The shelf for downtown Ann Arbor projects is started to get a little crowded. You might have noticed a little bit of controversy surrounding a number of projects slated for downtown in recent years. However, most of those have yet to materialize.
Seven major projects have been approved but have yet to break ground in the downtown Ann Arbor area. Another two are going through the approval process and the city has issued request for proposals for two of its downtown-area parcels.
Common sense would seem to dictate that there might be a flood of projects as soon as the economy recovers. However, don't expect to start seeing shovels go into the ground all at once (or any time soon) as banks and the rest of the financial industry continue to lick their wounds from the housing and mortgage meltdowns.
"The banks were all very burned by real estate," says Stewart Beal, an Ypsilanti-based developer and owner of Beal Properties. "They will be looking for other projects to finance before real estate."
Beal is currently trying to get several projects off the ground in Ypsilanti, ranging from small apartment building rehabs to the controversial Thompson Block. He recently put together a list of about 400 banks and financial institutions in the Midwest, sending out an application for a $175,000 loan to rehab a small apartment building near Eastern Michigan University. He got favorable responses from just three and was able to eliminate the rest from consideration within two weeks.
He characterizes half of them as out of business or close to it. Another 100 are forbidden from making new construction loans. The rest won't do any sort of construction loan unless the customer is occupying the building. He even points out that the owner of Village Green (a large, well-established company with thousands of assets) is publicly complaining about the lack of credit. That means the projects on downtown's plate could be as far as 10-15 years out instead of the average 2-3 year time span.
"The strongest owner that has the best product will go first," Beal says. "The second-best owner with the second-best product will go next and so on. Some of these projects will never happen."
So then why do developers keep going through the publicly arduous task of navigating NIMBYs and local bureaucracies in the face of such staggering odds? Beal sums it up as simple as a developer needs to develop just like a fish needs to swim. Plus banks won't even talk to a developer without local approval and if they spend this down time laying the ground work, they will be ready to build when the economy recovers.
"Developers are by nature very optimistic," Beal says.
Source: Stewart Beal, owner of Beal Properties
Writer: Jon Zemke
Enjoy this story?
Sign up for free solutions-based reporting in your inbox each week.