Michigan Hill Heats Up
GRAND RAPIDS — A lot has changed since Jeff Lobdell renovated an abandoned gas station at 450 Michigan St. NE as his first Bagel Beanery location.
In the 10 years since, Bagel Beanery has spread across the region, and Lobdell, president of Restaurant Partners Inc., acquired other concept properties, including Sundance Grill and Beltline Bar.
President of the Michigan Street Business Association from 1996-2003, his success was par for the
At night, a cluster of popular taverns has created an alternative downtown entertainment
And to the west: over $1 billion in health-care investment.
"The area has undergone a dramatic change in the last 10 years and particularly the last five years," Lobdell said. "All the added business related to the medical industry helps my business more and more."
Nine years ago, there was only
Today, the red Butterworth sign is gone, replaced by the green neon of Spectrum Health. Behind it, the five-block area sometimes called "Health Hill" represents some of
In five years' time, the hill became home to (from east to west):
For nearly twice that amount of time, the region's health-care and medical research infrastructure has been steadily pulled toward the hill, propelled by consolidation efforts and research initiatives, defined, respectively, by Spectrum Health and the Van Andel Institute (VAI).
In 1997, Butterworth Health System and
With the completion of the $78-million
While Spectrum is a research leader in its own right — 8 percent of its cancer patients participated in clinical trials in 2003 — it is VARI that is leading the hill's medical research.
Presently, the state's third-largest cancer institute has 17 laboratories and 189 full-time employees. Already one of the region's most lauded ventures, VARI and its sister organization, the Van Andel Education Institute, has hopes to become a nationally, if not globally, recognized program. A rumored partnership with the Barbara Ann Karmanos Cancer Institute could earn the VAI a shared
In May, VAI announced plans for a Phase II expansion that will eventually create 400 new labs. It intends to invest $120 million to $150 million in private funds and bonds to construct an additional 280,000 square feet on the west side of the facility, fronting
Ground will be broken on Phase II in spring 2006 and construction will take about two and a half years to complete.
Shortly after the VAI announcement, plans were revealed for
Construction should begin this fall on a 700,000-square-foot, five-acre medical complex that stretches from
Expected to cost more than $120 million, the Michigan Street Development project will consist of three office towers, a 2,300-square-foot parking ramp and, as part of a separate development, the cancer center.
The towers are designed to house medical offices, a food court and minor retail operations. With 100,000 square feet of lab space, it is the region's first private development aimed toward research-based tenants.
"Unlike other development projects, we're not just geared toward the physician office practices," said Joe Hooker, development services manager for Christman Co.
"We're taking extreme measures in the design process to make sure that we're able to recruit, attract and have facilities for high tech businesses as related to the SmartZone and Life Sciences Corridor."
A year ago, Christman entered into an agreement to redevelop the
With its premium position on the hill and within
Following its IPO, AP Capital re-evaluated its involvement in the venture, deciding it did not fit its core business. The insurance firm stepped out, and RDV Corp., Alticor co-founder Richard DeVos' development firm, stepped in.
DeVos purchased the 1.2-acre lot adjacent to the Towers building in 2002, until this winter the site of a Burger King restaurant. The cancer center broke ground on the site last week.
The first phase of construction will begin with an 11-story tower with
The first phase should take two years, Hooker said. The second phase, which will replace the Towers building with the third tower, should take an additional two years.
Like the Michigan Street Development Project, Mid Towne Village is a direct response to the growing need for medical space.
S.J. Wisinski & Co.'s Mid Towne is a mixed-use urban redevelopment project uniting residential, retail and office properties. In stark contrast to the Michigan Street Development Project, which is centered upon lab space, the centerpiece of Mid Towne is the Village Green, a 15,000-square-foot open space around which most of the community is set.
It is located just outside of the SmartZone, and was carved out of a residential area.
Like its competitor to the west, Mid Towne is attracting medical users, including the West Michigan Women's
The market for such facilities appears to be far from saturated. At presstime, a scan of the Commercial Association of Realtors Web site showed only one available finished property in the Life Sciences Corridor other than Mid Towne, which had barely broken ground. That property, at
As Spectrum continues its consolidation efforts and more research enterprises move in, the demand for Michigan Street Hill real estate can only grow, said Brad Rosely, vice president of S.J. Wisinski & Co.
"Everything that happens up there, it helps each other out," he said of the competing development. "We've had plenty of landowners call me and say they appreciate what we're doing up there, boosting land prices all over the place."
Mid Towne is listed at $16 to $19 per square foot.
Lobdell believes that the hot real estate market may actually stunt the neighborhood's growth.
"You have something like a big hospital come in, and people buy up a bunch of property and just want to sit on it," he said. "They look at how much that Burger King went for and they get dollar signs in their eyes."
These speculators won't make a capital investment, nor will they sign a long-term lease, Lobdell said. Instead, they are hoping to be bought out to make way for a large-scale development, with hopes toward the precedent DeVos set in 2002 with his $6.25 million purchase of the Burger King site.
A notable example is
There are two uncertainties weighing against speculators.
The first is seen in places such as Priority Health's
All are close enough to be considered part of the
For similar reasons, the SmartZone extends into the
"We haven't seen any medical activity," said Buchanan. "I know they really promoted the
"I think it would be great if we had some medical users that come in, but in the foreseeable future we're going to still be selling it as a unique neighborhood and a unique aspect of the core downtown."
The other hot-button issue for speculators is the possibility of the relocation of
