Third Coast looks to build Michigan Street Corridor
The five-story hotel at Mid Towne Village is just the beginning of firm’s plans for the area.
“For the Michigan Street Corridor … 2015 will be the line in the sand. It’s when the trees get planted.”
Max Benedict said it confidently, a smile on his face. Last month, Benedict, a principal at Grand Rapids-based Third Coast Development, placed his infant son Jack’s hand on the final beam set in place for Third Coast’s$28 million Hampton Inn & Suites hotel.
The hotel, along with its award-winning Mid Towne Village project, will continue to anchor Third Coast’s presence on the corridor. For Benedict, it was a moment that carried the intoxicating gravitas that occurs when business goals and personal dreams converge.
When it’s completed, the five-story, 90,000-square-foot hotel, which is being co-managed by Third Coast with Mount Pleasant-based Lodgco Management, will feature 142 rooms and a three-level parking garage for 200 cars.
Located east of the center of the Medical Mile and just north of Michigan Street, at 425 Dudley Place NE, the hotel, which was designed by Grand Rapids-based Integrated Architecture and is being built by Grand Rapids-based Pioneer Construction, is tentatively expected to open Sept. 1 of this year.
It’s just one of many plans Benedict and his partners at Third Coast have for the Michigan Street Corridor this year. In fact, the Michigan Street Corridor Association recently appointed Benedict secretary of its executive board. His role will be to lead the process of applying for a Community Involvement District/Business Improvement District for the corridor, after a recent study deemed it a feasible district for a CID/BID.
The Michigan Street Corridor Association defines the area as bound by Bostwick Avenue to the west, Plymouth Avenue to the east, the Ford Freeway to the north and Fulton Street to the south.
The CID is what the MSCA is currently working to get approved, Benedict said.
“We just put out our notice of public hearing, so there’s 60 days, and then in March we’re going to have a public hearing on it held at the City High School — that’s the next biggest hurdle. Then it goes to city commission for approval and then we’ll be establishing just the CID portion of it this summer,” he said.
“That will allow us … for that corridor, for the participating parcels, to collect that tax increment. So we’d be setting the baseline here this year and then, as property taxes increase, we’d be able to take that increase and determine amongst ourselves how we’d like to spend it.”
That initial amount isn’t forecast to be very much, Benedict said, but whatever comes in would be prioritized on branding the Michigan Street Corridor, similar to what the Uptown District did with East Hills and Eastown, he said: bike racks, banners on light poles and advertising.
But the new hotel is what’s really key.
“The thing that’s really interesting and exciting about our district more so than others — not to pooh-pooh anyone else, but in places like Eastown, for example, I don’t want to say never, but they’re not going to get a $30 million hotel plopped down in the middle of Eastown, for a whole bunch of reasons. We actually have that going in,” he said.
“Not only is it this, but you’ve got our other apartment buildings that are going up at Michigan and Union. You’ve got Derek Coppess at 616 (Development) doing his. All of this is going to be (after) the baseline is set.”
Michigan Street is the street that never seems to sleep. From 9 a.m. to 5 p.m., “you’ve got the biggest employer in West Michigan based there,” Benedict said, referring to Spectrum Health. After 5 p.m., the street has earned the nickname of “Bar Row.” That’s the magic of an “arterial street” — one that goes through the heart of the city, he said.
And this is all without mentioning what development does for taxes and property values in the area, said David Levitt, principal and co-founder at Third Coast.
“The other thing we’re really excited about as business and building owners in the area … when these buildings that are being built now roll off, you’re talking about a very large amount of money. The tax increment the hotel alone is going to create is about $300,000 in today’s dollars. So 15 years forward, it might be half a million just from that one building,” Levitt said.
“When you’re talking about the types of money that are going to be available in this corridor, different from all the other corridors, it’s a fairly significant amount of money to be invested in really cool things in that area, which really I think helps toward this notion of the Michigan Street Corridor being that second destination, the complementary destination to downtown.”
Part of the reason this arterial street is needed is because the downtown area is losing its middle-class housing, Levitt said. With the median annual income in Grand Rapids at about $39,000, it’s not always easy to find a place near downtown to live, he said. There’s a big gap in housing costs that is creating issues of affordability.
“You’re either up here in the $2.10 per foot/per month range — very often plus parking. Or if you’re in the income-restricted stuff based on federal programs and guidelines … those rates are sort of in the $1 range. Well, what happens if you can’t afford the $2.10 per foot and you make too much money to qualify for the $1 range? Where do you go?” Levitt said.
“What we think is cool, healthy and consistent with how other cities have grown … (is that) by creating this second place, we can hit that mid-range income. And (since) not everybody can afford that either, we’re looking at income restrictions for the corridor. We think that would be a healthy thing.”
One reason for the growth of corridors is to accommodate those who want affordable housing that is close enough to be part of the vibe of downtown. The Michigan Street Corridor could help develop the community in a way that people can live close enough to the downtown to contribute to and enjoy the city’s energy.
Corridors drive the development of the city, Levitt said.
“You can’t just have two classes of housing. You can’t have housing for the rich and housing for the poor and nothing in the middle. You have to have that ‘aspirational’ housing, or the whole thing collapses … and everyone moves out to the suburbs,” he said.
“But those who want to be in the city need a place to be. And there needs to be housing and amenities for people of all income ranges, not just lots of disposable income or none.”
As for the city, things are looking strong for Grand Rapids, Levitt said. There is demand for more development, and the biggest issue facing the business community now is balancing the supply/demand, Levitt said.
Not all of the sectors are back yet, but they likely will be soon, he said.
“Office is not back. Office is clearly the weak spot. I don’t know when or how that wave rides,” he said. “I think what we’re seeing is there’s a lot of demand for housing, mixed-use retail, and there’s industrial, but the pricing for industrial isn’t high enough yet to spur new development.”