Thats Not A Lot

April 21, 2006
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GRAND RAPIDS — The $3 million offer that KG Development recently made with the Downtown Development Authority for the Area 4 parking lot falls well below the price the city has asked for other properties in the district.

The offer is from 30 percent to 50 percent less on a per-square-foot basis than the others, depending on how a sale is calculated.

The entire Area 4 lot is 2.8 acres, or 121,968 square feet. At a sale price of $3 million, the entire lot would sell for just under $25 per square foot.

But the entire lot can't be developed because a U.S. 131 overpass limits the construction height of any project, leaving about 2 acres, or 87,120 square feet, that can be easily built on. At a sale price of $3 million, the 2 acres would sell for just under $35 a square foot.

Over the past few years, though, city-owned properties in the downtown district have carried a price tag that tops $50 per square foot. The going rates for three of these are:

  • $54 per square foot for the former City Centre parking ramp site at Fulton Street and Division Avenue.
  • $55 per square foot for a surface parking lot at Ottawa Avenue and Fulton Street situated between The BOB and 50 Monroe Place.
  • $51 per square foot for the PublicWorksIsland at
    201 Market Ave. SW.

Following a pricing pattern of at least $50 per square foot, the entire Area 4 lot should draw a bid of $6 million and the developable portion $4.3 million. The DDA has entered into sales negotiations with KG Development.

The city is also considering selling the Area 5 lot, which is immediately east of the Area 4 lot. Area 5 is about 1.6 acres, or 68,900 square feet. The property is being appraised and the asking price likely won't be revealed until the city issues a request for proposals, which is expected to be next month.

KG Development wants to build a movie theater with up to 14 screens on the Area 4 lot. The project also includes 12,500 square feet of separate retail space and up to three levels of parking above the theater. A companion residential and retail project could be built on the Area 5 lot, should the developers have the winning bid for that property.

KG Development is a partnership between Gershenson Realty & Investment of Farmington Hills and Kirco Development of Troy. Rockford Construction, Commerce Realty and Fishbeck, Thompson, Carr and Huber are working with KG Development on the project.    

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