There are three megatrends that are compelling planners to take a closer look at transit today: the public consciousness has been awakened regarding emissions and pollution; the era of cheap and abundant oil is over; and a lot of Americans simply want to live the urban lifestyle, according to Charles Hales, commissioner of Planning and Transportation for the City of Portland.
Hales has an extensive background in integrating regional transit with the urban environment. He’s known as the godfather of Portland’s highly successful streetcar system, which has spurred millions in new development in the city’s downtown. He spoke with business leaders and transit advocates Thursday afternoon at the University of Michigan & Urban Lank Institute Real Estate Forum.
Public transit serves poor people who need it to get around and it serves some middle class people who use it to avoid the hassle of everyday commuting, Hales said. It’s also the choice of many of the young people who are flocking to the urban living environments, he added. But statistics from the American Association of Retired People show that 71 percent of older Americans, too, want to live within walking distance of a transit system, he pointed out.
“People are seeking better designed communities served by and organized around transit,” Hales said. “We’re seeing an American Renaissance in transit.”
Some cities are building light rail systems. Others are investing in bus rapid transit, which Hales describes as a “great tool” for connecting a community. A bus rapid transit system will open in Grand Rapids in the summer of 2012. The BRT line will run along Division from 60th Street north to Wealthy Street, through downtown to Michigan Street and then to Central Station. The corridor runs through Grand Rapids, Wyoming and Kentwood. All in all, the route will be just under 10 miles, with 19 station stops and 10-minute service frequency during peak hours. The route will have a dedicated traffic lane and will use hybrid electric busses that have “secondary signal preemption,” which means traffic lights will automatically adjust to longer green lights and shorter red lights.
Many business leaders believe the route will be a catalyst for new jobs and investment in the corridor and that the 19 station stops will be sweet spots for development. Rapid Central Station will serve as one of the station locations and another station location has been recommended — on Jefferson Avenue on Saint Mary’s Health Care property.
Through the auspices of Grand Valley Metro Council, The Rapids will hold a series of charrettes with the three cities to talk about some of the other potential station locations, noted Peter Varga, CEO of The Rapid transit system. Varga said Thursday he expects the BRT will provide about a 400 percent return on investment at station sites.
The total cost of the BRT line is estimated at slightly more than $40 million, of which the state would need to provide a total capital match of 20 percent, or $8.02 million over a four-year period. Varga said legislators juggled items in the budget around a bit and have now assured a match by the state.
Other cities, like Portland, have built or are building downtown streetcar systems — what Hales refers to as “pedestrian accelerators” and “moving sidewalks.” Grand Rapids is one of the cities considering a streetcar system downtown.
A streetcar system is a local “concentrator,” in terms of bringing people together, it’s a tourist amenity, it’s a transit connector and, perhaps most importantly, it’s a huge catalyst for development, Hales said. Portland, for instance, opened an initial 2.4-mile streetcar line in 2001 for a cost of $56.9 million. Three extensions have since added 1.6 miles to the system. By 2005 more than $2.39 billion in private investment had occurred within a two-block radius of the streetcar route, with construction of 7,248 new housing units and 4.6 million square feet of office, institutional, retail and hotel space. Portland’s return on investment was 1,900 percent, which computes to a 40-to-1 return on investment.
According to Hales a streetcar system breeds greater intensity in an area, sharply increases property values and expands the customer base and customer access to businesses along the route.
“Streetcar creates the kind of environment people want,” Hales commented, adding that a streetcar system makes a city more competitive in its ability to attract knowledge workers and makes it more livable by reducing the city’s carbon footprint.
What does it take to make a streetcar system a reality? Hales said it takes the participation of public partners, including the city, universities and hospitals in the area, as well as the participation of private partners who are willing to invest in it.
The local Public Transportation Tomorrow Taskforce has already selected a 1.6-mile streetcar alignment along Monroe and Market avenues from the Sixth Street Bridge on Newberry Street to Rapid Central Station. The estimated cost for the first segment of a streetcar system, in 2008 dollars, is anywhere from $64 million to $80 million, which includes tracks, purchase of streetcars and any utility issues that might be involved.
Construction of the first segment would be funded under a public/private process. Varga, said he’s not seeking federal funds for the streetcar project because under the federal New Starts program The Rapid cannot compete effectively against city’s that are vying for those funds to build streetcar systems that go long distances. The task force is looking into funding options, he said.
The route selected would provide multiple options for future extensions, Varga said, and the task force is already envisioning the next possible alignment. Future extensions, however, would not include Michigan Street hill because the grade on that stretch of Michigan is too steep, he noted.
Varga said he’d like to see the opening of a streetcar system coincide with the opening of the BRT four years from now.
—Anne Bond Emrich
Friday, October 17, 2008
Thursday, October 16, 2008
Inter-governmental cooperation necessary for survival
With Michigan's state and local governments strapped for cash and costs increasing dramatically, that old bugaboo of inter-government cooperation and consolidation of some services surfaced at the afternoon panel presentation today at the University of Michigan & Urban Land Institute Real Estate Forum.
The topic was “Regionalism – The Future of Michigan.” The panel was a mix of mayors and professional administrators: Daryl Delabbio, Kent County administrator and controller; Kurt Kimball, city manager of Grand Rapids; Al McGeehan, mayor of Holland; and Steve Warmington, mayor of Muskegon; with moderator Don Stypula of the Grand Valley Metropolitan Council.
A mix of public and private funding is the answer in some situations, they said (Van Andel Arena, DeVos Place, Millenium Park, the renovation of downtown Muskegon), but they also had plenty of thoughts to share about cooperation between the counties, cities, townships and school districts.
“We have evolved” although there is still some parochialism in Kent County, said Delabbio.
With Michigan being a strong home rule state, that is “probably our biggest obstacle.”
Kimball mentioned the possibility of a merger of sorts between Grand Rapids and Kent County. Though he wasn't sure how or if it would work, he said, “we need to build on our record of collaboration and take it to the next level,” said Kimball.
“Michigan is too cautious,” said Kimball, and isn't doing enough to follow up on the challenge from Gov. Jennifer Granholm in her State of the State address a year and a half ago. She said the state had revenue to share with communities that would cooperate with each other and share services to keep costs down.
Delabbio agreed there is a track record of good communication in West Michigan, that encourages cooperation. Even though there are some key issues he and Kimball do not agree on, that does not prevent them from talking to each other, he said.
But it should be the professional government administrators sitting down together to draft the agreements — not the politicians, said Delabbio.
Delabbio also took a poke at the news media, which he said would rather focus on failed collaboration attempts than the “hundreds” of inter-government collaborations in this region that work.
McGeehan agreed, saying the media is more interested in “border wars.”
If Michigan is going to succeed and prosper, “it will occur in our cities and the communities around them,” said McGeehan.
There are still grass roots challenges to cooperation. Between the school systems, a stalemate often boils down to the issue of the high school football teams.
The panel agred that public and private joint ventures are a great strength of West Michigan.
Warmington pointed out that joint public/private ventures have pumped $175 million into downtown Muskegon, which has undergone a radical change in appearance since the failure of the downtown mall in 2002 to the new construction under way there today.
—Pete Daly
The topic was “Regionalism – The Future of Michigan.” The panel was a mix of mayors and professional administrators: Daryl Delabbio, Kent County administrator and controller; Kurt Kimball, city manager of Grand Rapids; Al McGeehan, mayor of Holland; and Steve Warmington, mayor of Muskegon; with moderator Don Stypula of the Grand Valley Metropolitan Council.
A mix of public and private funding is the answer in some situations, they said (Van Andel Arena, DeVos Place, Millenium Park, the renovation of downtown Muskegon), but they also had plenty of thoughts to share about cooperation between the counties, cities, townships and school districts.
“We have evolved” although there is still some parochialism in Kent County, said Delabbio.
With Michigan being a strong home rule state, that is “probably our biggest obstacle.”
Kimball mentioned the possibility of a merger of sorts between Grand Rapids and Kent County. Though he wasn't sure how or if it would work, he said, “we need to build on our record of collaboration and take it to the next level,” said Kimball.
“Michigan is too cautious,” said Kimball, and isn't doing enough to follow up on the challenge from Gov. Jennifer Granholm in her State of the State address a year and a half ago. She said the state had revenue to share with communities that would cooperate with each other and share services to keep costs down.
Delabbio agreed there is a track record of good communication in West Michigan, that encourages cooperation. Even though there are some key issues he and Kimball do not agree on, that does not prevent them from talking to each other, he said.
But it should be the professional government administrators sitting down together to draft the agreements — not the politicians, said Delabbio.
Delabbio also took a poke at the news media, which he said would rather focus on failed collaboration attempts than the “hundreds” of inter-government collaborations in this region that work.
McGeehan agreed, saying the media is more interested in “border wars.”
If Michigan is going to succeed and prosper, “it will occur in our cities and the communities around them,” said McGeehan.
There are still grass roots challenges to cooperation. Between the school systems, a stalemate often boils down to the issue of the high school football teams.
The panel agred that public and private joint ventures are a great strength of West Michigan.
Warmington pointed out that joint public/private ventures have pumped $175 million into downtown Muskegon, which has undergone a radical change in appearance since the failure of the downtown mall in 2002 to the new construction under way there today.
—Pete Daly
Award winners identify emerging trends
The University of Michigan Land Use Institute Real Estate Forum Excellent Award winners were asked to identify what they thought would be emerging trends in their field. Here are highlights of those responses.
Robert Pliska of Sperry Van Ness: Having good relationships with mortgage bankers. “It’s always been that way, but more so now with the way the economy is,” he said.
Aaron Young of The Wisinski Group: Property owners have to be very sensitive to their tenants, as they will be asking for more concessions. Right now, owners aren’t looking three steps ahead and they should be because their loan-to-value ration could drop. “Equity leases were big a few years ago, and these might come back,” he said. Young also said there is additional pressure on brokerage companies because leases are stronger than sales.
Marcel Burgler of Prime Development: Urban universities will be a catalyst for development. “If you look at the sectors that are growing it’s health care, education and, unfortunately, government,” he said.
Colin Kraay of Grubb & Ellis/Paramount Commerce: Doing a thorough due diligence. “We had to use incredibly in-depth market knowledge to get (the Priceline.com) deal done. Due Diligence is going to become more important for brokers as we move forward. From a broker’s standpoint, it’s a return to due diligence and market research,” he said.
Jon Rooks of Parkland Properties: Cooperation with state and local governments will become more important. “There are a lot of tools in the tool box. The state of Michigan is excellent with incentives. Our city government is also excellent,” he said. He also said there would be less new construction, but more renovations of existing buildings. He felt the conversion of apartments into condos was over, but downtowns will thrive because people want to live in those districts and they are willing to downsize their lifestyles to do that.
Randall Allman of CB Richard Ellis: More seller financing and more leasing activities. “We have to be creative and put the two opportunities together to get to the end,” he said.
Duke Suwyn of Grubb & Ellis/Paramount Commerce: Low-skilled, high-paying jobs are gone and so are the large manufacturing plants. Public-private partnerships are vital. Brokers have to be cooperative and do what is best for a community. “We have to get things down to size to meet the market,” he said of large industrial plants.
—David Czurak
Robert Pliska of Sperry Van Ness: Having good relationships with mortgage bankers. “It’s always been that way, but more so now with the way the economy is,” he said.
Aaron Young of The Wisinski Group: Property owners have to be very sensitive to their tenants, as they will be asking for more concessions. Right now, owners aren’t looking three steps ahead and they should be because their loan-to-value ration could drop. “Equity leases were big a few years ago, and these might come back,” he said. Young also said there is additional pressure on brokerage companies because leases are stronger than sales.
Marcel Burgler of Prime Development: Urban universities will be a catalyst for development. “If you look at the sectors that are growing it’s health care, education and, unfortunately, government,” he said.
Colin Kraay of Grubb & Ellis/Paramount Commerce: Doing a thorough due diligence. “We had to use incredibly in-depth market knowledge to get (the Priceline.com) deal done. Due Diligence is going to become more important for brokers as we move forward. From a broker’s standpoint, it’s a return to due diligence and market research,” he said.
Jon Rooks of Parkland Properties: Cooperation with state and local governments will become more important. “There are a lot of tools in the tool box. The state of Michigan is excellent with incentives. Our city government is also excellent,” he said. He also said there would be less new construction, but more renovations of existing buildings. He felt the conversion of apartments into condos was over, but downtowns will thrive because people want to live in those districts and they are willing to downsize their lifestyles to do that.
Randall Allman of CB Richard Ellis: More seller financing and more leasing activities. “We have to be creative and put the two opportunities together to get to the end,” he said.
Duke Suwyn of Grubb & Ellis/Paramount Commerce: Low-skilled, high-paying jobs are gone and so are the large manufacturing plants. Public-private partnerships are vital. Brokers have to be cooperative and do what is best for a community. “We have to get things down to size to meet the market,” he said of large industrial plants.
—David Czurak
Developing a successful city
Grand Action Committee co-chairman David Frey listed six elements that he felt are necessary to develop a successful city at the University of Michigan & Urban Land Institute Real Estate Forum, and here are the six in the order he gave:
—David Czurak
- A cultural package: Frey said Grand Rapids was strong in this area with DeVos Performance Hall, the new Grand Rapids Art Museum, the Urban Institute for Contemporary Arts, the Gerald R. Ford Presidential Museum and the Van Andel Public Museum Center. He also noted that the city’s arts organizations are nationally known.
- Great health care: Here, again, he said the city is doing well with Spectrum Health, Metro Health, Saint Mary’s Health Care, the Van Andel Research and Education Institute and the Michigan State University College of Human Medicine. While Frey noted that having aspiring medical students in the city was a very good thing, he thought VAI provided the best opportunity for the city’s medical future. “The real untold story is the commercialization of the research being done at the Van Andel Institute,” he said.
- Good education: Frey said the city was doing very well in this area with five universities and colleges located downtown.
- Good entertainment: Also good. Frey said the city offers baseball, arena football, hockey, Millennium Park, an expanding John Ball Zoo and the Meijer Gardens and Sculpture Park, which he said , by the way, was paid for with only private dollars, a $155 million worth. “It is the second-largest tourist attraction in the state of Michigan,” he said of the Frederick Meijer family development.
- Good places to gather: Frey said people need places to socialize, other than in establishments that serve alcohol, but the city is lacking in this area. “We are in the process of creating those, all in the private sector,” he said.
- Urban dwelling units: Frey said downtown needs to become easier to walk in order to draw more people to live in the district. “We are sort of pedestrian friendly, but we’re more car friendly,” he said.
—David Czurak
Lenders seek developer’s ‘commitment’ to project
The loan spigot is still open at several financial institutions, but other financial outlets simply don’t have the ability to lend right now, according to Holly Jacoby, a client manager of commercial real estate banking at Bank of America. Even where loans are available, lenders are being more cautious these days.
Jacoby said she doesn’t know of any banks that are providing loans for any type of residential development projects or that are acquiring existing residential projects, including condominiums, single-family homes and second homes.
As for commercial real estate projects, banks are looking ever more carefully at a developer’s commitment to a project, Jacoby said.
“In addition to your cash, banks are looking at your commitment as developers to the project. We look at that in a couple of different ways. One way is the guarantee, which I think you’ll find is increasingly unlimited rather than pro rata or some of the other loosened up guarantees that we saw in 2005 through 2007.”
Secondly lenders should be prepared to ask a developer whether he was around during the last recession and if he was, how did he handle it? Did he ever get property back? Did he ever default on a property? How did he work his way out of his problem?
“We’re looking more carefully at the history of behavior in case it might repeat in the next three years,” Jacoby said. “I think you’ll find that lenders are more careful than ever about that sponsorship question. Is the developer prepared to be personally committed to the project?”
Furthermore, for the next few years developers will probably see more three-year term loan deals than the five-year deals, Jacoby said.
Michigan developers need to understand, too, that many believe Michigan is in a one-state recession: Many lenders — even if they would lend in 49 states — would not lend in Michigan, she said.
“We have been written off the map. It’s like they sawed off the mitten and it’s gone,” Jacoby remarked. “Even when the economy returns, lending will not look like it did in the past 36 months.”
—Anne Bond Emrich
Jacoby said she doesn’t know of any banks that are providing loans for any type of residential development projects or that are acquiring existing residential projects, including condominiums, single-family homes and second homes.
As for commercial real estate projects, banks are looking ever more carefully at a developer’s commitment to a project, Jacoby said.
“In addition to your cash, banks are looking at your commitment as developers to the project. We look at that in a couple of different ways. One way is the guarantee, which I think you’ll find is increasingly unlimited rather than pro rata or some of the other loosened up guarantees that we saw in 2005 through 2007.”
Secondly lenders should be prepared to ask a developer whether he was around during the last recession and if he was, how did he handle it? Did he ever get property back? Did he ever default on a property? How did he work his way out of his problem?
“We’re looking more carefully at the history of behavior in case it might repeat in the next three years,” Jacoby said. “I think you’ll find that lenders are more careful than ever about that sponsorship question. Is the developer prepared to be personally committed to the project?”
Furthermore, for the next few years developers will probably see more three-year term loan deals than the five-year deals, Jacoby said.
Michigan developers need to understand, too, that many believe Michigan is in a one-state recession: Many lenders — even if they would lend in 49 states — would not lend in Michigan, she said.
“We have been written off the map. It’s like they sawed off the mitten and it’s gone,” Jacoby remarked. “Even when the economy returns, lending will not look like it did in the past 36 months.”
—Anne Bond Emrich
Salvation Army project proceeds
The Salvation Army is $700,000 away from breaking ground for the Ray & Joan Kroc Corps Community Center near South Division Avenue and Alger Street SE in Grand Rapids, attendees at the University of Michigan-Urban Land Institute Real Estate Forum learned today.
The nonprofit organization’s Major Roger. R. Ross, Kroc Center administrator, provided an update on the project during the roundtable portion of the conference, being held in Grand Rapids for the first time ever. Efforts are underway to establish a ULI satellite in West Michigan. The real estate organization sponsors the conference annually along with U-M Taubman School of Architecture and Urban Planning. Next year’s conference will be in Ann Arbor.
Ross said the Salvation Army hopes to break ground on the $20 million center on Oct. 29. It has raised $11.8 million of its $15 million from 100 donors in a quiet campaign, but needs $12.5 million before construction can begin. “We have a little bit more to raise before we can put a shovel in the ground,” Ross said.
After the center was rebuffed from Garfield Park, the Salvation Army, the city of Grand Rapids and Grand Rapids Public Schools worked together to cobble together the 20-acre site near New Branches School, a charter school, and GRPS’ Brookside Elementary. The deal included the purchase of five private lots from four owners, Ross said.
Planned is a 94,000-square-foot building at 2500 S. Division Ave., plus an outdoor recreational area.
Among the features: indoor and outdoor performing arts and worship areas; a conference center available for meetings, receptions and other functions; a gymnasium; and indoor water park featuring a 28-foot slide, a lap pool, a lazy river, a 22-person hot tub and zero-entry pool; an outdoor splash pad; child care; an area for painting, ceramics and art programs; a fitness center; a softball diamond; two soccer fields; sand volleyball court; playgrounds; an outdoor basketball court that will be flooded in the winter for ice skating; a sledding hill that will be covered with rubber and turned into a giant “slip n side” in the summer; a community garden; and ropes course.
Ross said the center is expected to open in 2010. “We’re providing this to a neighborhood that has absolutely nothing,” he added, noting that 11,000 children ages 18 and under live within one mile.
He said memberships would be sold, and $250,000 per year will cover scholarships. Ross said no price has been set for memberships.
The late Joan Kroc, widow of the founder of McDonald’s, bequeathed $1.5 billion to the Salvation Army to build centers across the country, after overseeing the first one in San Diego. The funding comes with some strings attached, such as the need to raise local matching funds, putting half the money into an endowment to fund programs and the requirement that no child be turned away, but everyone must pay at least something to use the facility, Ross said.
The Grand Rapids Kroc Center has $21.5 million from the Kroc estate. Of the $15 million fund-raising goal, $11.5 million is planned to support the endowment and the remainder for construction. The total endowment will be $31.5 million, Ross said.
He said the center, with 70 staff member expected, plans to work with Grand Rapids Public Schools and other nearby school to provide physical education programs during the school day as well as after-school programs.
Ross said Erhardt Construction is construction manager on the building, which is being planned for silver level certification under the Leadership in Energy and Environmental Design program. Architect is IBMA; landscape architect is Jim Morgan; and Bob Israels is handling interior design.
—Elizabeth Slowik
The nonprofit organization’s Major Roger. R. Ross, Kroc Center administrator, provided an update on the project during the roundtable portion of the conference, being held in Grand Rapids for the first time ever. Efforts are underway to establish a ULI satellite in West Michigan. The real estate organization sponsors the conference annually along with U-M Taubman School of Architecture and Urban Planning. Next year’s conference will be in Ann Arbor.
Ross said the Salvation Army hopes to break ground on the $20 million center on Oct. 29. It has raised $11.8 million of its $15 million from 100 donors in a quiet campaign, but needs $12.5 million before construction can begin. “We have a little bit more to raise before we can put a shovel in the ground,” Ross said.
After the center was rebuffed from Garfield Park, the Salvation Army, the city of Grand Rapids and Grand Rapids Public Schools worked together to cobble together the 20-acre site near New Branches School, a charter school, and GRPS’ Brookside Elementary. The deal included the purchase of five private lots from four owners, Ross said.
Planned is a 94,000-square-foot building at 2500 S. Division Ave., plus an outdoor recreational area.
Among the features: indoor and outdoor performing arts and worship areas; a conference center available for meetings, receptions and other functions; a gymnasium; and indoor water park featuring a 28-foot slide, a lap pool, a lazy river, a 22-person hot tub and zero-entry pool; an outdoor splash pad; child care; an area for painting, ceramics and art programs; a fitness center; a softball diamond; two soccer fields; sand volleyball court; playgrounds; an outdoor basketball court that will be flooded in the winter for ice skating; a sledding hill that will be covered with rubber and turned into a giant “slip n side” in the summer; a community garden; and ropes course.
Ross said the center is expected to open in 2010. “We’re providing this to a neighborhood that has absolutely nothing,” he added, noting that 11,000 children ages 18 and under live within one mile.
He said memberships would be sold, and $250,000 per year will cover scholarships. Ross said no price has been set for memberships.
The late Joan Kroc, widow of the founder of McDonald’s, bequeathed $1.5 billion to the Salvation Army to build centers across the country, after overseeing the first one in San Diego. The funding comes with some strings attached, such as the need to raise local matching funds, putting half the money into an endowment to fund programs and the requirement that no child be turned away, but everyone must pay at least something to use the facility, Ross said.
The Grand Rapids Kroc Center has $21.5 million from the Kroc estate. Of the $15 million fund-raising goal, $11.5 million is planned to support the endowment and the remainder for construction. The total endowment will be $31.5 million, Ross said.
He said the center, with 70 staff member expected, plans to work with Grand Rapids Public Schools and other nearby school to provide physical education programs during the school day as well as after-school programs.
Ross said Erhardt Construction is construction manager on the building, which is being planned for silver level certification under the Leadership in Energy and Environmental Design program. Architect is IBMA; landscape architect is Jim Morgan; and Bob Israels is handling interior design.
—Elizabeth Slowik
Ballpark idea floated for downtown
The Grand Rapids Business Journal is reporting Rockford Companies CEO John Wheeler has revealed a proposal to build a ballpark downtown which could house the West Michigan Whitecaps. Wheeler discussed the proposal at a morning session of the University of Michigan Urban Land Institute Real Estate Forum being held at the Amway Grand Plaza Hotel. For more on this story, go to grbj.com.
Wednesday, October 15, 2008
‘NuMu’ waterfront going green
NuMu is a nickname Dan Henrickson of True North came up with for the new Muskegon, which is rising from the industrial ashes of the past to much more of a lifestyle community on the water. He sees the Muskegon waterfront changing color from rustbelt brown to green, as in sustainability — and money.
So far it's mostly public money that has transformed the Muskegon Lake waterfront, which is just a hop over Business U.S. 31 from downtown Muskegon. But he told his Wednesday audience at the University of Michigan & Urban Land Institute Real Estate Forum there is a lot of opportunity for private investment in an area that is more than twice the size of the prime development area in downtown Grand Rapids.
"Some smart people from Grand Rapids are starting to look at Muskegon," he said.
At the northern end of the waterfront is Harbor 31, a True North development that already has some completed condo units on the water called Vida Nova, with more to come. Other parcels already sold are occupied by MAREC, the GVSU Michigan Alternative and Renewable Energy Center; and the Parmenter O'Toole law firm headquarters.
The entire area was covered with factories and rail sidings for several generations, starting with it's boom town status in the lumber era to another boom in heavy industry during World War II. Muskegon Lake is one of the few deep water industrial ports on Lake Michigan. With all that industry perched there on the shore, downtown Muskegon lost its connection with Muskegon Lake, but that's changed now, and the potential for lakeside living with plenty of boat slips and access to the Big Lake are obvious. The waterfront's industrial heritage make it largely a brownfield area today, which means help with the financing — and Muskegon Lake has already been cleaned up over the last 30 years.
Henrickson, an architect, has worked on a lot of projects in Grand Rapids and other parts of West Michigan. He said Grand Rapids was once lacking in energy and vitality; now it is acclaimed for having the most LEED-certified construction in America. It's happening in Muskegon, too — MAREC is LEED-certified and Vida Nova roofs are literally alive with green roofs for storm water control and natural insulation.
It's all about water in the “NuMu” — and the color green.
—Pete Daly
‘What’s Next for The Hill?’
The development of health care and life sciences along Grand Rapids’ Michigan Street hill holds economic promise for West Michigan, said speakers at a discussion called “What’s Next for The Hill” at the University of Michigan/Urban Land Institute’s Real Estate Forum in Grand Rapids Wednesday.
“We, I think, have an opportunity here to do something that you can’t do in Boston, you can’t do in Philadelphia; it’s not going to happen in L.A.,” Spectrum Health Hospitals President Matt VanVranken. “It’s really about creating a draw for this community that is palpable.”
Marsha Rappley, dean of Michigan State University’s College of Human Medicine, said the establishment of the medical school’s headquarters, four-year program and research and development arm in Grand Rapids is an example of the public-private partnership that is the only way forward in a time of economic distress in Michigan.
She said a telling moment occurred while she was touring Ferris State University’s Kendall College of Art & Design, incognito, with her college-shopping son: “This young, passionate artist was recruiting this group of students to Kendall, and he was telling us how the nightlife is so great in Grand Rapids…so he talks about the apartments, he talks about the bars and the restaurants, and then he turned to me and said, ‘And we’re going to have our own medical school, right here.’
“It was a turning point, really, in how I cam to understand, what is the value that we bring to this community. It goes well beyond the training of physicians. It goes well beyond the presence of a Big Ten university in downtown Grand Rapids. It means something to this young artist and his ability to recruit to his facility.”
Grand Valley State University President Thomas Haas said in the economic theory that jobs follow talent, “my job is to create human capital, to create talent.” He noted that 98 percent of GVSU graduates are either employed or in graduate school, and of those with jobs, 88 percent stayed in Michigan.
“In the next 10 years, clearly Grand Valley State University will focus and invest further to be the premier educational provider in the health sciences,” Haas said. “I think there will be new programmatic initiatives as well.”
“Grand Valley was really built not even 50 years on public-private partnerships,” he added. “That will continue to be the fuel as Grand Valley positions itself to a distinctive future especially in the life sciences.”
He predicted a need to expand the West Michigan Science and Technology Initiative’s wet lab space in the Cook-DeVos Institute “beyond the Medical Mile.”
“We’ll be working with both Grand Valley and Michigan State to jointly recruit people to this community,” VanVranken said. “In the last five years, we recruited 2,000 new employees to our system. You know what the spin-off means in terms of homeownership, the economic (effect). I would see the future having a similar impact as we bring in people, all three of us, into this community the economic impact is significant.”
He said Spectrum Health spent $206 million on local vendors in its 2008 fiscal year.
—Elizabeth Slowik
Brownfield use spurs values
David Levitt, a partner with Brad Rosely in Third Coast Development Partners, shared some brownfield advice Wednesday afternoon at the University of Michigan Urban Land Use Institute Real Estate Forum. Third Coast initiated MidTowne Village, a six-acre, medical mixed-use development just north of Michigan Street at the end east of the Medical Mile. Levitt said the brownfield tax credit was vital for the project to be able to go forward, like it is for many developments. But why it went forward was extremely distinctive.
Levitt said MidTowne was either the first or second project in the state to be approved for brownfield tax credits because Third Coast “took on blight.” These business tax credits are awarded to projects for one of three reasons; the site is polluted, the building is obsolete, or a property is blighted. “How do you prove blight? You can see it, but how do you prove it,” Levitt asked the audience before he explained how Third Coast did it.
Levitt said the firm gathered a lot of quantitative data about the low-income residential neighborhood that consisted of 50 older homes Third Coast wanted to build on and then compared those findings against averages in the city. Things like the rate of tax delinquency there versus the city-wide average and the number of code violations there were compared to the entire city, among other key statistics like mortgage foreclosures.
The resulting data proved blight existed, but there was another problem. Defining a neighborhood as blighted is a public process and Levitt said doing that can trigger liability issues for a city. So in the MidTowne case, the brownfield authority labeled the 50 properties as blighted and not the city commission. Between the business tax credits that come from the brownfield and the project’s tax-increment financing, Levitt said MidTowne is collecting $5.3 million in tax incentives over 12 years.
“We know blight when we see it, but you should get hard data to prove it,” he said. “Don’t do it alone. Get an expert. The whole point of this is to demonstrate need.”
The Women’s Health Center, Park Row Condominiums and 545 Michigan Street are the three buildings that currently make up the MidTowne Village. Third Coast sold the parcels to the developers. But Levitt said a fourth building is planned. They want that to be a hotel and Third Coast is thinking about being a partner in it. That project, however, has been put on hold until the financial markets get better.
“I can’t emphasize enough that brownfield is a very valuable tool in any economy,” said Levitt, “but especially in this economy.”
—David Czurak
Van Andel Institute built upon a vision
The late Jay Van Andel had a new vision for Michigan Street hill, and with the help of what was then Butterworth Hospital, he was able to fulfill that vision.
Jay Van Andel’s vision was to build a medical research institute that would not be encumbered by the normal bureaucracy that was seen in university centers, Steve Heacock, chief administrative officer and general counsel for the institute, told an audience today at the University of Michigan & Urban Land Institute Real Estate Forum. Jay Van Andel’s vision was for a scientific community that would encourage collaborative and novel approaches to medical research within its own labs and with other organizations in West Michigan and institutes throughout the world. His goal was to build an institution that would be a catalyst for the development of a life sciences environment, Heacock explained.
“The Van Andel Institute as an entity probably more comfortably belongs in San Diego, or Seattle or Boston,” Heacock said. But that wasn’t what Jay wanted. He wanted to make it happen here and help create and be part of a high density life sciences cluster.”
Today on the Medical Mile there is much to compliment Van Andel’s original vision, Heacock noted: the Lemmon-Holton Cancer Center, the Fred and Lena Meijer Heart Center, Grand Rapids Community College’s Science Center, Grand Valley State University’s Cook-DeVos Center for Health Sciences, the recently dedicated Hauenstein Center, and the Helen DeVos Children’s Hospital, the Michigan State University College of Human Medicine and the Michigan Street Development that are all under way.
“These really are exciting and dynamic times in West Michigan,” Heacock said.
Ground was broken on Phase I of the VAI in 1998 and the facility’s grand opening was held in 2000. The building is set into a steep hill, and its three-segmented convex glass roofs cascade down the east side of the building, evoking the rapids of the nearby Grand River.
The VAI broke ground in April 2007 on a $170 million Phase II expansion that will triple its laboratory space and allow for a broadened research focus that includes neurological disorders and other chronic illnesses. The eight-story, 240,000-square-foot addition is being built on to the institute’s existing facility on Bostwick Avenue. When that project is completed in late 2009, the institute will have 402,000 square feet of space.
The expansion will open the doors to 550 new positions. When the facility is fully built, staffed and operating at capacity, it will employ 800 researchers and administrative staff whose work will be supported by a $125 million annual budget. The institute is funded by a combination of its endowment, research grants and private philanthropy.
With more labs and with a larger research team, the VAI will advance new initiatives in basic and translational research, Heacock said. The institute will be able to move more aggressively into research related to Alzheimer’s and Parkinson disease, for instance, in addition to some other areas of cancer research.
Cancer killed about 560,000 men, women and children last year, so there’s more work to do, Heacock said.
“I think what were doing here in Grand Rapids will make a difference in people’s lives.”
—Anne Bond Emrich
ULI may branch out
Local Michigan members of the Urban Land Institute’s Detroit District Council were planning to meet Wednesday night to lay the groundwork for establishing a branch in West Michigan.
The Detroit ULI and the University of Michigan’s Taubman College of Architecture and Urban Planning brought their annual real estate forum to the Amway Grand Plaza today and Thursday.
“The idea to start what our national office refers to as a satellite district council in Grand Rapids came up about a year ago,” said Shannon Sclafani, administrator of ULI’s 400-member Detroit District Council, which was founded in 1999.
ULI provides networking, education and sharing of best practices at 26 programs per year for its members, Scalfani said. Members include commercial real estate professionals, developers, real estate lawyers, public officials, city planners and others involved in the industry, she said.
Sclafani said the Detroit council has 16 members from West Michigan. The national ULI organization prefers satellite councils to have 50 to 75 members, so some local recruiting can be expected after tonight’s meeting, she added.
“One major advantage is that when ULI Detroit started out, there was no staff or support with this getting off the ground. Although I’m three hours away, they still have access to me for handling administrative duties,” Slafani said.
The U-M architecture school started the conference about 22 years ago, she added. It’s the first time it’s been held outside of Southeast Michigan and drew 250 participants.
—Elizabeth Slowik
Stan’s disappearing act
Just when Stan Wisinski, chairman of The Wisinski Group was all set to receive the much coveted Real Estate Excellence Award at the UM-ULI Conference held at the Amway Grand Plaza Hotel today, he disappeared. No one in the audience knew why he left, or where he had gone. Later we found out the reason for the “disappearance” was a major deal he was in the middle of closing. I would say that sort sums up Stan, and is a fitting tribute to a guy who has closed thousands of deals in his years in the commercial real estate business.
Meanwhile, of course, Stan had covered his bases by asking Aaron Young, president of The Wisinski Group, to sub for him. This is vintage Stan, covering his bases, and clearly explains his “disappearance.” Aaron made light of the “disappearance” and did a credible job of replacing Stan.
In addition, a group of business leaders from Detroit showed up in time for the awards session. They were part of our most recent “One Michigan — Bridging 96” collaborative effort between the Grand Rapids Business Journal and Crain’s Detroit Business. This group came from Detroit on a bus tour to see and hear some of the major Grand Rapids area developments and business leaders. And Tuesday, we took a group of Grand Rapids business leaders on a bus tour to Detroit to do the same in Detroit.
The “Bridging 96” project is all part of our shared belief, and long-term goal, that both sides of the state — east and west — can learn from each other about the types of ideas and projects that work and why. And also, that business success, jobs and the future of Michigan’s economy can no longer depend on government for solutions, as it has been unable to successfully overcome the partisanship divide and entrenched bureaucracies. Business leaders can and must step forward and take leadership roles.
The UM-ULI Conference provides another opportunity for some of the best development minds in the state to hear about best practices and ideas.
There is also a wonderful opportunity to network and establish friendships on both sides of the state. The governor and the entire Legislature should have put these two days on their calendars and attended.The conference continues this afternoon, evening, and all day Thursday at the Amway Grand Plaza Hotel.
—John Zwarensteyn, Publisher
Award winners ponder challenges
After receiving their well-earned honors Wednesday, the winners of the University of Michigan Urban Land Institute Real Estate Forum's Excellence Awards were asked to consider the biggest challenges they will be facing in the future. Here are some of the responses.
Jon Rooks of Parkland Properties: The Michigan Business Tax and retaining young talent between the ages of 25 to 35.
Robert Pliska of Sperry Van Ness & Randall Allman of CB Richard Ellis: Securing financing
Marcel Burgler of Prime Development: The MBT, and municipalities are being too aggressive when it comes to property taxes. "If increasing this works, why don't we make it 100 percent," he said.
Duke Suwyn of Grubb & Ellis/Paramount Commerce: Brokers need to help clients understand whether it is better for them to buy or lease, otherwise opportunities will be missed. "Look around, things haven't changed that much. There are a lot of opportunities," he said.
Colin Kraay of Grubb & Ellis/Paramount Commerce: "What we need to do is find the opportunities in this state. Let's put on our smiley faces for a while, let's be courageous, and let's make some deals," he said.
—David Czurak
Formula for growth shared
Grand Action co-chairman John Canepa revealed the secrets to his group's success in getting Van Andel Arena and DeVos Place built this morning at the University of Michigan Urban Land Institute Real Estate Forum being held in Grand Rapids for the very first time in the event's 22-year history. And Canepa, a retired banking executive, disclosed those secrets in a very nice and neat order, which makes it relatively easy for other organizations to follow. "We do our homework on the front end of a project," he said.
Homework includes:
- Paying visits to similar facilities. Checking out those that make money and those that don't.
- Bring in a consultant(s) to conduct a feasibility study and an economic model.
- Create a fund-raising team.
- Move ahead and secure a lead gift. Canepa said this was a very important step to take as "a lead gift allows us to fund those activities," meaning the biggest giver tends to convince other to also donate.
- Establish a building committee.
- Start the fund-raising campaign with one-on-one visits to key individuals. "Eighty percent of the philanthropy comes from 20 percent of the donors," he said.
- Meet with public officials at the state, county and city levels.
- Hire an architect.
- Select an operations group. For the arena and convention center that turned out to be the Convention and Arena Authority, which was chartered by the state.
- Speak with related groups. For the arena, it was potential tenants like the sports teams and concert promoters. For the convention center, it would be the Convention and Visitors Bureau, hotel owners, show producers.
- Have the architect hold public workshops to showcase and explain the project. Canepa said getting community consensus for a project was vital because you can take that public support to local governments when you ask for public dollars. When Grand Action was trying to gets funds from the state for the convention center, Canepa said they asked then-Gov. John Engler for $80 million. Engler offered $45 million. Canepa said he and his co-chairmen, Dick DeVos and David Frey, got up to leave the governor's office and said,” Looks like we won't have a convention center. He then gave us $65 million. We were persistent in that case."
Canepa said the arena, convention center, the Civic Theater and the Michigan State University College of Human medicine, four downtown projects that Grand Action has been involved with, are worth $393 million in combined investment. Using the multiplier effect, Canepa said those projects have help catapult $2.7 billion in new investments downtown over the past dozen years.
—David Czurak
Real estate forum kicks off
The 22nd annual University of Michigan & Urban Land Institute Real Estate Forum opened in Grand Rapids this morning. Forum attendees from across the state received a welcome from Grand Rapids Mayor George Heartwell.
An introduction focusing on the renaissance of Grand Rapids’ downtown was presented by Grand Action co-chairs Dick DeVos, John Canepa and David Frey.
Few people in the audience knew that later today DeVos will be hosting President George Bush for tea at his Ada residence, a remarkable coincidence to what is occurring on the global stage even as developers gather to look at best practices in commercial and industrial real estate.
The Grand Rapids Business Journal will be reporting on the conference at this blog site today and Thursday.
—Carole Valade
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