Muskegon Momentum Lures Investors

October 18, 2002
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MUSKEGON — Tax advantages and the proximity to both a waterfront and a downtown business district have lured an East Lansing developer to plan a $7 million to $8 million project within the high-tech business park planned along Muskegon Lake.

Gillespie Development LLC has acquired four parcels totaling 4.2 acres around the entrance to the Muskegon Lakefront SmartZone and plans to develop two three-story buildings with 42 luxury loft apartments on the upper floors and "boutique style" retail shops and professional office space on the first floors. The firm is looking to develop two of the parcels for national chain restaurants that are considering the Muskegon market.

The project will feature an architectural style reminiscent of a "1930s type of downtown," developer Patrick Gillespie said.

His company primarily develops and manages multi-family housing properties and has been looking to undertake a new style of urban development that features an old-style design and mixed uses. The Muskegon Lakefront SmartZone offered the perfect setting, Gillespie said.

The broader SmartZone development site provides a location that's right between Muskegon Lake and downtown where Gillespie can build new, rather than searching for an older building to redevelop.

"We think it would be a great place to start out. The whole thing is unique," Gillespie said. "This was a great opportunity to start from scratch and make it the way we want it.

"The whole goal when we're done is to have you go, 'Wow, are those old buildings that look great or new buildings?'"

The SmartZone venture is just one of four projects Gillespie Development has going on in Muskegon County. The firm also is developing 104 apartment units in Norton Shores, at Old Grand Haven Road and Farr Road, 534 units along Harvey Road near the Lakes Mall, and 264 units on East Apple Avenue in Muskegon Township.

The SmartZone itself, with a focus on renewable energy research and technologies, wasn't necessarily what drew Gillespie to downtown, although he was certainly interested in taking advantage of the tax incentives and other intangibles that go with it. The emergence of the high-tech business park in the next few years, for instance, will create a workforce within close proximity to his development, producing a pool of potential residents for the apartments as well as patrons for the retail shops, restaurants and professional service businesses that locate in Gillespie's project.

From a broader view, Gillespie liked the location and the environment in downtown Muskegon that — with the Lakefront SmartZone, several other projects planned or completed, and activity now underway to redevelop the defunct Muskegon Mall site in the heart of downtown — is on a decided upswing.

"I see positive momentum down there," Gillespie said.

So do organizers of the Muskegon Lakefront SmartZone who last week closed on several deals that pushed the project forward, among them the formal acquisition of the 34-acre former Teledyne Continental site by Muskegon law firm Parmenter O'Toole, whose legal partners are behind the development, working as Lakefront Development LLC.

With the agreements signed for such items as financing for public infrastructure to the development site and a sea wall along the lake, Grand Valley State University plans to break ground Oct. 28 on a fuel-cell research center and business incubator.

Additional facilities, including a new office building for Parmenter O'Toole and the Gillespie Development project, will occur after roads and water and sewer utilities are completed, Parmenter O'Toole partner Chris Kelly said.

Until the public infrastructure is done, "you won't see a lot of building go up" as developers and potential clients for the SmartZone hold off acting on their interest in the project, even as purchase agreements are signed in the next 30 days for seven or eight lots, Kelly said.

"To me, when that's done, that's the home run that needs to happen," he said.

Still, last week's signing of seven different agreements with GVSU, the city and the state represents a milestone for the SmartZone development because it enables work on the public infrastructure to proceed. Most pressing is the extension of Shoreline Drive past the project site, which has been delayed for more than a year.

"It's a big step because now a lot of construction activity can occur" on the public infrastructure, Kelly said.

Gillespie plans to begin construction on his project as work on Shoreline Drive and the public utilities nears completion. His project will then take about six to nine months to construct, he said.

Beyond the GVSU research center and business incubator that will anchor the SmartZone and, in concept, serve as a draw for high-tech businesses in the future that focus on renewable energies such as solar and fuel cells, Kelly sees commercial development coming next summer as the interior site work is completed. A fuel-cell power station that Siemens Corp. plans to build as part of a partnership with GVSU will eventually provide electricity to the entire development.

The development also will make use of renewable energy technologies, including solar cells and nickel hydride batteries that are capable of storing large amounts of electricity.           

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