In Between Spaces
When it is completed next year, the renovated corporate headquarters of Holland furniture maker Haworth Inc. will include a three-story glass atrium, a “green” roof, and new workstations that have been custom designed to influence a customer-driven corporate culture.
Until the more than $30 million construction project is complete next year, a little less than half of the facility’s 800 employees will be working out of nearly 100,000 square feet of converted warehouse space directly across the street at 1451-300 M40 on 146th Avenue. This is the second time in a decade the company has occupied the Robert Grooters Development facility during a construction project.
Providing such a space for a temporary need is part of what has become an interesting niche for the real estate firm.
“When a large organization is building new facilities or remodeling what they already have, our buildings lend really well to that temporary use,” said Jason Allard, Robert Grooters leasing director. With some exceptions, Robert Grooters properties are high-ceilinged warehouse spaces that can be adapted to most industrial and office uses. While these are much less attractive than the type of space a company like Haworth would normally prefer, the buildings offer a high degree of flexibility and basic amenities such as parking and highway access.
“This allows us to be real creative with the rates and the leases,” Allard said. “Naturally, we would prefer a 10-year lease, but we’ll take your business however we can.”
Earlier this summer, the local Michigan Department of Environmental Quality office vacated 25,000 square feet of similar space at 4460 44th St. SE in Kentwood for its new facility. Roughly 150 DEQ employees occupied that Robert Grooters facility for over a year. From 2000 to 2003, the main branch of the Grand Rapids Public Library occupied 100,000 square feet of space at another Robert Grooters facility — Union Station at 1110 Hynes Ave. SW — during the $16 million makeover of its downtown library.
“Owners regularly want long-term leases, but if they have a particular building or complex open, something is better than nothing,” said Stanley Wisinski, president and CEO of real estate brokerage S.J. Wisinski Co. in Grand Rapids. “Any owner with excess space will do it.”
Tenants should avoid interim locations if at all possible, Wisinski explained, as an extra move can be a costly and disruptive activity that affects phone service, utilities, mail delivery, the cost of movers and other concerns.
He compared the situation to individuals who sell their current home before the new one is built. “You’ve got to be out of your house, so you’re going to rent an apartment as close to the new house as possible,” he said. “But you’re going to give up location, convenience and some amenities until your new house is done.”
This was the case for the year-old Grand Rapids office of Detroit law firm Clark Hill PLC. The group of attorneys launching the practice had previously practiced at Law, Weathers & Richardson PC in Grand Rapids. With the better part of a year between the group’s departure and the completion of its new offices in the Chase Bank building at 200 Ottawa Ave. NW, the attorneys were in desperate need of a presentable temporary space. The landlord of the forthcoming location, DP Fox, arranged for the use of a vacant floor in the Frey Building next door at 300 Ottawa Ave. NW.
“We didn’t have time to build out the kind of space we wanted within the timeframe we had,” said Clark Hill Managing Partner Ingrid Jensen. “We just slapped down carpet and paint, rented furniture and made it minimally accessible.”
At Haworth, a company whose core business is creating attractive and productive workspaces, the temporary facility does come with some sacrifices.
“There are a couple of challenges for us,” said John Scott, Haworth facilities project manager. “It doesn’t have sound masking or many of the other amenities that we are used to. … But it’s only temporary.”
The furniture from the existing facility was moved into the temporary location along with its occupants over the course of the past year. When completed, the new facility will feature entirely new furniture product; the current furniture will be sold or donated.
Art Hasse, president of Kentwood Office Furniture, launched an expanded, national rental business last year in response to the new office construction following hurricanes Katrina and Rita. While that venture did not succeed as he had hoped, rental business in the company’s historical sales regions has been strong, including a six-month lease to a large telecommunications company during a renovation in Southfield.
“If someone needs temporary space, it’s a lot more economical to rent furniture than install new furniture and tear it down for the move,” Hasse said. “Ideally, you want perfectly clean furniture in your new facility.”
For small and medium-sized companies, there are options to avoid a full investment in interim facilities.
Chris Beckering of real estate brokerage Grubb & Ellis|Paramount Commerce in Grand Rapids suggests clients seek sublease opportunities, which can come with flexible terms and fully furnished.
“Whenever you see consolidation — and we’ve seen a lot of that recently — they leave these furnished spaces out there that are still under lease for two or three years,” Beckering said. “They don’t have anywhere for the furniture to go, so they just leave it there.”
Beckering currently has listed a third-floor property at 3001 Orchard View in Cascade Township formerly occupied by and still under lease to Michigan Electric Transmission LLC. He noted that the reorganization of local furniture manufacturer Steelcase Inc. has left several unused facilities in the metro region.
Local economic development group The Right Place Inc. steers many of the firms it works with to executive suites operated by Regus Group and Second Story Properties in downtown Grand Rapids, and Robert Grooters and Choice Business Services in the airport corridor. At these operations, a new company or a company new to the region has access to turnkey office space complete with furniture, office machines, utilities, telecommunications, meeting areas and — at the more sophisticated operations — support staff.
When computer-aided design firm Configura, a Swiss firm, launched its local presence five years ago with an eye toward the local furniture industry, it did so with a suite at Choice Business Services at 2525 East Paris Ave. SE in Grand Rapids. The facility staff provided administrative and clerical support for the firm, even answering the phone, until it “graduated” to a new facility downtown.
The local office of Microsoft Corp. occupies a 2,000-square-foot space at Choice Business Services. Insurance firm Humana recently moved to a permanent location after two years there.
“We tend to see people when they are testing out a market,” said Deborah Bates, Choice Business Services owner and director of marketing and sales. “We give them a business identity — a brick and mortar location — while they work on their business model and figure out what they want to do.” CQ