A Showcase Deal
The site, just west of I-96, has been home to the 10-screen Showcase Cinemas since 1985. Before that it held a twin drive-in theater. Today, the cash value of the property is nearly $8 million. But the development value is, well, priceless.
“This is the last prime vacant space on 28th Street in Grand Rapids. It’s right there at the expressway. It’s going to enable them to have retailers who will appeal to a wide range of shoppers,” said Bill Bussey of Grubb & Ellis/Paramount Properties, the real estate firm that represented National Amusements in the deal.
“It will appeal to travelers on the highway and you’ve also got a lot of high income households in that area, too,” he added.
Jeff Hundley and Ed and Mark Finkelstein make up Hund-Fink Acquisitions LLC. They plan to turn the site into a mixed-use project with office, retail, restaurants and a hotel. The development will be worth between $50 million and $100 million, and it will offer from 400,000 square feet to 650,000 square feet of retail space.
Hundley told the Business Journal that they are meeting with the state Department of Environmental Quality to determine how many acres of the large parcel can be developed safely. When they learn that, they will then have a better idea of how big the development will be and how much the investment will be worth.
“We’re meeting with the DEQ to work out all our requirements and approvals from them, and that will kind of dictate what we will be allowed to build. There is about 118 acres, of which only about 75 is buildable,” said Hundley.
“That is still a lot. If we can build on 25 percent of that, which we should be able to do pretty easily, we still should be able to get 600,000 to 700,000 square feet of retail, plus a hotel site or two, a possible office building or two, and a couple of restaurant outlots,” he added.
As far as construction costs are concerned, Hundley thought the development would run at least $100 a square foot, plus the land costs.
“It depends on whether we do some nice hotels or a nice office building. An office building is worth $200 a square foot versus $100 as retail. So I would say it’s anywhere from probably $50 million to an excess of $75 million to $100 million pretty easily,” he said.
“It is a very big project and I’m really very excited about it.”
Hundley is director of Colburn Hundley Inc., an industrial and commercial real estate company, while Mark Finkelstein is an associate realtor at the firm. The Finkelstein family founded the MC Sporting Goods chain and the partners have developed retail throughout the area, most recently the Home Depot and Best Buy stores at RiverTown Crossings Mall.
“What this site brings is a lot of tenants who really only want one store in all of West Michigan. In order to get those people, you have to have immediate access to the highway. In addition to that, you still want to be by the main thrust of retail, which is obviously 28th Street,” said Hundley, who has had his eye on the property for five years.
“I’ve never seen the interest on a site like we’ve had with this one,” he said. “I’ve talked to restaurants and users that we never envisioned being in Grand Rapids and they are looking at it.”
An average of 52,000 vehicles travel past the site every day, and more than 91,000 people live within five miles of the site with an average household income of nearly $65,000. Those numbers make the property a valuable piece of commercial real estate.
“The desirability of the area is also illustrated by the fact that both Bennigan’s and IHOP wanted to be there so bad that they did a very complex deal across the street. Bob Evans liked it well enough that they tore down their old building just to build a new one,” said Bussey.
“Much of the land right now is just sitting vacant. So this will be a highly visible mixed-use project and, I think, a very successful project,” he added.
National Amusements, a major media player with 1,390 screens under the Showcase and Multiplex names in the United States, United Kingdom and Latin America, will shut down Showcase Cinemas once the deal closes. The 65-year-old firm is the parent company of Viacom and it has 112 screens in Michigan with almost all in the metro Detroit area.
Hundley said he hopes to seal the deal by the end of the year. Site plan approval from Cascade Township will be needed. But before that can happen, the DEQ needs to tell the partners how much of the site can be developed. If the state agency says that only, say, 20 acres are useable, then the deal will have to be redone.
The developers hired Fleis & Vandenbrink Engineering to help them out and the DEQ should have its evaluation of the site done around October.
“If they come back with what we think they may, or hope that they may, we’re pretty strong on the deal. I think we’re going to buy the property, unless there is some huge red flag that nobody has seen yet,” said Hundley. “I’m pretty sure that we’ll probably close, at the latest, year-end.”