Sudden Office Scarcity In Muskegon

November 27, 2002
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NORTON SHORES — A major chunk of the available office space in the Muskegon area would come off the market if the former Quality Stores Inc. headquarters becomes a high school.

The 140,000-square-foot facility represents more than 10 percent of the office space in the Muskegon area. The proposed conversion of the building for Western Michigan Christian High School will significantly reduce the amount of available office space in the market, creating upward pressure on lease rates for large tenants looking for space, said Tom DeBoer, vice president and a partner at Grubb & Ellis Paramount Properties in Grand Rapids, who's handling the transaction.

The deal, if it goes through, would affect the Muskegon-area market "in a huge way," he said.

"It's going to affect the overall rates, in my opinion, and allow landlords to say there's not a lot of space available," DeBoer said.

The vacancy rate for class B office space in the Muskegon area is now 45 percent, DeBoer said. The sale of the Quality Stores headquarters, vacant since April, will reduce that rate to 18 percent, potentially helping to drive demand for new office developments, DeBoer said.

"It's going to cause a lot of new opportunities in and around that area," he said. "The next five years are going to be a time we'll see some real good activity in the Muskegon marketplace."

Western Michigan Christian High School wants to convert the former Quality Stores facility and its surrounding 15 acres into a new campus. In doing so, school leaders would back away from earlier plans to develop a new school on acreage along Pontaluna Road, near the Lakes Mall.

The Quality Stores facility provides Western Michigan Christian High School an opportunity to move into a new home sooner and at far less cost — $10.5 million — than the previous $16.4 million plan.

"Those kinds of things you have to look at and say, 'Cool,'" said Joyce Workman, Western Michigan Christian High School's director of advancement. "This is an opportunity we feel God has really placed in our laps."

Parents and supporters of the 250-student school will vote on the proposal this week.

If they go along, the school would initially use about 60 percent of the facility. The school may consider leasing the remaining portions for office space to "someone who could be good neighbors with us," Workman said.

"It would have to be the right neighbor, but that would be possible," she said.

Western Michigan Christian High School has already raised about $4.6 million toward developing a new school facility and will begin construction when 60 percent of the cost is raised. The plan for the Quality Stores site includes selling the 59 acres at Pontaluna Road and U.S. 31 that was acquired four years ago and has since doubled in value to about $4 million.

The site is about a mile south of the Lakes Mall and in a rapidly developing retail and commercial corridor along Sternberg Road and Harvey Street.

DeBoer believes the parcel, situated at the U.S. 31 interchange, will generate high interest.

"There's no question in my mind," he said. "It's going to generate a lot of interest. Interchange property always does well."

School leaders became interested in the Quality Stores site when an executive from the defunct retail chain approached them earlier this year. Quality Stores went out of business last year after filing for bankruptcy.           

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