GRAND RAPIDS — A group of metro Detroit developers is eyeing a massive West Michigan industrial site that has for years resisted new construction.
Ben Smith, Scott Magaluk and Dennis Griffin will go before the Grand Rapids City Commission on Thursday to seek rezoning from industrial to transitional city center at a one time WWII-era parachute factory. The 14-acre site, adjacent to downtown Grand Rapids in the city’s Roosevelt Park neighborhood, includes plots at 620, 640 and 644 Chestnut St. SW, 835 and 943 Godfrey Ave. SW, 700 Martin Luther King Jr St. SW and 655 Godfrey Ave. SW, the last of which has already been rezoned.
The zoning change would allow the trio redevelop the site and build a 375-unit mixed-use apartment complex called Factory Yards at the site, which is currently occupied by three main buildings and extensions that total over 600,000 square feet.
The three-phase project is expected to take several years and cost about $150 million. Smith said pending approvals and financing, they hope to begin construction on phase one this fall and finish within 30 months.
The three developers have a long history in metro Detroit. Smith is founding partner of TerraNovus Capital, and Magaluk is principal of Magalix Investments, both based in Birmingham. And Griffin has been involved in multiple local real estate projects, including the conversion of a former 13-acre factory site into Iron Ridge Marketplace in Ferndale.
Griffin had formerly partnered on the Grand Rapids project as a co-owner and co-developer with John Breza, of Iron Ridge Holdings in West Bloomfield. According to city property tax records, Breza sold his interest in the property in June for $8.25 million to 655 Godfrey LLC, registered to Smith, Magaluk and Griffin.
The parcel at 655 Godfrey was rezoned to transitional city center back in 2018, when Breza and Griffin pitched their original plan to convert the site to mixed-use residential. For various reasons, it didn't work out, and Smith and Magaluk stepped in to help Griffin move the plan forward in December 2021, Smith said. Their first order of business was getting the whole site — including a railyard that was in use until recently — rezoned.
“Given the size of the site, and just sort of the scale, we're really aiming to create a destination,” Smith said. “We really want to make this a spot for everyone in the community to be a part of — the people that live there now, people that move there and people that work there.”
The “Factory Yards” moniker nods to the site’s history as an industrial complex. According to the Grand Rapids History Center, it was built in phases in the early 20th century as Luce Furniture Co., which went out of business in 1938 during the Great Depression.
Auto supplier McInerney Spring & Wire Co. then acquired the building, and during World War II, converted it into a parachute factory. After the war, the factory went back to making seats for the auto industry until it closed in the ‘80s.
“According to articles that were written back in the day, it was at one point the largest furniture manufacturing facility in the world by square footage,” Smith said.
It also was one of the first factories in Grand Rapids to hire women.
Today, there’s just one tenant left on the site: Tontin Lumber at 565 Godfrey, in a mid- to low-rise building on the south end of the site. Smith said that business is in the process of moving to a new location.
As proposed in documents filed with the city, Factory Yards will consist of 375 apartments, 60,000 square feet of commercial space and 80,000 square feet of self-storage.
Smith said the developers would need a separate zoning variance to accommodate freestanding self-storage, so that part of the plan is tentative until approvals can be secured.
“The building on the south end of the site ... we were kind of scratching our heads about what to do with it,” Smith said. “We thought maybe we would just tear it down … but one of us said, ‘Hey, what about self-storage?’” Smith said. “We had a market study done, and it turned out there was a great deal of demand for it; it really penciled out very well. And then, beyond that, we kind of looked at it as an amenity for the residents, given we anticipate about 700 people are going to live on this site. We’ve got a lot of studio apartments and one-bedrooms, so it’s something that we hope residents will be able to utilize, as well as the general public."
A portion of the commercial space will be designated for a food hall, bar and event space, pending future approval of a special land use permit to sell alcohol. Smith said discussions with a prospective tenant are ongoing, and he declined to disclose the operator's name.
“Everything’s obviously still in flux, but the food hall would be in the ground floor of the five-story building, and it would integrate with an outdoor plaza,” he said.
The balance of the commercial space will be marketed to office, commercial, hospitality and retail tenants.
An additional 100 units of housing are planned for a future phase in a ground-up multifamily building that would be constructed on the south end of the site.
Due to the high cost of construction and rising interest rates, the partners plan to seek brownfield and Obsolete Property Rehabilitation Act tax incentives to assist with financing.
“When we put this thing under contract, interest rates were 4 percent, and now they’re at seven,” Smith said. “That's a big difference on a $150 million project.”
He said the site is eligible for historic tax credits, but the team will not pursue them so that they can demolish a portion of one of the buildings for an outdoor plaza.
“We thought it was important to create that amenity for the project and for the neighborhood, frankly, so we’re not pursuing those,” he said.
Smith said while the development is subject to adjustments based on city feedback, he’s confident the team has devised a solid plan for an area that will be appealing to future residents.
Roosevelt Park also is home to a similar type of housing development called Box Board Lofts, less than a half-mile north on Market Avenue SW, and the Oxford Trail walking and biking path that crosses the Grand River is steps away.
“We view it as sort of a warehouse district,” he said. “It’s a mixture of uses. It’s a transitional area, but also if you look at a map … you’re a 10-minute walk from Founders and maybe a 15-minute walk from the central business district.”
Smith said he and his team are looking forward to working with the community and neighbors to continue gathering feedback. Griffin and Breza previously engaged the Roosevelt Park Neighborhood Association, Habitat for Humanity and the neighboring West Michigan Hispanic Center, and the new developers have continued those conversations, he said.
“We want to make this a project for everybody and be inclusive about how we do things,” he said.
From Crain’s Detroit Business.