- change ups
It was a truly unique urban deal
Although it didn’t involve a building to be named later, the final transaction was likely as close to a “hot stove” deal as any real estate agreement could possibly be.
And for three reasons.
First, it occurred during the off season. Thanksgiving week marks the start of the holiday season, and the deal was completed then — an unusual time for a transaction to be confirmed.
Second, it involved a fairly substantial trade. Eight properties — one building, two parking lots and five small parcels — exchanged hands on the southeast side of Grand Rapids.
Third, a third party entered the negotiations at the last hour, which led to an unexpected sale of three buildings and a parking lot. That late entry turned a standard transaction into an unanticipated three-way deal that any major league baseball general manager could admire. Here’s the final scorecard:
**Kent County picked up five former city of Grand Rapids-owned parcels in the 100 block of Franklin Street SE.
**The county gave the city the Paul I. Phillips Gym near Madison and Franklin SE, a parking lot at Madison and Pleasant SE, and the building at 415 Franklin St. SE.
**The city then turned around and sold the Franklin Street building and the Madison Avenue lot to Ed De Vries Properties.
**De Vries Properties responded by selling 1110 and 1120 Monroe Ave. NW to the city.
The city has been leasing space for years at 1120 Monroe, the location for its one-stop development center that serves property owners and developers, where many planning decisions are made. The city is paying $4.2 million for the three-story structure and will sell bonds worth up to $5 million to pay for the purchase and make upgrades to the building.
“We’ll be investing about $500,000 for improvements into the building. So we’ll be focusing on customer service and also on building systems,” said Deputy City Manager Eric DeLong.
“We’re looking at how we can combine planning and the building inspections group onto one floor. So the development center may move up, maybe even up to (floor) three, along with planning,” he said.
The building has tenants besides the city, and DeLong said they will stay. “In fact, they’re an important part of our pro forma, so we will work to retain our current tenants.”
The other building the city is buying, 1110 Monroe Ave. NW, is a smaller structure that sits in front of 1120 Monroe.
De Vries Properties is paying $402,600 for the Franklin Street building, which until last June was home to the Kent County Department of Human Services. The agency has since moved into the new Human Services Complex at 121 Franklin St. SE. The county wanted the city’s parcels for additional parking at the complex.
Ed De Vries said last week that the former DHS building holds some sentimental value for him. The building once was the home of Grand Rapids Christian High School, where he and his three brothers attended. “So we know the facility quite well,” he said.
In addition, his father was the general contractor for the 1957 construction of the Paul I. Phillips gym. “My two oldest brothers and my father worked on that project and really handled all the construction on it,” he said.
De Vries said he hasn’t decided what to do with the building, yet. “But that’s what typically happens with many of the old buildings we acquire. The building has potential and eventually a market is created for it,” he said.
Whatever De Vries does with it, though, it will go back on the tax roll after being off that list.
“It will, and his track record for restoring buildings is exceptional. When we look at what he did with Clear Water Place (the city’s former water filtration plant) and the others that he has done, they’ve all come out quite well,” said DeLong.
DeLong said he expects the purchase agreement to be finalized this month and the due diligence for all buildings to take place in February. The city will go to market with its bond offering when the sales transaction closes.
The deal began months ago as a straight property swap between the city and the county, a pretty uneventful transaction but one that nicely served both parties’ needs. When De Vries Properties came into the picture, though, the deal moved up more than a few notches on the transaction scale, and the city couldn’t have been happier.
“For any transaction to work, you have to have the right nexus. We were really interested in trying to minimize our risk. In order to do that, we needed to have the right buyer. When we thought of Ed, the nexus was there, and it made for a really great transaction,” said DeLong.