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A Whole New Purpose

Wednesday, August 14, 2019  
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Seeing vacant commercial property is not a new phenomenon. However, a series of changing dynamics in our economy is forcing communities across the country, including the Lansing region, to develop new, innovative strategies for filling vacant buildings because, quite simply, conventional approaches no longer work.

Among the factors impacting commercial vacancies are the well-documented struggles of the retail industry impacting shopping malls, big box stores and neighborhood shopping districts nationwide. The rising number of offices leveraging remote employees and co-working spaces, along with a shift from an era of industry to information have created increased pressure on commercial inventory.

Out of the new challenges have come unique opportunities for developers, entrepreneurs, local governments and the commercial real estate industry to pursue new strategies for abandoned properties. Trends include converting shopping malls to mixed-use spaces, warehouses into breweries, factories and industrial land are being converted to parks, schools into senior living and office buildings into multi-family developments.

“Sometimes in our business, change creates opportunity,” said Van Martin, CEO of Martin Commercial Properties. “Getting creative about who are the non-traditional candidates for those properties forces you to think differently. We have to market differently today than we did 10 years ago.”

There are advantages to repurposing vacant buildings. Research shows adaptive reuse involves 16% cheaper construction and 18% less time to complete a project. Repurposing also gives new life to neighborhoods and supports the local economy, while enabling people to stay close to their workplaces. Often times, local governments provide tax incentives to make projects more viable for developers. 

“People are looking for adaptive reuses in former big box stores and malls,” said Jeffrey M. Shapiro, principal at NAI Mid Michigan/ TMN Commercial. “75,000-square-feet in the Younkers store that will now be a go-cart track, U-Haul opening a state-of-the-art self-storage in the former Kmart location on South Cedar, fitness gyms in malls and data centers and back office operations are filling big box and neighborhood shopping center vacancies that no longer attract national retailers while expanding the labor pool.”

The Lansing region is among the communities that are experiencing an influx of innovative new uses for vacant commercial property.

“Lansing has been affected by the retail swing,” said Dillon Rush, tri-county development and placemaking manager for the Lansing Economic Area Partnership (LEAP). “There are a lot of redevelopment ready practices that are focused on creative thinking and ensuring a smooth process for redevelopment.”

HIGH CALIBER KARTING AND ENTERTAINMENT

Who would have thought you would go to a mall to visit a go-cart track?

High Caliber Karting and Entertainment will open an indoor karting track in the former Younker’s space on the north end of Meridian Mall.The entertainment center will open in late August with a ribbon-cutting planned for Sept. 20.

High Caliber Karting is the brainchild of three Lansing area natives, Jordan Munsters, Connor Tracy and Kevin Biesbrock. Targeting primarily young adults, though reaching out to ages 8-65, the 76,000-square-foot establishment will feature two indoor racetracks, ax-throwing, arcade games and a full bar and bistro featuring craft bar and gourmet pizza. Owners were not initially interested in a mall location but shifted their view after visiting the nearby Toys ‘R’ Us location, which was too small. CEO Munsters says the Meridian Mall turned out to be the best partners they have had during the process.

“Nobody has been more helpful in our growing than this mall,” said Munsters. “So, not only do we get the opportunity to repurpose a building that otherwise would be a vacant, blighted facility, we get the opportunity to have one of the best partners we have and stay within our budget, which they have helped us with.”

High Caliber Karting has big plans for the future. Munsters says they are already in discussions for a second location and are working with a franchising attorney for distribution across the United States. Munsters says the company’s mission is to be the adult version of Disney and bring joy and new entertainment options to its customers.

“We need to be exciting so people are willing to stay in this community,” said Munsters. “Lansing is moving away from the factory-town image. We need to be able to support that and be the entertainment capital.”

NAI Mid Michigan/TMN Commercial negotiated the High Caliber/ Meridian Mall deal, which Shapiro says is a prime example of uncovering opportunities that fit the need.

“Malls have big spaces and they are the ones suffering the most,” said Shapiro. “By looking at the malls and figuring out how we can cut up that space or use that space as a whole and still be competitive causes everyone to consider other uses. We just have to think differently about looking for space and include the malls in those searches.”

LAUNCH TRAMPOLINE BRINGS FAMILY ENTERTAINMENT TO THE MERIDIAN MALL

When the Fortune 500 bank he worked at for 20 years closed his division, Matt Dalson found himself pondering ‘what now.’ Dalson decided to combine his interest in being an entrepreneur with the experience he enjoyed in family entertainment business during his college days. The result is Launch Trampoline Park, which opened this spring where Gordman’s was previously located in the Meridian Mall.

“The thought of creating a business that brings smiles to thousands of faces each year was an opportunity we couldn’t pass up,” said Dalson.

In addition to the trampolines, Launch Trampolines offers a 2,500-squarefoot laser tag arena, a café that serves made-to-order pizza and an arcade room.

“We strive to be the premier family entertainment venue in the area,” said Dalson.

Dalson said locating in the mall has been an advantage because of the additional foot traffic that has led more people to discover the business than a stand-alone location might offer. He said vacant space on both sides of the location offers potential for expansion down the road.

STOCK AND FIELD CONVERTING SAM’S CLUB ON LANSING’S SOUTHSIDE

South Lansing received a shot in the arm with the announcement that Illinois-based Stock and Field Stores (formerly Big R) was taking over the former Sam’s Club location on Edgewood Boulevard. Stock and Field has begun hiring for its expected fall opening in South Lansing, which is the company’s first store in Michigan.

The 11.5-acre, 135,000 square foot location will offer residents products such as farm equipment, sporting goods and tools, as well as pet and animal supplies.

“Stock and Field is really good for South Lansing,” said Van Martin, whose company negotiated the Stock and Field sale. “They will have a very positive impact on residents and shoppers in the area.”

“We are thrilled to be bringing a family-owned, farm, home and outdoor retailer to Lansing to serve the community and surrounding areas,” said Matt Whebber, chairman and CEO at Stock and Field. “We plan to carry all the mission-critical supplies our customers need to live the outdoor lifestyle: pet and animal supplies, farm equipment, sporting goods, workwear, tools, lawn and garden supplies and a whole lot more.”

REVAMPING OUR CORRIDORS: THE IMPORTANCE OF PLACEMAKING

There are many commercial nodes that offer distinct challenges and opportunities for commercial redevelopment. Most notably in Lansing area are Michigan Avenue, Saginaw, MLK and Cedar/ Larch. Economic developers say placemaking involves capitalizing on existing assets with the intention of creating public spaces that promote people’s health, happiness, and well-being.

“Creating a different experience along those corridors is going to be really important to what comes next,” said Kris Klein, economic development specialist for LEAP. “There are changing attitudes towards how people shop,” echoed LEAP’s Rush. “It’s a new frontier that will include a comprehensive picture of the housing stock, food options and all the amenities. Those are huge factors that influence employer’s decisions about where to locate.”

Suburban and rural communities face the same challenges in filling commercial and industrial vacancies. The LEAP team points to the redevelopment of the FC Mason site in St. Johns as a shining success story. That location is being converted to a much-needed apartment complex.

Neogen Corporation has been a leader in the region in repurposing school buildings for their researchbased facilities in Lansing. Growing tech company ASK recently renovated the former Moores Park Elementary at 316 Moores River Drive as its new company headquarters. With an investment of over $1 million, the building offered exactly what the ASK team was looking for.

“Lansing as a community has been a big reason why we’ve been successful, and as we looked for our forever home, we knew we wanted to keep our business in Lansing,” said ASK president and CEO Mike Maddox. “The former Moores Elementary School is a perfect fit for us. We are able to provide our staff with a new type of work environment with our gymnasium, walking distance to downtown REO Town, the Lansing River Trail and conveniently placed in the beautiful Moores Park. With room for growth, expansion, giving back to the community and even leasing out office space to startups and small businesses, this building and the community surrounding us is more than we could have ever dreamt of for our business.”

TRENDS FOR THE FUTURE

A strong economy and ready availability of capital bode well for continued redevelopment projects in the region. Van Martin suggests the area might tap into what are known as opportunity zones. The Opportunity Zone Program was created as part of the 2017 Tax Cuts and Jobs Act to encourage long-term investment in low-income urban communities throughout the country.

“I think it will be interesting how Lansing reacts to opportunity zones,” said Martin. “We haven’t seen a big push for it but there are a number of projects that are being discussed and could emerge.”

Shapiro has been interested in a trend among more regional and national grocers such as Meijer and Target opening new small format stores in central business district, including in Lansing and East Lansing. He also sees the growth of the medical marijuana industry impacting commercial market locally.

“It is tying up land, warehousing and retail buildings some of which sit off the market for a year,” said Shapiro. “Small industrial buildings throughout the Lansing area have been grabbed up very quickly at very high prices.”

The focus on placemaking and building experience for people will involve more mixed-use approaches to repurposing projects and a continued push for housing.

“A lot of large buildings have turned into housing whether that be school buildings or industrial buildings near residential areas being turned into housing,” said LEAP’s Klein. “That’s because people want to be near food options and want an accessible and walkable community.”

It is certain that repurposing will become more than a trend and will be viewed as the way of doing business. Studies suggest that over the next 10 years, new development will decrease and up to 90% of development will be in the form of renovation and repurposing. The Lansing region has the assets to leverage, smart strategies to govern growth and motivated leadership to enable the continued emergence of innovative new ideas for redevelopment. 


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