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Third Coast Makes The Pieces Come Together
HOLLAND TOWNSHIP — The revival has been pretty remarkable, especially considering the relatively short amount of time involved.
When Third Coast Development Partners of Grand Rapids listed the former Hart & Cooley plant at 500 E. 8th St. in Holland Township every inch of the building's 627,000 square feet was empty on Jan. 1.
On Sept. 1, the structure in the Federal Square Business Park was half full.
The building's newest tenants are Charter House Innovations, which offers high-quality dining environments to the food-service industry, and the Howard Miller Co., a leading furniture manufacturer. Charter House bought a condominium unit in the building, while Howard Miller signed a long-term lease for warehouse space.
The addition of those two tenants brings the building's total tenants to seven, and means that Third Coast has leased or sold about 330,000 square feet, over half of the plant, in just eight months.
"We got really lucky, I think," said Dave Levitt, who owns Third Coast with Brad Rosely.
Lucky in the sense that Levitt and Rosely planned to develop the 45 acres that makes up Federal Square for a minor league professional baseball franchise that wanted to play in the Holland market. But the team never materialized.
"I don't think it was a week or two after the baseball thing fell apart we were contacted by Charter House. Howard Miller went a little faster, as that just happened a couple of weeks ago. We're pretty excited about having both of them in there," said Levitt.
Hart & Cooley moved its 80-year-old manufacturing operations from the building to other sites in the U.S. and Mexico. Then the company also transferred its headquarters and research division to a new 60,000-square-foot building in Cascade Township that Third Coast built for the firm.
Those two moves left the building empty. Then the baseball franchise struck out and left some in the market questioning whether Third Coast would be able to fill the building, let alone redevelop the site.
"Securing those last two tenants represents good news for the community, as it brings jobs to the area," said Rosely. "It's also good news for the project. Our ability to secure these tenants confirms our plans to redevelop the facility."
Chip Hurley, of the Wisinski Group, represents Third Coast in its marketing effort, and said the speed with which the building has filled up shows that Levitt and Rosely are willing to offer potential tenants a good deal with good terms.
"Clearly, this early success is a strong indication of the value of Federal Square Business Park. We are happy that this facility is back in productive use and that people are again working at 500 E. 8th St.," said Rosely.
That early success Rosely alluded to came without one of the biggest and most valuable incentives a redevelopment needs today: Renaissance Zone status. Being able to offer a nearly tax-free location makes the sales job easier, but Third Coast hasn't had that luxury to offer.
Holland Township officials approved Third Coast's Ren Zone request. But the firm's application has sat idle in the state House for much of the past two sessions. With this being an election year, any action on it before year's end seems highly unlikely, and Third Coast is hoping its request gets reintroduced next year.
The economic conditions haven't exactly been ideal for a redevelopment, either. But Levitt told the Business Journal that the economy doesn't concern him and Rosely as much as the credit crunch that surfaced from the sub-prime mortgage disaster.
"It's harder to make deals work because the lending standards have tightened up," he said.
"The net effect of it is that it's harder to get loans, and when you get one you're paying more for the money than in years past in this market. A lot of the good stuff that has happened in this market over the last five or 10 years has been driven by a lot of redevelopment and new development. My fear is this could really put a damper on where things go for the next year or two," he added.
Third Coast bought the Federal Square property two years ago for $5.2 million, and Hart & Cooley left the site late last year. Levitt joked that the heating bill for the massive and empty plant last February was twice what he made from his first job and cost his wife a new car.
"It all went up in smoke just to keep the pipes warm," he laughed.
The optimism that Levitt and Rosely share for Federal Park goes beyond just filling the remaining half of the former factory. They still see plenty of opportunities for the land that surrounds the building. And they also know that a key ingredient for them to complete the redevelopment is their combined patience.
"We have got some good property up on 8th Street, which could be used in the future as a free-standing retail or office building. There is some property on Hoover that sets up very nicely for a single-tenant office building. There is property on the south end that goes almost all the way to 16th Street, which is right across from the new Menard's," said Levitt..
"So if you look at all of those angles, there are a number of opportunities. At this point, we have the luxury of being able to kind of let our game come to us here."