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Posted on Wed, Jun 8, 2011 : 12:44 p.m.

Should new Ann Arbor retail development be 7 times proposed size?

By Paula Gardner


Image courtesy of developer

Plans for Arbor Hills Crossing generated a collision between planning principles and market forces when they went before the Ann Arbor Planning Commission — for the first time — on Tuesday night.

The developers went into the meeting knowing that a decision would be delayed, due to some missing information from state road officials.

But they — and others — may have been as surprised as me about the comment from Planning Commission Bonnie Bona made during the meeting about the size of the project.

In a town that's expressed a whole lot of fears about density over the past decade, Bona raised the question: What kept Campus Realty and North Shore Properties Group from taking this project from the proposed 90,000 square feet to the maximum allowed by zoning: 649,066 square feet?

Some of that could be office and residential, aided by underground parking.

But really: 649,066 square feet on the 7 acres fronting one of the busiest roads in Washtenaw County?

On the planning front, we need rules that can deliver an overall vision for a community. Raising the question when preparing to evaluate plans is an important component of that.

Yet there's a practical element driving that, too. I often use the catchphrase "market forces," but really what has to happen in development, for it to be successful, is that people have to want to be a part of it.

On the retail side, we're seeing a spike in vacancies along the corridor — in Ann Arbor, it's not just at Arborland. When you extend the vision for Washtenaw into other municipalities, the spike is acute: It's just been weeks since boards went up on the window at the vacant Ypsi-Arbor Bowl, across the street from a long-vacant grocery.

We're also seeing effects of nationwide retail overbuilding, major chains cutting back on their store space and pressures on smaller retailers — the kind that fill the types of neighborhood centers conducive to walking or cycling — that can make operating a storefront challenging.

One benefit that I'm seeing from the recession is the new attention to infill development — like this site — and a slowdown of the greenfield development. Our greater community will be better off if we retain the commercial viability and vitality of its core areas.

Plus, we've learned that Ann Arbor isn't a bottomless market for retail, office or residential space.

So do we need to aim for the maximum on every project? And is the community harmed if we don't?

As I consider that, I'm thinking of two recent projects that serve as examples that bringing mixed-use concepts and more density to development sites may not be the best move:

• Ashley Terrace, which started out as an office concept, but was turned into a condo tower with retail space. Office and retail remain empty and many condos became rentals — before 27 unsold units went back to the lender, along with the commercial space. We can point to the economy, but we also can point out that other office deals got done in the last few years, and this is shaping up to be "last resort" space. Worth the density?

• Plymouth Green Crossings, where the commercial space isn't full and the condos were turned into rentals — and it could be years before a second building goes up. The standalone bank on the property, its most traditional component, seems to be functioning fine. When will Ann Arbor be ready for this mixed-use approach?

It's still early in the public discussion process for Arbor Hills Crossing, and I'm eager to see where it goes. Planning comments often lead to better projects.

But I do hope that the so-called "market forces" play a role in that so we're not left forcing a good planning concept onto a property that, on the commercial and investment sides, may not be able to sustain it.



Fri, Jun 10, 2011 : 5:41 a.m.

Read this three times and couldn't find a location named for this project. Did some quick research and found out, but why on earth isn't it mentioned in the article? Or is this op-ed only for those in the know? Seems that such basic information would be included for the benefit of the reader. As for the question proposed, it really seems a nonissue, since the builder doesn't want to build further on the property anyway. So what's the clamor about? I think jumping on what people say has a kind of chilling effect on free expression.

John Alan

Thu, Jun 9, 2011 : 2:02 p.m.

Another good one.... The planning commision has no respect for people's right. Nothing new here. These are expensive lands and it is the best to be built to its maximum. If the developer (owner) is not asking for deviation and/or exception and it is BY RIGHT.... then why are these people trying to change something that has nothing to do with them. I sure hope the owners take it to court and get their BY RIGHT enforced by a judge....


Fri, Jun 10, 2011 : 5:50 a.m.

I do not understand your comment. Did I miss something maybe? What rights do you feel are being violated? And what is it you feel the owners should go to court for?


Thu, Jun 9, 2011 : 12:41 p.m.

Arbor Hills Crossing is a speculative proposal, meaning that it will be built before any leasers commit to the property. In view of the abundant vacant commercial space being offered for lease at cost per square foot that will be cheaper than required for Arbor Hills Crossing to be profitable, investors in the development will be accepting considerable risk. Of course, the estimated construction cost has not been mentioned so far nor where funding will be obtained. The financing required for the proposed development is directly related to the size of the project. Developers will likely have a better chance of obtaining funding for 90,000 sqft than for 649,066 sqft. The latter plan would require more than six times the funding as compared to the former plan. When building on spec investors will be sensitive about overbuilding, if they hope to maximize profit. Some comments indicate that the involvement of developers is misunderstood. Developers primary interest is for their own profits which are gained by taking fees from the financial loans when they are secured. Developers do not usually have any of their own money invested in the project. While this arrangement means that the developer will not receive further financial benefit if the project is profitable, the developer has no risk of losing money if the project goes into bankruptcy. The developers only risk is that they will not obtain financing and then the money which they spend in designing their projects will be financial losses for them. But once financing is secured developers will take their 1% or 2% "off the top" and be done with it.


Thu, Jun 9, 2011 : 1:01 a.m.

They should maximized develpoment. Sure, in these times it is a huge risk, but the City and the County can guarantee their money. The worst case scenario is that the taxpayers are on the hook. But that is why we have government. To make decisions for people on how their money should best be spent.


Thu, Jun 9, 2011 : 10:59 a.m.

We should guarantee the money? Really?


Wed, Jun 8, 2011 : 10:39 p.m.

Please direct me to the portion of the article that states where this development is.


Wed, Jun 8, 2011 : 9:22 p.m.

This proposal is way too large for that area. Washtenaw Ave is a congested, clogged road at most times of the day and turning into and out of businesses is a nightmare. This oversized development would just add to the congestion, pollution and empty retail around town, and only serve to fatten the developer's pockets. Does A2 need ANOTHER wine store, spa and cafe (as pictured in the drawing)???? Another stoplight would have to be added to that location to allow left turns from Platt to Washtenaw, adding yet more "stop-start" congestion along Washtenaw. There are all kinds of examples of empty, overbuilt retail around A2, why add another one, except to fatten the developer's wallet? Oh, that's right, the developer would have to pay taxes on the property, whether it's filled with more needless retail or not. Oh, that's right. A2 has all these rich students just dying to try more duplicate retail over on Washtenaw. Not good reasons to add congestion and pollution to a grim roadway. Turn this property into a park.


Fri, Jun 10, 2011 : 5:43 a.m.

You feel the 90,000 foot proposal is too large?

Vivienne Armentrout

Wed, Jun 8, 2011 : 7:17 p.m.

Peter Allen, in his remarks before a DDA committee this morning, said that the office market is for rents around $20/ s.f. but rent needs to be $30/ s.f. to support new construction. It would be interesting to see that documented with some numbers.

Stephen Landes

Wed, Jun 8, 2011 : 6:19 p.m.

The poll needs other options. How about an option that says the OWNER of the property gets to decide how much to invest and what will provide the return on investment required?


Wed, Jun 8, 2011 : 6 p.m.

Great op-ed Paula. The empty buildings in town make expanding this development a bad demand. And traffic at that intersection is already a mess. On another subject could separate op-ed pieces from polls? If the intent of the poll is to get an objective gauge of public opinion than it shouldn't accompany an opinion piece.

City Confidential

Wed, Jun 8, 2011 : 6 p.m.

@ a2grateful: the only problem with that thought is that the owner can walk away - in the middle of construction, or after something hideous has been built. It seems that once something is built, it stays, often abandoned, whether that is good for the area or not. Should the city bear the burden of tearing everything down and filling in old foundations, in order to entice new developers? Should the owners' "liability" include costs of removing buildings if they go broke? Where will they get the money to shoulder their own responsibilities to clean up the mess they made? The blocks and blocks of abandoned gas stations, strip mall space, old style taco bells, the hideous former drive through burger joint, not to mention the giant buildings like the bowling alley and the grocery store in the Ypsi section of Washtenaw are enough to help me see the flaw in letting people do whatever the heck they want. They don't have to live with it when it is time to pack up and leave.


Wed, Jun 8, 2011 : 5:53 p.m.

Nobody is building residential construction these days, so adding anything residential to this development would be a total waste of the developer's money. Expanding the size of the development is a decision for the developer and their financiers. It's clearly in the city's best interest to "tweak" the plan and force the developers to add a bike path, or more parking, or more trees etc. etc. but changing the number of square feet may not jibe with their business plan. They may feel confident that they can lease out the 90K square feet, but nothing more. Who's going to take the risk of an additional 500K square feet?


Wed, Jun 8, 2011 : 5:51 p.m.

I just love the way the un-elected panel: Ann Arbor Planning Commission, gets to decide how much money a company can make in Ann Arbor real estate. Ms. Gardner: can Ann Arbor afford not to maximize this project? The city needs money for the homeless, hungry, parks, Arts and other trivia things that this project could pay for. Come on be a capitalist, its fun!


Wed, Jun 8, 2011 : 4:57 p.m.

How's this for a novel answer: Why not let the owner decide? It's their property, investment, risk, and liability. Any other party with different plans should buy the property and develop it themselves.


Wed, Jun 8, 2011 : 11:06 p.m.

sorry, idea was not part of the poll.