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Posted on Mon, Oct 26, 2009 : 10:24 a.m.

Long-empty Pinball Pete's building signaled South University redevelopment potential

By Paula Gardner

The former Pinball Pete’s on South University was empty for years, a small building that signaled big potential for redevelopment.

But on a practical, investment-side, its price made it unattractive to many potential buyers, despite its location along the student-oriented downtown retail district.

The fire that gutted the building over the weekend raises even more questions about the property’s future.

It is unclear this morning whether the building will now have to be torn down or remain boarded-up.

The site been in a potential state of flux for years.

The property was bought by the Tice Family Partnership, according to city records, in 2001 for $700,000.

Three years later, it was listed for sale - and it stayed on the market for some time. Unclear this morning is whether it was an active listing at the time of the fire.

The property generated a lot of development interest due to the listing. But the price - $1.2 million in early 2004 - resulted in no serious proposals that ever were made public.

“It was off the radar because it was so expensive,” said Jeff Harshe of MAV Development in Ann Arbor. “It was hard to figure out what to do with the property that would make sense.”

The difficulty, developers have said, is the size of the lot: with 26 feet of frontage and 132 feet deep, the price and area combined to make a tall building the only viable option. The city assessor set the land value at $239,000; annual tax payments were about $8,600.

But the discussions about what that could mean on that property helped drive discussion - and policy - about development in downtown Ann Arbor.

“We want to create an environment where there’s incentive for property owners to develop property,” Maggie Ladd told me in early 2004.

Ladd, director of the South University Area Association, submitted a zoning application right before that conversation, seeking greater building height in that area.

Discussions about height and floor-area ratios in the South University district led to broader conversations about downtown building height.

It was a pressing issue in 2004, as developers sought to capitalize on the vibrancy of downtown and its proximity to the still-growing University of Michigan campus. One example of how the additional height in that district came to fruition: Zaragon Place, the student housing high-rise that opened this year on East University.

And one example of how changes in what was allowed generated backlash: The original proposal for University Village, which called for up to 26 stories of housing at the corner of South University and South Forest. It later was renamed 601 Forest and downsized to 14 stories.

Today, downtown building height is a less pressing on the submitted-project front: Economics of development downtown don’t work in this recession, which comes with limited capital availability.

But Ann Arbor is still trying to determine the best guidelines for what can be built and where. The A2D2 design guidelines will be formalized soon, and the city is hiring a new planning director to lead big-picture planning guidelines for the city.

Ladd’s original effort to add density to South University was driven in part for a greater diversity on the street.

Years ago, it catered to a wide variety of Ann Arbor residents.

Today, it’s largely student-oriented retail - both stores and bar-restaurants - with a smattering of U-M offices. Among the retail: The “new” Pinball Pete’s, in the Galleria building on the south side of South University.

Comments

Ponycar

Tue, Oct 27, 2009 : 10:42 a.m.

I love the fire conspiracy theorists here! Look, usually the simplest explanation is the real explanation. There were teen/homeless/whatever going into the building illegally (even though the owners had recently re-boarded it up) and one of them was cooking something of left a gas lantern running or something and the fire started. I'm guessing it'll be something like that. It's too bad the Tice's didn't develop the property in the time they owned. it. They were probably cash strapped due the beautiful, but I'm sure VERY expensive, renovations to Pizza House.

M.Bradshaw

Tue, Oct 27, 2009 : 7:44 a.m.

- Old rundown property 'suddnely' burning to the ground is nothing new...on South U, or elsewhere. Wonder how they get away with it? - MB -

Vivienne Armentrout

Tue, Oct 27, 2009 : 6:57 a.m.

Paula, thanks for the great retrospective. This type of article is really "value added" - not just the breaking news but the background and information on issues affecting our longer-term perspective.

annarborfan

Mon, Oct 26, 2009 : 12:22 p.m.

It's all about getting insurance money so that "something" can be done with the space.

jreed205

Mon, Oct 26, 2009 : 12:14 p.m.

The owners before the Tice family wanted an outrageous amount to rent the location and were not very flexible with the terms of the lease. This makes it hard to take on when you lose 30k customers for three to four months a year and is evident by the different buisness that you see come and go on south universty. It is very hard to survive in a down market when rent is between 8k and 10k/month. The other issue is the increasing amount of highschool kids standing outside the storefronts on south university. You don't see this on mainstreet and those buisness are successful and have been there for years. I have nothing against the kids but they don't have the finances that an older crowd does.

Paula Gardner

Mon, Oct 26, 2009 : 10:04 a.m.

We are still working the fire angle of the story, and hope for an update soon. I drove by on my way to work this morning, and it looks like the owners are well on their way to securing the space. It's probably done by now. That pricing aspect is interesting - it's something we hear a lot of in residential real estate, with people saying "I can't sell it for that, I paid $x." But it's just as true in commercial property that pricing can't necessarily be based on the previous sale. And in Ann Arbor, where the potential value was determined to be limitless in about 2004-2005, that's especially true. Many of those deals never took into account the possibility of an eventual down market.

adameichner

Mon, Oct 26, 2009 : 9:55 a.m.

Not raised here, but implied if one connects the dots: Property owners in Downtown Ann Arbor (on both sides of the diag), when trying to attract either tenants or buyers make a big mistake: They tend to value their assets based on what they (over)paid, instead of what the market will actually bear. Little-by-little owners are starting to realize, as they brush cobwebs out of their unoccupied spaces, that they need to adjust their perspectives. A good case in point is the old Fuji Restaurant up at Braun Court that has been for sale for what seems like a bajillion years. In my opinion, if you've had it for sale for $475k since Lincoln was president, its time to get real and price appropriately. Also - Paula - while this article's focus was on the market aspect of the property -- is there any news from the fire investigators? It just seems like when a property has had no value for an owner for nearly a decade, without knowing a thing about the moral uprightness of the owners, intentional fire-starting sounds like a plausible concern.....