Steelcase Project Is A Work In Progress

March 9, 2007
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GRAND RAPIDS — Demolition work on the Steelcase Inc. campus will get started soon, as Ashley Capital LLC is finalizing its plan for the redevelopment of the 206-acre site on the city's southeast side.

Vice President of Leasing Kevin Hegg told the Business Journal last week that Ashley Capital was reviewing several conceptual plans for the property and hadn't decided on one yet. But he did say the project would likely include retail, residential and industrial uses.

"Those plans will continue to evolve and change over time as we get feedback from the market as to what the market demands," said Hegg from his office in the Detroit suburb of Belleville

"The feedback on residential hasn't been as strong as the other two components of the project. But we're continuing to talk to people. We're not trying to put anything in there that people wouldn't want. First of all, we want to be good neighbors," he added.

Ashley Capital, headquartered in New York with regional offices in the Atlanta, Chicago and Detroit metro areas, has a portfolio of roughly 25 million square feet with most in the eastern half of the U.S. Seventeen million square feet of that total is in Michigan. The firm usually focuses on industrial sites it considers to be good targets for redevelopment.

Ashley Capital normally leases space on its properties. This time, though, the company is looking to sell a few of the buildings, because this area has more user-owned structures than other regions do.

"We will have several facilities that we will provide asking prices for, if companies want to buy them. So this project is more of a mix. Typically when we go in, our plan would be to lease 100 percent of it, but we're keeping all of our options open," said Hegg.

Hegg said demolition would likely get started within the next few months and the work may involve razing fewer buildings than originally planned. As few as six of the site's 18 structures might come down.

"Some of our plans for demolition have changed over the last six months because we've been approached by some interested parties on some buildings we had planned to demolish. So you won't quite see the flurry of activity we had initially anticipated," he said.

Ashley Capital closed on the property in late February and announced the sale in early March. The company signed a non-binding letter-of-intent to buy the land from Steelcase last spring. The price Ashley Capital paid for the property wasn't revealed.

But Globe St.com, an online commercial real estate news site, reported that insiders said the price tag was less than $30 million. GlobeSt.com also quoted Ashley Capital Vice President Lori Roth as saying that it would spend $50 million to redevelop the site.

"Ashley Capital has an incredible track record in the successful redevelopment of projects this size, and we feel sure they will be key in the renewal and reuse of the Steelcase campus," said Dave Konyndyk, an industrial adviser at Grubb & Ellis|Paramount Commerce, which brokered the transaction.

One of those redevelopments is in BrownstownTownship near Detroit. Ashley Capital converted the 241-acre site into the BrownstownBusinessCenter, a four-building park with 2.6 million square feet of industrial space and room for another 200,000-square-foot structure. Tenants there include Ford Motor Co., General Motors Corp., the U.S. Postal Service and TNT Logistics.

Steelcase announced two years ago it would close the chair plant on the

Eastern Avenue SE
property, but still maintain a presence near the site. The company's headquarters and learning center are remaining at their current locations.

"We applaud Steelcase for being such a wonderful steward of this property, which holds such a prominent spot in southeast Grand Rapids," said Duke Suwyn, CEO and president of G&E|PC.

The city amended Ashley Capital's brownfield plan in January, a move that paved the way for the company to get $13 million of its total proposed investment reimbursed through tax breaks. Former Economic Development Director Susan Shannon said then that the firm would invest $162 million to redevelop 4.7 million square feet. Shannon said the project had to be completed by 2011 and that it would result in nearly 4,000 new jobs.

Driesenga & Associates of Holland is doing the engineering work on the property. Ashley Capital hasn't picked an architect or general contractor yet but has used Oliver & Hatcher of Wixom to manage its metro Detroit projects.

"As much as we can, we want to use local contractors. But we, obviously, have some relationships that benefit us, as well," said Hegg.

Buying the Steelcase campus marks Ashley Capital's entry into this side of the state, and Hegg said coming here was something the company was eager to do.

"We've got a big investment in Michigan, and West Michigan seems to go through less of a severe economic cycle than Detroit. Obviously, the area is affected by Detroit, but there is a great work force in western Michigan. It's non-union. Some of our tenants in Michigan might have interest in western Michigan. It has a good quality of life," he said.

"At the time we put it under contract, the economics in western Michigan were better than southeastern Michigan, and it all fit."    

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