D VISION a Proposal to Rehabilitate 200 South Division Ave
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d_VISION A Proposal to Rehabilitate 200 South Division Ave An investment opportunity that cannot be passed up! 200 S. Division was home to a Goodwill Retail Establishment Placemaking Initiatives: Storefront Windows, Sidewalk Café, Rooftop Terraces Investment Summary CHERRY STREET SHELDON AVENUE IRR 52% Return on Cost 20% Cash on Cash Return 2.07x S. DIVISION AVENUE Purchase Price $2,250,000 200 S. Division Ave, Grand Rapids, Michigan d_VISION EXECUTIVE SUMMARY To: Peter Allen, Professor, The University of Michigan, Ann Arbor From: Mabel Kessler, MUP ‘15; Alex Lieberman, BBA ‘15; Kevin Swanson MArch ‘15; and Julia Upfal, MUP ‘15 Date: December 12, 2014 Subject: Proposal to Rehabilitate 200 South Division Ave, Grand Rapids, MI The Heartside Neighborhood of Grand Rapids is an excellent emerging neighborhood to invest in and we have chosen to do so with a property that has endless potential. d_VISION is a large mixed-use building lodged between two Silver Line BRT stops. Before we purchased d_VISION, the building was an Oldsmobile Dealership and more recently a Goodwill store. Currently, Cherry Hill Health Network occupies a significant amount of office space in the building, and we hope to develop a partnership with them and maintain their presence in the future. The d_VISION building currently spans 95,517 square feet, of which 44,845 square feet of is unoccupied and will be renovated by our firm to be used for retail and office space. We hope to add an additional 32,400 square feet of construction to the building, which we will split up into several units of residential apartments and condos. Our mixed-use building will offer a wide-range of sought after amenities, from two terraces with plenty of green space to an underground parking garage with secure access. The modeling that we did made financial projections based on approximately $5,225,000.00 in equity and $1,575,000.00 in debt resulting in a levered IRR of 52% and a stabilized NOI of $1,064,780.28. d_VISION is the addition that Grand Rapids needs. We would like this project to serve as an anchor of the Heartside Neighborhood and as a popular destination for residents and visitors of Grand Rapids as a whole. We believe this project will increase foot traffic and draw attention to the charm and positive energy that Heartside has to offer. Sincerely, Mabel Kessler, MUP ‘15 Alex Lieberman, BBA ‘15 Kevin Swanson, MArch ‘15 Julia Upfal, MUP ‘15 Research & Document Design Financials & Comparables Design & Site Analysis Research & Writing d_VISION TABLE OF CONTENTS RESEARCH DESIGN FINANCIAL ANALYSIS Grand Rapids Site Considerations Construction & Concepts Costs Demographic Profile Placemaking Comparables Strategy Market Assumptions Analysis Creative Interventions Transportation Property Connection Pro Forma Unit Analysis Power of Ten Sensitivity Our Vision & Amortization Amenities Stakeholder Analysis RESEARCH Grand Rapids d_VISION | Grand Rapids is a thriving city located along Michigan’s west coast. The local population is 190,411, making Grand Rapids Michigan’s second largest city. In the last few years, new developments in Grand Rapids have led to many new economic opportunities for residents and investors; cultural events, such as Art Prize, have made Grand Rapids into a welcoming place for visitors, new infrastructure has been built to keep up with local growth, and public transit improvements have been made to increase accessibility. In Grand Rapids, philanthropy and public- private partnerships are commonplace and heavily responsible for the vibrant downtown the city is home to today. DESIGN Grand Rapids’ close proximity to Lake Michigan has helped it to become a main stop among Michigan travelers who frequent Chicago and to beachgoers heading to Michigan’s west coast. Grand Rapids boasts a very diverse Art Prize installation 2013 population and is an excellent place for residents of all ages. With many emerging neighborhoods and growth in its The Rankings Are In! FINANCIAL urban core; it is clear that Grand Rapids offers a healthy and desirable market to invest in. Nation’s Best Place to ANALYSIS Own Rental Property! According to All Property Management, Grand Rapids is the nation’s best market for landlords. Nation’s Best City for Raising a Family! Out of the 100 largest metros, Forbes ranked Grand Rapids the number one city for raising a family. Number 4 Best City for Finding Employment Ranking is based on the unemployment rate, the diversity of industries, the cost of living, the range in size of companies offering employment, and high level of education among residents. One of 15 U.S. Cities with ‘Emerging Downtowns’! Grand Rapids is attracting reinvestment and population 200 S. DIVISION AVE growth in the downtown. Public- private funding has helped develop GRAND RAPIDS, MI Art Prize has made Grand Rapids a cultural ‘hot spot’ significant capital projects and planning initiatives. Sources: Triad Real Estate Partners, forbes.com, allpropertymanagement.com, careerbliss.com, mlive.com RESEARCH Demographic Profile d_VISION | The demographic profile of Heartside is illustrative of the people who live there and the market potential of the neighborhood. Heartside has a higher population density than the rest of Grand Rapids due to its close proximity to Grand Rapids’ downtown. Although Heartside struggles economically, with a high unemployment rate and a very low median household income, the neighborhood shows clear signs of resilience and we would like to be DESIGN included as a part of Heartside’s revitalization effort. Heartside Grand Rapids Renter Year Born Demographic Market Share FINANCIAL Population 2,059 188,040 1977-1996 Millenials 78% ANALYSIS Population Density (per sq. mile) 4,342 4,274 1946-1964 Baby Boomers 13% Median Age 32.6 31 Varies Traditional/ Non-Traditional Families 9% Median Household Income $13,495 $39,227 Total 100% Unemployment Rate 16.10% 8.80% Median Age Population Density Median Household Income 200 S. DIVISION AVE GRAND RAPIDS, MI Sources: ACS 5-Year Estimates: 2009-2013, Triad Real Estate Partners RESEARCH Market Analysis d_VISION | Grand Rapids is a great emerging market for investors to capture value from. College graduates Downtown Employment and young professionals have been moving to the city in increasing numbers. Empty storefronts are regularly being replaced with thriving local businesses and new planning initiatives have been introduced to accommodate a more urban lifestyle for Grand Rapids’ residents. Vacancy rates in Grand Rapids have decreased sharply since 2010, and rents in Grand Rapids have slowly increased in that time. With patterns of development showing no signs of slowing, it is evident DESIGN that now is the perfect time to invest in Grand Rapids. Downtown & Heartside Rental Market FINANCIAL ANALYSIS Rental Vacancy Rate: Grand Rapids, MI, US Rental Occupancy 580 784 1092 437 515 553 723 1053 1659 294 866 246 1322 2214 Studio Bedroom Rental Single Bedroom Rental 2-Bedroom Rental Average Rent: $580 Average Rent: $784 Average Rent: $1,092 200 S. DIVISION AVE Luxury Rent: $866 Luxury Rent: $1,322 Luxury Rent: $2,214 GRAND RAPIDS, MI Our Rent: $715.75 Our Rent: $875.75 Our Rent: $1,035.75 Sources: Department of Numbers, rentometer.com, Triad Real Estate Partners RESEARCH Transportation Connection d_VISION | Current Planning Initiatives in Grand Rapids: - The Midwest region is committed to developing high speed rail infrastructure to serve the region. This would make travels between Detroit, Chicago and Grand Rapids quicker and easier. - Just earlier this year, Grand Rapids opened its first Bus Rapid Transit line. - In October, a new Amtrak station was opened to service Grand Rapid’s residents in a way that DESIGN allows for more connections to other local transit options. - Grand Rapids continually evaluates and improves its award winning sustainability and climate adaptation plan. FINANCIAL - Last year, Grand Rapids’ voters approved a new parks tax that will provide the funding for ANALYSIS significant repairs to many of the city’s parks. Transit Options Grand Rapids is close to many great travel destinations The Rapid Central Station Travel Time Grand Rapids to Detroit 2 hours & 20 mins Silver Line BRT Stations Grand Rapids to Chicago 3 hours Grand Rapids to Lansing 60 minutes 131 Amtrak Grand Rapids to Lake Michigan 40 minutes Greyhound Grand Rapids to Traverse City 2 hours CHERRY STREET Megabus SHELDON AVENUE DIVISION AVENUE Bike Lanes & Sharrows Heartside to Downtown 200 S. Division Ave N 1/4 Mile Radius 200 S. DIVISION AVE 1/2 Mile Radius GRAND RAPIDS, MI Sources: Department of Numbers, Greater Grand Rapids Bicycle Coalition, walkscore.com RESEARCH Power of Ten d_VISION | 8 1. Rosa Parks Circle 6 2. Downtown Market 3. Founders Brewery 4. Grand Rapids Art Museum DESIGN 10 1 5. Urban Institute for Contemporary Founders Brewing Company Arts FINANCIAL 4 9 6. Devos Place Convention Center 131 5 ANALYSIS 7. Van Andel Arena 8. Medical Mile 7 CHERRY STREET 9. Grand Valley State University SHELDON AVENUE 10. Grand Rapids Community College The Silver Line BRT Central Station 3 DIVISION AVENUE 200 S. Division Ave 2 1/4 Mile Radius 1/2 Mile Radius N 1 Mile Radius Silver Line BRT Rosa Parks Circle 200 S. DIVISION AVE GRAND RAPIDS, MI Grand Rapids Art Museum UICA Van Andel Arena Devos Place Convention Center Medical Mile RESEARCH Amenities d_VISION | Within a 1/4 Mile Restaurants (11) DESIGN Bars (8) FINANCIAL Coffee Shops (2) 131 ANALYSIS Entertainment (2) Shopping (10) CHERRY STREET Grocery (1) SHELDON AVENUE SHELDON Parks (2) 200 S. Division Ave DIVISION AVENUE DIVISION 1/4 Mile Radius Amenities 1/2 mile 1 mile Restaurants 70 100 Bars 14 18 Coffee Shops 14 26 N Entertainment 7 11 200 S. DIVISION AVE Shopping 25 49 GRAND RAPIDS, MI Grocery 3 5 Parks 5 6 RESEARCH Stakeholder Analysis d_VISION | Cherry Hill Health Network The Cherry Hill Health Network is currently situated in the DESIGN d_VISION building.