Leading Downtown Building Sold
GRAND RAPIDS — The structure has served as a poster child for the revival of the North Monroe Business District, as a showcase for what can be accomplished in the city's Renaissance Zone, and as a rallying point for what defines outdoor building art.
And now the award-winning Brass Works Building at 648 Monroe Ave. NW is being recognized for another reason: It is changing hands. Well, maybe "fingers" is more accurate, as one of the original hands is keeping his fingers in it.
Brass Works Equities LLC is buying the building from the Canal Street Group.
Jack Buchanan, CEO of Blue Bridge Ventures, and Second Story Properties President Sam Cummings are what is left of the Canal Street Group. Over the past few years, Buchanan bought out the group's other original partners, Eric Wynsma and Casper Zubin, leaving him and Cummings as the building's sellers. Well, kind of.
It's true that Cummings is a seller. But he also is a buyer and is joining The Estes Group President Todd Schaal, MCM Ventures principal Michael Miller and Second Story Properties Executive Vice President John Green in Brass Works Equities.
"I am selling a portion of my interest, but am also retaining a significant portion. Second Story Properties, which presently has north of a half-million square feet under management, will be taking over the Brass Works Building," said Cummings.
After the deal closes, Cummings will give up about a 5 percent share in the loft-style office address so that he, Schaal, Miller and Green can each have a quarter equity in the building.
Buchanan, however, is selling his 70 percent interest in Brass Works. Being a real estate developer, he felt it's time for him and his staff at Blue Bridge to move on to other projects.
"Two years ago, we started talking about selling the building and we've been negotiating with these guys for about a year. We're at the end of the development project and this frees up our capital to move on to something else," he said.
But while Buchanan is moving on, he and Blue Bridge aren't moving out of their second-floor suite at Brass Works.
"The only circumstances under which we would (go anywhere else) might be as part of a couple of other projects that we might look into."
What makes this deal a bit more unique than the average transaction is that Brass Works Equity plans to develop a pool of investors for the Brass Works Building. They see it as a low-risk investment offering a good return on a nearly tax-exempt property.
"Because this has such a solid financial future, this a great way to roll out collectively what we intend to do more of in the community, which is offer pieces of our projects to other investors," explained Cummings.
"This is a quasi-public offering. The four of us are on the street getting investors involved in our projects," he added.
Cummings told the Business Journal that their search for investors would continue for another month and that a share in the equity group was going for $50,000.
Buying Brass Works is the fourth investment the quartet has done together, and as far as they are concerned the sky is the only limit to the number they may end up doing.
"We've found that when you are good at something, people want to associate with you, either by doing it with you or being close to you when you do it," said Schaal. "This gives us an opportunity to pull in friends and associates who've said, 'We want to do something with you at the next opportunity.'"
"This just created a wonderful opportunity for associates to be a part of this magnitude. Otherwise, they would not be able to be based on different jobs that people maintain. We want to be able to put these types of opportunities out so the small investors can realize success with us," said Miller.
The building is fully leased, one of the few downtown buildings that is. The last four tenants are so new that their names still weren't listed on the lobby's directory a week ago.
The rent has risen, too. When the structure began its second life as an office address, a square foot ran from $5.50 to $7.50 to lease. Now that price tag hovers around $14.
Canal Street spent nearly $14 million to renovate the former factory, which had taken almost two decades to build, from 1904 to 1922. The renovation took more than two years, work that was designed by Cornerstone Architects and directed by McGraw Construction. That effort has earned the building several awards.
Neither the buyers nor the sellers would disclose the price and terms of the deal, which includes two parking properties.
The state has set the building's equalized value at just under $172,000. It's arguable how meaningful that figure currently is, as the Brass Works has eight more years in the Ren Zone. One thing is certain for the equity group, though: Buying Brass Works isn't as much about today as it is about tomorrow.
"We think the neighborhood in which Brass Works has anchored has really just scratched the surface," said Cummings. "There is a great deal of potential around here."