Downtown Ann Arbor Borders property owner launches eviction proceedings against real estate firm
A family trust that owns a portion of the former Borders store property in downtown Ann Arbor has filed documents to proceed with the eviction of the Farmington Hills-based real estate firm that was leasing part of the store to Borders.
Agree Realty Corp., which has long controlled the Borders property at Liberty and Maynard streets through a complex land-lease deal with landlord Malcolm Properties LLC, is the target of the eviction proceedings.
Malcolm Properties filed documents with the 15th District Court claiming that Agree stopped paying rent on Aug. 31. Since then, Agree has accrued $49,085.50 in unpaid rent for September and October, according to the court filing.
Borders exited its downtown Ann Arbor store in September.
Melanie Maxwell | AnnArbor.com
Agree also has failed to pay $120,797.07 in property taxes tied to the former flagship store, which straddles 600-616 E. Liberty, 305 Maynard and 311 Maynard, according to Malcolm Properties' filing.
The relationship among Agree, Malcolm and Borders was complex. Agree also owns part of the property, which includes several legal parcels.
Adding a layer of complexity to the situation is the fact that most of the store appears to be empty, save for abandoned bookshelves and magazine racks.
An eviction notice was placed on the empty store's Liberty Street entrance in early November. A court hearing scheduled for Nov. 10 was rescheduled for 9 a.m. Nov. 17.
The future of the Borders store property is widely viewed as a linchpin in reshaping the character and vitality of downtown Ann Arbor's most expensive retail district.
Ann Arbor-based Borders Group Inc. closed its flagship store in September as part of its bankruptcy liquidation.
A real estate broker for Agree recently told AnnArbor.com that a potential tenant for the store had emerged — but no deal has been announced.
W. Daniel Troyka, an attorney with Conlin, McKenney & Philbrick who is representing Malcolm Properties, could not be reached for comment.
Oakland County attorney Mayer Morganroth, who is representing Agree Realty, also could not be reached today.
Executives for Agree Realty, which also owns Borders' former corporate headquarters building on Phoenix Drive, did not respond to requests seeking comment.
Malcolm Properties LLC is the legacy of a family trust that originally leased the former Jacobson's store to Borders in the mid-1990s. The trust — then called the Clara I. Malcolm and J. Karl Malcolm Testamentary Trust, according to the documents reviewed today by AnnArbor.com — represented about 10 different family members at the time.
Borders' original lease for the downtown property — which has about 43,000 square feet of retail space — was included in the filings reviewed by AnnArbor.com.
The lease, which lasted through 2025, spells out a rent schedule with successive increases in rent. Borders was paying Agree $24,543 a month when it filed for Chapter bankruptcy protection in February.
If Borders had stayed in business and not secured changes to its lease, it would have had to pay Agree $26,997 a month from Sept. 1, 2013 to Aug. 31, 2018, $29,697 from Sept. 1, 2018 to Aug. 31, 2023 and $32,666 from Sept. 1, 2023 to Jan. 31, 2025.
The documents did not disclose the payments from Agree to Malcolm.
Also recently, vandals sprayed graffiti on the front door to the former Borders store. One style of graffiti reads: "Make this a shelter! I'm freezing my (expletive) off *spirit Hands*" while another reads "WORD."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
YpsiLivin
Tue, Nov 15, 2011 : 6:11 p.m.
"Also recently, vandals sprayed graffiti on the front door to the former Borders store." Good thinking. Blight always helps.
Gordon
Tue, Nov 15, 2011 : 2:30 p.m.
How about the trust that privately distributed wealth as opposed to the tax structure which distributes wealth? A lot of services are supplied by the City of Ann Arbor for the privilge of housing the ZUniversity of Michigan. Residents / businesses pay taxes for that privilage because the City can't tax the University. The rent at $6 per square foot is very reasonable making the tax burden a bit less onerous. Lets convert the space into temporary housing for the un-employed while they are re-building our infrastructures similar to WPA in the 1930's? Or, if re-leased, use the tax money to re-build the infrasturcture.
a2roots
Tue, Nov 15, 2011 : 4:12 p.m.
Sure sounds like you have it all figured out for the owners. My guess is they have a better plan.
shrewdrealist
Tue, Nov 15, 2011 : 2:30 a.m.
If Borders just remained one single bookstore it would have been more successful than selling out. Look at Powell's bookstore in Portland.
From Nearby
Tue, Nov 15, 2011 : 2:13 p.m.
Yeah, look. Powells laid off 7% of their staff after not filling about 40 positions the year before as people left, cut benefits, suspended 401(k) contributions, and instituted a pay freeze in February and said that if sales continue to fall that won't be the end of the cuts. <a href="http://www.oregonlive.com/business/index.ssf/2011/02/union_provides_details_on_powe.html" rel='nofollow'>http://www.oregonlive.com/business/index.ssf/2011/02/union_provides_details_on_powe.html</a> <a href="http://artsbeat.blogs.nytimes.com/2011/02/09/powells-books-announces-layoffs/" rel='nofollow'>http://artsbeat.blogs.nytimes.com/2011/02/09/powells-books-announces-layoffs/</a> Hundreds of independent book stores have closed over the past few years. Borders was just the biggest to go to date in an industry going the way of the wagon wheel maker.
Kara H
Mon, Nov 14, 2011 : 10:55 p.m.
Did I miss something? For 43,000 sq ft, that's a little over $6/sq ft, which is good in downtown.
Kara H
Mon, Nov 14, 2011 : 10:56 p.m.
Rent wise. No comment on taxes, not enough info on those.
Tom Joad
Mon, Nov 14, 2011 : 10 p.m.
That's some hefty rent...got to sell a lot of books at marked up prices to make the rent. One word: Amazon.com It'd be nice to know what period that property tax covers as well
Charlie Brown's Ghost
Mon, Nov 14, 2011 : 11:58 p.m.
Overpriced coffee sales probably helped
Brian Betts
Mon, Nov 14, 2011 : 9:16 p.m.
Is it just me, or is that a ridiculous amount of property tax?! I'm not a tea party, "don't tax me bro" type at all, but there's a clue as to how this business couldn't stay afloat...
John B.
Tue, Nov 15, 2011 : 4:41 p.m.
$32K/month is a killer deal for 43,000 square feet in that prime, prime location! And they weren't paying that, they were paying more like $25K. That is under $7 per square foot. That goofy nail salon near Arborland is paying over $50 per square foot, for comparison. Current rates are more like $15-30 per square foot, typically.
clownfish
Tue, Nov 15, 2011 : 1:25 p.m.
What about the $32k/month for rent!
Steve Hendel
Mon, Nov 14, 2011 : 10:13 p.m.
Well, it IS a multi-million dollar building...and we don't know what period of time that tax amount represents.
L'chaim
Mon, Nov 14, 2011 : 8:58 p.m.
Occupy Empty Buildings! Homes for the homeless, work space for the organizers!
Wolf's Bane
Mon, Nov 14, 2011 : 8:15 p.m.
SNAFU!!!
Joe_Citizen
Tue, Nov 15, 2011 : 8:21 a.m.
was