DeVos, Van Andel families plan massive ‘skyline defining’ project in Grand Rapids

GRAND RAPIDS, MI — A roughly seven-acre, riverfront parking lot in the heart of downtown Grand Rapids could be transformed into a vibrant, mixed-use development with three high-rise towers containing up to 671 high-end apartments and condos, a hotel, office tower and retail.

The vision is being proposed by Fulmar Property Holdings, a company comprised of members of the DeVos and Van Andel families. The families own the 500-space parking lot at the corner of Fulton Street and Market Avenue, just north of Acrisure Amphitheater, where the project would be built.

Supporters call it a "skyline defining project."

It would activate an underused stretch of prime riverfront property, create access to the waterway through a pedestrian walkway, and provide a gateway to the 12,000-person amphitheater that's catalyzing development on the southern edge of downtown.

It would also bring lots of new housing downtown, though the apartments and condos are market-rate and expected to be pricy.

"There's been lots of discussion about what it could be," Brad Thomas, president and CEO of Progressive Companies, said of the 500-space parking lot. "Frankly, this is everything we hoped our imagined it could be."

Progressive Companies, a Grand Rapids-based design firm, is leading the project in partnership with Fulmar Property Holdings and Michigan Growth Advisors. Michigan Growth Advisors is an economic development incentive consulting firm that's a subsidiary of the Miller Johnson law firm.

In addition to the housing, office and hotel uses, the project would include up to 2,500 parking spaces.

The project is still in the conceptual phase, and five engagement sessions with community groups, including the Heartside Neighborhood Association, are scheduled for later this month and into next month.

While still conceptual, the goal is to begin construction next fall, with a targeted completion date of fall 2028 to spring 2029, according to project documents. With an estimated $738 million price tag, it likely ranks as one of the biggest projects in the city's history.

To make the project a reality, developers are eyeing a big public subsidy — a $544 million Transformational Brownfield plan.

The plan must be approved by the city of Grand Rapids and the Michigan Strategic Fund.

While the public subsidy is big, it's not an upfront cash handout to the developer.

Rather, it would provide Fulmar Property Holdings with a host of state and local taxes, generated because of the development, over a 30-year period. If the development doesn't occur and no tax revenue is generated, no payments are made to the developer.

"That math doesn't work without incentives," said Joe Agostinelli, the founder of Michigan Growth Advisors. "The Transformational Brownfield program is critical for the development to move forward."

He said the incentive is needed because building high-rise towers, which the city wants to see downtown, is expensive.

In short, it costs as much to build a high-rise tower in Grand Rapids as it would in New York or Chicago, Agostinelli said. But the amount a developer can charge in rent in Grand Rapids is much lower than big cities. That means rental revenue, on its own, isn't enough to cover the cost of building such a structure in Grand Rapids, he said.

There's also challenges with the site itself.

"People might not be aware, but the site, 150 years ago, was actually the Grand River," Agostinelli said. "The river flowed through this property, and it was filled in a century ago with various urban fill that really isn't suitable to construct a building of this scale on top of. So, there's very, very significant underground challenges and costs."

The project has three main parts:

Hotel and condos: On the northeastern side of the property, this 27-story building would include a 130-room hotel with 76 condos, and six floors of parking.

Neither the hotel brand nor the management company has been selected, Thomas said. But the idea is to create a high-end, boutique hotel whose rooms could be even pricier than those at the JW Marriott downtown, where lodging starts at nearly $400 a night.

Apartment tower: This 43-story building would include 595 market-rate apartments, a mix of studios, one-bedroom and two-bedroom units. There would also be six-floors of parking, with apartments built around the exterior of the building.

The units would be market-rate. Though rental prices haven't been set at this time, they're expected to be priced at rates equivalent to 150% of Kent County's Area Median Income, Agostinelli said.

For a studio apartment, that would be $2,643 per month, $2,833 for a one-bedroom, and $3,401 for a two-bedroom, according to data maintained by the Michigan State Housing Development Authority.

Office tower: This 21-story building would include eight-levels of parking and 420,000-square-feet of office space. It would be built at the southern edge of the property, adjacent to U.S. 131, near where the Charley's Crab restaurant once sat.

"This is not speculative office," Thomas said. "We are working with a user who would occupy the entire 420,000 square feet."

He declined to identify the user.

The parking lot where the project is planned is currently used by employees at Amway Hotel Corporation, which is owned the DeVos and Van Andel families, as well as the West Michigan Sports Commission.

Thomas, who has worked in Grand Rapids for 25 years, said there's been lots of discussion during that time about redeveloping the site.

But an idea began to firm up during the COVID-19 pandemic.

Conversations were ongoing at that time about building an amphitheater at 201 Market Ave. SW. And rather than the venue being developed in isolation, he and other planners began looking at developing a roughly 31-acre stretch along Market Avenue between Fulton and Wealthy streets with one unified vision.

Those plans, which envisioned a vibrant Market Avenue corridor complete with arts and entertainment, housing, retail, green space and more, were presented to the public during a 2021 meeting of the Economic Club of Grand Rapids.

"As we envision it, these are really one, large transformational project," Thomas said, noting how the vision for the 500-space Fulton and Market parking lot is designed to complement the amphitheater and pedestrian walkway along the river.

The project is slated to be discussed by the Grand Rapids Brownfield Redevelopment Authority on Sept. 25.

The Transformational Brownfield Program, signed into law by Gov. Rick Snyder in 2017, is designed to help spur large-scale projects that would have a "transformational" impact on the local economy, reimburses a developer for a host of construction costs using state and local tax revenue generated because of the development.

That includes property taxes, and the state withholding and income taxes of people who live and work at a development. It also includes income taxes paid by a project's construction workers.

In Grand Rapids, only projects valued at $100 million or more qualify.

Projects with an affordable housing agreement with the municipality in which they're based can receive a bigger subsidy through the program.

For the Fulton and Market project, Fulmar Property Holdings is proposing to do so by providing a $7 million payment to the Grand Rapids Affordable Housing Fund over a 20-year period, Agostinelli said.

Fulmar Property Holdings could have accessed the biggest subsidy by including income-restricted apartments in the project itself. However, project officials decided not to go that route.

"We did some modeling and realized we could build about 4.5 times more affordable units by contributing to the affordable housing fund and having the city use those dollars to construct affordable housing in whatever use type they want." Agostinelli said.

While the public subsidy is significant, he said the project's investors are not making a windfall profit.

"Candidly, I think the market return on this project is relatively skinny compared to a lot of other real estate investments, even with the incentives," Agostinelli said, noting the rate of return on the project is under 12% by "a meaningful amount."