city called for), but I don't think they'd get move forward until they got a long-term office user (or two).

Joe

[jdkacz]

With UICA doing well with its apartments and this to me a better location - is the price per square foot conducive to building more apartments?

[SupercityGR]

Iv been trying to find a nice apartment for a while. Everyone i talk to is full and puts me on the waiting list. Just look at icon and bond, they turned into apartments and filled fast.

[joeDowntown]

Agreed. I think more apartments would do well downtown. Seems like 38 and Gallery are always full / near capacity.

Joe

[JRich2425]

Joe,

Can you get your hands on the preliminary renderings from your reliable source?  Even if they are very preliminary, it would be interesting to see what people are invisioning for this space.

[joeDowntown]

Unfortunately, I can't. I have to play dumb and act like I don't know much about what's going on downtown. I think if they knew I followed it so closely, they wouldn't talk as much. LOL.

Joe

JRich2425, on 03 February 2012 - 01:28 PM, said:

Joe,

Can you get your hands on the preliminary renderings from your reliable source?  Even if they are very preliminary, it would be interesting to see what people are invisioning for this space.

[GRDadof3]

Wasn't there an image posted on here? Or maybe in the Press? errr, Mlive.

[Gorath]

GRDadof3, on 05 February 2012 - 12:19 PM, said:

Wasn't there an image posted on here? Or maybe in the Press? errr, Mlive.

Like this one from Mlive

Courtesy CWD Real Estate/Integrated Architecture

Edited by Gorath, 05 February 2012 - 02:45 PM.

[SupercityGR]

If this does ever get built i hope it doesnt look to stuby. Im thinking around 12-13 stories would be alittle more eye pleasing.

[Gorath]

CWD buys the the neighboring "Trade Center" building at 50 Louis.

http://www.mlive.com..._the_downt.html

I have a feeling that whatever CWD puts up in the parking lot the Trade Center will be a part of it.  It wouldn’t surprise me if the floors were connected.

In related news, Open Concept Gallery is moving out of the Trade Center.

Edited by Gorath, 14 March 2012 - 02:18 PM.