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Shifting retail on Grand Rapids’ east side reflects broader market trends

Posted By: MiBiz on August 28, 2022.  For more information, please click here to read the source article.

Retail corridors on Grand Rapids’ east side are in flux as new businesses move in and longtime staples relocate or shut down.

The corridors in East Hills and Eastown embody West Michigan’s hot commercial real estate and retail market, characterized by low vacancy rates and growing property values and lease rates.

The real estate trends are having a direct effect on retail shifts recently seen in Eastown and East Hills, small business districts surrounded by an equally hot residential market, said Ingrid Miller, executive director of Uptown Grand Rapids Inc.

“What we witness at the public level are the visible outcomes of a much more intricate business ecosystem,” Miller said.

The market forces at play have led some longtime business owners to exit by retiring or selling off their property, while other business owners have been pushed out of desirable retail locations because of rising rents or other market conditions caused by the pandemic.

“There has been an increase in demand against a limited supply in the commercial real estate market, similar to the housing market,” Miller said. “Being a neighborhood business district and almost all locally owned minus a few chains which are still locally franchised, people talk to each other. If you are ready to sell, there is usually a ‘let me know first’ conversation you have with neighboring business owners.”

Paul Lee, who co-owns All In Hospitality Group LLC, which operates Donkey, Hancock, Winchester and Royals, said the pandemic has taken a toll on some longtime operators. 

“A lot of these small business owners had an opportunity to cash out or let others take over,” Lee said. “I think that’s what you’re seeing as a big part of this changeover. Some of the other changes are things really have changed over the last couple years with the way we go out and dine.”

Longtime staples shutting down

Brick Road Pizza Co., which closed in January after 13 years in business on Wealthy Street, was barely holding on during the pandemic, co-owner Cindy Talbert said in January. The business was set up for dine-in customers, posing a critical challenge as restaurant capacities shrunk and patrons preferred takeout options. It also was hard to maintain staffing levels and pay rent on the large space, which also contributed to the restaurant’s closure, Talbert said.

Big Bad Wolf Grand Rapids LLC, which is registered to Electric Cheetah Owner Cory DeMint, is in the process of applying for a liquor license at the former Brick Road Pizza location at 1017 Wealthy St. SE, according to Michigan Liquor Control Commission filings. Electric Cheetah is located on the same block as the former Brick Road. 

Cory DeMint did not respond to requests for comment. A Facebook page called The Big Bad Wolf posted on March 17 that a Mediterranean/Polynesian/vegetarian restaurant and bar is opening at the former pizza restaurant.

Other recent notable closures of longtime Eastown and East Hills businesses include Cherry Deli and Catering, Elk Brewing, Eastown Antiques and Bluedoor: A Home Collective antique store. 

Jason and Kate McClearen, owners of The Everyday Chef and Wife, bought the building at 834 Cherry St. SE on July 15 for $640,000 from former Cherry Deli owner Scott Schulz. 

“We were fortunate enough to meet the old owner of Cherry Deli,” Jason McClearen said. “He was emotional about passing the torch and was excited it would be in some ways the same mission (Cherry Deli) had.”

The location appealed to the couple because it is near downtown Grand Rapids on a visible, popular retail corridor.

“We’re really excited about finding this location,” Jason McClearen said. “We loved Cherry Deli when it was here, and we just want to bolster what the neighbors are doing and share our idea at the same time.”

Miller, of Uptown Grand Rapids Inc., said a “sense of mourning” typically follows a longtime community business closure.

“Cherry Deli is one of those losses everyone mourns,” Miller said. “Businesses like that are friendly faces, but they also make up a huge part of the neighborhood and they make Uptown appealing. They kind of were these paramount places that drew other businesses. There definitely is a sense of loss, but then understanding that there are just cycles of business. Twenty years ago, the district looked very different. Today, we have less vacancies and there is a lot of demand.”

Retail trends

Retail space in West Michigan has an overall vacancy rate of 3 percent, with popular retail corridors experiencing the highest sales volume over the last year, according to Colliers International’s 2022 Q2 Grand Rapids Retail Market Report. Currently, 180,000 square feet of retail space is under construction throughout West Michigan, which is “small enough not to have an impact on the vacancy rate and rent growth,” the report states.

The average lease rate in the Uptown Business District — which includes Eastown, East Hills and the East Fulton business district — has increased and is steadily around $20 to $25 per square foot, according to a recent study conducted by Uptown Grand Rapids Inc. Newer properties have been listed at $30 to $34 a square foot, which is the highest the district has ever experienced, Miller said.

“We’re happy to see the improvements and how it looks and we expect a certain amount of the property value to go up, but we also are aware it is increasing lease rates,” Miller said. 

Uptown Grand Rapids tries to work with property owners to communicate the benefits of longer term leases that gradually increase rent over the years, rather than sharp increases on short-term leases, Miller said.

“Our businesses are experiencing the benefits of the revitalization,” Miller said. “There are more people out walking around. It provides a boost in sales, and at the same time their property values are increasing. This has provided longtime owners an opportunity to exit while the value of their property is at its highest, which in some cases has created unfavorable circumstances for their other tenants who may experience an increase in lease rates.”

Both Eastown Antiques and Blue Door: A Home Collective, formerly located on East Fulton Street, closed recently after a change in their respective buildings’ ownership.

Blue Door: A Home Collective announced on Facebook on June 27 that its building was sold, and the business closed in August. 

“We want to thank all of our loyal friends for supporting us along with all of our valued vendors that have been a part of Blue Door,” the post stated. 

Dean Wiers-Windermuller owns Riverside Guitar School in Eastown, and recently bought his building at 1515 Lake Drive SE to expand his business. Weirs-Windermuller bought the nearly 5,000-square-foot, 102-year-old building for $920,000, according to property records. The acquisition ended up displacing Eastown Antiques after the two parties were unable to reach a new lease agreement, according to Weirs-Windermuller.

“Eastown Antiques was here for 17 years and my business has been here for seven years,” Weirs-Windermuller said. “They were always a good neighbor and had a good reputation. I did what I could to work with them to try to keep them in the front part of the space, but ultimately they decided it was best to close up and are now focusing on the estate sale side of their business.”