Gallery on Fulton

[GRDadof3]

City Commission gives OK to 60 day extension

Second Story hopes to begin construction this Spring or Summer. It's make or break time.

[twoshort]

It's make or break time.

Is it? Seems like time is one thing they do have.

[Yankee Fan]

Is it? Seems like time is one thing they do have.

I am very disappointed in the floor reduction of this project.

[Grandrapidsne]

Why is this project dependant on only the UICA? Isnt there some other space for retail in this project? Pinning everything on a non profit organization that barely makes any money is risky id say I think the developer should try seeking out more than one option for this space.

[Parhelion]

I really like that they are making some plain old apartments- what a prime area for young (and not-so-young) professionals to give downtown living a try without having to commit to a purchase agreement. When I moved to West Michigan, I had trouble finding many downtown GR apartments that were not low-income-only (outside of about two available apartments at the time, the only available ones had a mile-long waiting list). This economy lends itself well to the apartment life; moreover, SSP can just turn it into condos if demand so dictates.

[DSchoon]

I really like that they are making some plain old apartments- what a prime area for young (and not-so-young) professionals to give downtown living a try without having to commit to a purchase agreement. When I moved to West Michigan, I had trouble finding many downtown GR apartments that were not low-income-only (outside of about two available apartments at the time, the only available ones had a mile-long waiting list). This economy lends itself well to the apartment life; moreover, SSP can just turn it into condos if demand so dictates.

Here, here.

The Zimmerman Volk study a long time ago suggested that there was a need for mid-range rental space downtown. I'm going from memory, but I think there is a strong possibility the condo demand (with data, relating to GRDad's point, from when the state was at least above water in the toilet) was eaten up by a handful of early developments, River House and the several hundred converted apartment units.

Allowing that a lot of condos are now rentals, I'm guessing there might be a shortage of quality apartments downtown.

I also wonder if peopel might be souring on condo developments to some degree. I've heard some horror stories about association housing developments in the burbs.

[tamias6]

I really like that they are making some plain old apartments- what a prime area for young (and not-so-young) professionals to give downtown living a try without having to commit to a purchase agreement. When I moved to West Michigan, I had trouble finding many downtown GR apartments that were not low-income-only (outside of about two available apartments at the time, the only available ones had a mile-long waiting list). This economy lends itself well to the apartment life; moreover, SSP can just turn it into condos if demand so dictates.

That's an interesting idea about turning the apartments into condos in the future. I think the developer would have to add some extra goodies such as higher end kitchens and better master suites than what is offered in standard apartment to make converting to condos easier.

[GRDadof3]

That's an interesting idea about turning the apartments into condos in the future. I think the developer would have to add some extra goodies such as higher end kitchens and better master suites than what is offered in standard apartment to make converting to condos easier.

Not necessarily true.

In regard to the retail spaces and the shrunken floor plates for retail, I think that's directly indicative of a very pessimistic view of downtown retail possibilities not only by the developers, but probably also by the lenders. Does anyone know the downtown retail vacancy rate? It's huge, something like 30 - 40%. Goes right back to my contention that downtown really needs a large scale retail development. This project just does not have the scale to support any large national retailers. I think smaller locally owned shops would rather be in a neighborhood environment (as evidenced by Cherry Street's near 100% occupancy rates).

[joeDowntown]

30-40% vacancy rate? That seems optimistic! I would think 30-40% occupancy rate (and that might be optimistic) .

I do agree, we need more mid-range apartments downtown. I think with the housing market in the toilet, predatory lenders taking heat and banks tightening their belts, there will be a swell of demand for apartments.

Remember how the rental boom in the burbs subsided about 5 years ago? I think it will heat up again (I notice that Eastbrook is starting the apartment portion of Clements Mills on Spaulding, across from Quixtar). I hope downtown jumps in and gets a piece of the action.

Joe

Not necessarily true.

In regard to the retail spaces and the shrunken floor plates for retail, I think that's directly indicative of a very pessimistic view of downtown retail possibilities not only by the developers, but probably also by the lenders. Does anyone know the downtown retail vacancy rate? It's huge, something like 30 - 40%. Goes right back to my contention that downtown really needs a large scale retail development. This project just does not have the scale to support any large national retailers. I think smaller locally owned shops would rather be in a neighborhood environment (as evidenced by Cherry Street's near 100% occupancy rates).

[chgrnative]

The Grand Rapids Press had a different rendering in yesterdays edition that was closer to what we had seen before. Not like the disgusting rendering in last weeks paper.

[GRDadof3]

The Grand Rapids Press had a different rendering in yesterdays edition that was closer to what we had seen before. Not like the disgusting rendering in last weeks paper.

Yeah, that rendering in the Press is wrong. The Parking Commission packet has images of how the project has changed from then until now, and that image is of the old design (the original). You only have to look at the floorplans for a short time to realize the Press image and the floorplans don't at all coincide.

This is the image that the Press ran:

which was the old design with more retail, 3 floors of retail on the Commerce end with 8 stories of residential above, and the garage entrance off of Division:

One good thing to note: the project now has 6 levels of UICA, and 8 levels of residential (if I'm reading the plans correctly). That's at least 3 floors taller.

[DSchoon]

30-40% vacancy rate? Depending on how you define that, I have a hard time believing that it is so high. There doesn't seem to be a huge amount of vacant storefronts on the beaten path, although a lot of those are office tenants. When I was researching downtown retail last year, there was actually a number of complaints about a shortage of space for certain tenant requirements. Full-service restaurants and bars, in particular, were having trouble finding good spots.

[GRDadof3]

30-40% vacancy rate? Depending on how you define that, I have a hard time believing that it is so high. There doesn't seem to be a huge amount of vacant storefronts on the beaten path, although a lot of those are office tenants. When I was researching downtown retail last year, there was actually a number of complaints about a shortage of space for certain tenant requirements. Full-service restaurants and bars, in particular, were having trouble finding good spots.

I think Joe is right that it might even be higher. There are 6 or 7 vacancies on Monroe Center and Monroe Avenue alone. Tons of vacancy on South Division (which adjoins the Fulton/Division parcel), vacancies on Commerce, vacancies on Ionia, ground floor of the Trade Center, Keeler Building is completely vacant, Kendall Building vacant, vacancies on Grandville Ave. The DDA has even set up a special task force to address the problem. They were supposed to report on one task they were working on, which was current business retention calls, at yesterday's DDA meeting. Anyone able to attend?

[Allison Slater]

Actually the Keeler isn't completely vacant. It has one tennant, but that is all.

[tamias6]

Now that's more like it. That ugly white thing previously posted sure scared me. But now that we are seeing the actual renderings I'm now back on board with this project.

Yeah, that rendering in the Press is wrong. The Parking Commission packet has images of how the project has changed from then until now, and that image is of the old design (the original). You only have to look at the floorplans for a short time to realize the Press image and the floorplans don't at all coincide.

This is the image that the Press ran:

which was the old design with more retail, 3 floors of retail on the Commerce end with 8 stories of residential above, and the garage entrance off of Division:

One good thing to note: the project now has 6 levels of UICA, and 8 levels of residential (if I'm reading the plans correctly). That's at least 3 floors taller.

[GRDadof3]

Now that's more like it. That ugly white thing previously posted sure scared me. But now that we are seeing the actual renderings I'm now back on board with this project.

tamias6, that one is not the current rendering. That is the old plan.

[blueradon]

That's a shame because that was my favorite rendering - but I like the current one too.

[joeDowntown]

So I'm confused. Can someone post the latest rendering?

Joe

[GRDadof3]

So I'm confused. Can someone post the latest rendering?

Joe

So far I haven't seen a new rendering of the entire project. Just the model in the images I posted up a few posts. I'm seeking clarification from the developers, so hopefully we'll get the skinny.

The DDA has also stepped in and provided additional assistance on this project:

DDA OKs incentives for Gallery on Fulton

The Grand Rapids DDA on Wednesday approved reimbursing up to $724,000 in taxes collected as a result of the $34 million project to cover construction related expenses by the development partnership between RSC & Associates of Chicago and Second Story Properties of Grand Rapids.

The DDA also gave tentative approval to buy vacant land from the city for about $1 million and then sell to the developers over 15 years at a lower-than-market interest rate.

The developers originally proposed paying the city about $2 million for the land in 2005.

The lower price is partly because the city would end up owning the other half of the property when it repurchases the portion of the project including the 262-space parking ramp for $9.4 million.

[n_wasmiller]

It seems like the city is willing to do just about anything to get something built on this land (sell the land for half the price, buy parking spots at above market value, offer low interest financing, etc.). I wonder what the other developers who originally bid on this land think about that. I suppose that they'd likely be in the same boat with the change in our housing markets since the land was on the market.

[GRDadof3]

It seems like the city is willing to do just about anything to get something built on this land (sell the land for half the price, buy parking spots at above market value, offer low interest financing, etc.). I wonder what the other developers who originally bid on this land think about that. I suppose that they'd likely be in the same boat with the change in our housing markets since the land was on the market.

Hard to say, but I think you're right that whoever else would have been the developer, they would probably also be running into the same financing challenges. Not just a softened real estate market, but increasingly tight belts in the banking industry for residential projects.

I think the city is so determined to make this work because it was their idea. If you remember, the city was supposed to originally just replace the city center ramp because it was basically obsolete and falling apart, and way too expensive to repair. But instead of just replacing the ramp with a new one, they decided to do (what all of us are screaming for the city to do) is incorporate some active uses into the parking ramp, by including residential and retail. That's how they came up with the proposal system and voted on RSC/SSP's design. According to the Parking Commission, the parking is needed in that area to meet demand and foster more development, and they expect the ramp to make a profit as early as 2013 (after a 2010 opening date).

[joeDowntown]

Although if you remember, Rockford Construction said they could start their project immediately. I wasn't a fan of their plan, but it makes you wonder what they think of the sweet deal.

Joe

Hard to say, but I think you're right that whoever else would have been the developer, they would probably also be running into the same financing challenges. Not just a softened real estate market, but increasingly tight belts in the banking industry for residential projects.

[tamias6]

tamias6, that one is not the current rendering. That is the old plan.

Oops. I guees I'm back in limbo on this project.

Edited January 12, 2008 by tamias6

[Floyd Z]

What were the other plans that didn't win?

[DJL3CDP]

What were the other plans that didn't win?

The guys we represented, Todd Radashaw et al, went on to buy the land at 240 Ionia and try their hand down there with about the same level of success (we were not involved in that one). Interestingly, when we put toghter the program for Fulton & Division we did not think the land was worth more than $1.2MM. When the City accepted RSC & Sam's plan at $2.0MM we were unsure of how those numbers could work and clearly they didn't.

Hopefully, the delay in closing (which essentially gave them 2 years of free carry) the price cut, the parking purchase subsidy, the brownfield and the DDA goodies will make it pan out. At this point, I don't think any of the other 4 players (Radashaw, Wheeler, Tol, Azzar) would step back in. So this may be the city's last best hope for that project for a while.

If things don't work out soon, my guess is that the City will probably just have to do a surface lot for a few years and see what happens next.

DJL