NAI Wisinski moves to the head of the class
If the Grand Rapids Public Schools system were to grade commercial real estate firms, it would likely give NAI Wisinski West Michigan straight A’s for the past semester.
NAI Wisinski sold four vacant school buildings to two separate buyers over the last six months, with the most recent sale occurring just weeks ago. In mid-July, the firm sold the former Riverside Elementary School, a single-story building with 36,686 square feet on seven acres at 2420 Coit Ave. NE, to G.A. Haan Development for $510,000.
Haan Development, based in Harbor Springs, plans to build an 8,000-square-foot addition to the building and create an assisted living center for seniors that will offer five levels of care. NAI Wisinski represented both the seller and the buyer in the transaction.
Earlier this year, the company sold three vacant GRPS elementary schools to GR School Lofts of Berkley, Mich., for $1.6 million. GR School Lofts plans to develop rental apartments in the former Lexington Elementary at 45 Lexington Ave. NW and in the former Eastern Elementary at 758 Eastern Ave. NE.
The city and the Michigan Economic Growth Authority gave both properties brownfield status. The developer is planning to begin construction this fall after the Michigan State Housing Development Authority approves low-income housing tax credits for the projects.
GR School Lofts then sold the third school, the former Oakdale Elementary at 944 Evergreen SE, to National Heritage Academies Inc., which is creating the River City Scholars Charter Academy there.
It’s easy to see why NHA would purchase a vacant school. Buying an existing building for a similar purpose is certainly more cost-effective than building new. But what makes school buildings an attractive buy for companies like Haan Development and GR School Lofts?
“The rental market in Grand Rapids has a pretty low vacancy rate, especially in the downtown area. And the conversion of these buildings is attractive because it’s a lot cheaper than building brand new, plus there are some tax credits and brownfield credits that buyers can obtain on these properties,” said Stan Wisinski, a principal at NAI Wisinski, of why GR School Lofts purchased the schools.
“I think also it’s the uniqueness of the properties that attracts people to the conversions. It’s a school being converted to residential. It’s not your typical residential building. If you look at what Jon Rooks did to the old Union High, it’s been attractive to people and isn’t a typical residential condo,” said Mary Anne Wisinski-Rosely, an associate broker at NAI Wisinski and president of the Commercial Alliance of Realtors.
Wisinski said the interest Haan Development showed in Riverside centered on the building’s location. He said the company really liked the residential neighborhood it sits in, which by all reports is a fairly quiet and stable area. The property also offers the developer some greenspace to work with and the building’s layout is perfect for its projected use.
“It adapts very well to a senior-citizen retirement home because it’s all on one floor. And a lot of people living in that neighborhood are elderly and there is a market for those people that want to stay in that neighborhood,” he said.
“A lot of them have lived in that neighborhood for a very, very long time, and those who develop senior housing say people tend to want to stay close to where they currently live when they move into senior housing. So it’s a prime neighborhood for something like that. It’s a mixed neighborhood with young people, as well as people who have lived there for a long time,” said Wisinski-Rosely.
Wisinski said another key selling point for both buyers was that all four buildings were built to last a long time and have solid foundations. He added that nonprofits and churches are often the usual buyers of school buildings because the structures are normally located in residential neighborhoods, which is an attractive location for both.
But for other types of developers, a neighborhood isn’t the most favorable setting. Wisinski-Rosely said selling a building in a residential district can be tough to do because the number of potential buyers is often limited. “And, two, being located in a residential neighborhood doesn’t have the exposure that some users and buyers are looking for,” said Wisinski.
Wisinski said it’s usually more difficult to sell a school than an office or an industrial building. “Generally speaking, I would say ‘yes’ because you’ve got some different objections such as zoning in a neighborhood. A use has to be compatible with a neighborhood,” he said.
As an example, Haan Development needed a zoning change and a “special land use” designation from the city to transform Riverside into a senior living center.
“And schools tend to be in more residential areas, so the potential uses are fewer than in an office building or an industrial building,” said Wisinski-Rosely.
GRPS originally planned to sell another vacant school building, Stocking Elementary at 863 7th St. NW, to GR School Lofts but decided not to after the firm sold Oakdale to NHA. Wisinski said Stocking hasn’t been listed for sale since the school board pulled it off the market months ago.
“We were told in the last two weeks that the board is mixed on whether they should reuse the building for the continued use as a school or sell it. It’s probably 50-50 right now,” he said. “It’s not on the market now.”