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By Nathan Peck | TransActions
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BATTLE CREEK — It is rare when one real estate move can turn a commercial real estate market around virtually overnight.

The move that brought the Kellogg Company to downtown Battle Creek was a somewhat circuitous one, but has made finished office space in the downtown business district relatively scarce since.

In late 2009, Kellogg announced that it planned to relocate 600 employees from its Porter Street location and lease space in the Fifth Third building at 67 W. Michigan Ave. That decision set into motion a scramble by the Hinman Company to renovate the Battle Creek Tower across the street and to help relocate tenants into new office space, said Anmar Atchu, VP of marketing and leasing.

Atchu has been in nearly constant motion since, helping direct a renovation of the Battle Creek Tower, relocate tenants, and prepare the 67 W. Michigan property for renovation, all in 60 days.

“It took some time, putting together pictures of what this would look like, but we’ve negotiated something that (Kellogg) is happy with, we’re happy with, and the city’s happy with,” Atchu told TransActions. “We have close to 100-percent occupancy in the (tower). It is a challenging project. We’re in the last two minutes of the game, everyone is moving in, everyone’s watching.”

Kellogg had previously announced a plan to build a $22.5 million office tower in downtown, but the poor economy and a peanut recall certainly forced a change in plans, which the company scrapped in favor of leasing space in the Fifth Third building, said Karl Dehn, president and CEO of Battle Creek Unlimited, the city’s economic development arm.

Making the deal happen required flexibility on the part of the city of Battle Creek, as the Battle Creek Tower sits in a tax-free Renaissance Zone and the city had stipulated that Hinman could not sign tenants already within downtown, for fear of cannibalizing the commercial real estate market. The city’s agreement allowed for this only when there was to be a significant impact to downtown, and this project fit the bill, said Dehn.

“We wanted the building to be renovated, but we did not want to create vacancy in the rest of the city,” Dehn said. “I give Hinman credit — they put together a very good proposal initially, then came back after receiving input from Kellogg. This became a bigger thing than the first, where you’re taking that much vacancy off the market. Overwhelmingly, the response has been remarkable.”

Dehn estimates that between $4 million and $4.5 million will be invested in each building. The Kellogg move is another pillar of BCU’s $86 million downtown Battle Creek revitalization plan, which includes supporting the W.K. Kellogg Foundation, moving the Battle Creek Math and Science Center to a newer facility, and supporting the newly formed International Food Protection Training Institute.

For Kellogg, the move made sense as it allowed the company to concentrate employees downtown, without the significant capital outlay associated with building a new structure. Hinman will begin renovating the building in the first quarter of 2010, with the majority of Kellogg’s employees moved in by the end of the year.

“Given the continuing weak economy and the many projects we are implementing to make Kellogg Company even stronger in the future, renovating and leasing existing space was a more prudent use of resources,” said Kris Charles, spokesman for the Kellogg Company. “We believe that a consolidated downtown campus is in the best interest of our employees, our business, and the downtown revitalization effort being led by Battle Creek Unlimited and the city of Battle Creek.”

Atchu is bullish about the impact Kellogg’s move will have on downtown. Still, he’s in the midst of directing a team of 60 contractors in completing renovations at the Battle Creek Tower before moving across the street to work on Kellogg’s facility.

“Such an absorption of vacancy in one fell swoop allows other investors to reinvest,” Atchu said. “Everyone has been committed to making it happen. It took an incredible amount of coordination and cooperation from Kellogg, the city, our tenants, and our contractors.”  TA