Plans for 24-story tower in Grand Rapids scrapped
GRAND RAPIDS, Mich. (WOOD) – A developer is dropping plans to bring a 24-story tower containing apartments, office space and parking lots to “The Wedge” in downtown Grand Rapids.
“In this current economic climate, it is not possible for us to advance this project at this scale,” said Jason Wheeler of the Wheeler Development Group.
Wheeler Development Group dropped his possibility to buy The municipal lot at Ottawa Ave. SW 22 expires on October 1st.
“It just doesn’t feel right that we’re taking risks on this scale,” Wheeler said.
The mixed-use development of WDG, dubbed city tower, would have connected to the city’s existing park structure on the triangular site bounded by Ottawa Avenue, Ionia Avenue and Fulton Street. That project proposal comprised more than 100 apartments, several condominiums, office space and parking lots.
Wheeler said the decision to abandon the plan was based on higher construction costs, “huge” rate hikes and continued supply chain unpredictability in the delivery of building materials like steel in glass, which could push the project much further than the 28-month timeline.
Wheeler said since WDG proposed development in 2019, costs have increased by 25% to 30%, which is at least $13 to $14 million more than the original estimate. He said no amount of “added value” or the use of alternative materials and design overhauls can fill that gap, and passing on the cost increase to new tenants isn’t realistic.
“These apartments would have to cost $4,000 a month to justify that. We know this is not a healthy rental structure and does not give the community the opportunity to embrace the project,” Wheeler said Monday.
The same challenges prompted WDG to do so Stop his Robinson Flats proposal for Easttown in June.
Wheeler said at the time that while it’s rare for the company to halt a project like this, the industry “is dealing with unknown factors that haven’t been present in the decision-making process for a long time.”
“The timing is not right,” he said on Monday. “We always have to be smart.”
Wheeler said WDG expects this to be a temporary situation “but it could be a couple of months or a couple of years. We just watch like a hawk, see what indicators are signaling a shift, and then we’re ready to act.”
For now, WDG is focused on its backlog of opportunities, including Village East of Ada and Evergreen Townhomes. Wheeler said the company is still considering new projects and meeting with new customers.
Polling results released Monday by Grand Valley State University’s Seidman College of Business showed that West Michigan’s economy has been flattening, with steady demand from auto parts suppliers offsetting more negative results from other sectors, including the office furniture industry.
GVSU Supply Chain Research Director Brian Long said he was about 80% certain the region was slipping into a “shallow recession” given national trends and feedback from regional industrial employers. Long said the lower confidence has worsened near-term business prospects, but perceptions are still positive three to five years from now.
News 8 has reached out to other major developers in the region to see if they are removing any project proposals from their list due to the current economic conditions.
“Despite talks of a recession, the owners and developers we work with continue to move forward with their projects,” said Jeff Smigielski, vice president of construction at Orion Construction, in a note to News 8. “Certain sectors are even increasing to meet demand . We’re seeing growth in multifamily housing as Grand Rapids has one of the most competitive rental markets.”
“Overall, development continues to be strong across all market segments and our project flow has not been impacted,” said Smigielski. “We anticipate a strong project portfolio through 2023 and beyond.”
https://www.woodtv.com/news/grand-rapids/plans-scrapped-for-24-story-tower-in-grand-rapids/ Plans for 24-story tower in Grand Rapids scrapped