U-M signs deal to move into Liberty Lofts commercial space in downtown Ann Arbor

With the deal, Ann Arbor’s largest mixed-use redevelopment project concludes.

“It’s a significant milestone,” said developer Ron Mucha of The Morningside Group, which bought the former industrial property from the Eaton Corp. and turned it into 68 condos in addition to the commercial space.

The College of Architecture and Urban Planning leased the building, which had been discussed for several years as one of downtown’s most viable options for larger-scale retail uses. Some ideas floated for the property over the years include a grocery store and a variety of collective marketplaces.

Yet its location just two blocks west of downtown - along with the proximity to the condos and Old West Side residences and 54 on-site parking spaces - failed to find a tenant.

The building - offered for sale at $3.9 million or lease over several years - drew much attention, real estate agents said.

At the same time, its attributes like the high ceiling and clerestory windows made it difficult to subdivide or retrofit for a specific use.

But it was those very qualities that appealed to U-M, Mucha said. The architecture school had leased the space for short-term uses before it evolved into its best option for the longer-term vision.

“What they value is the physical nature of the space,” Mucha said. “The high bays, the unencumbered nature of the space. There are no columns. It gives them a lot of flexibility to do a lot of research-oriented tasks.”

A U-M spokesperson said the architecture school continues to consider the specific use for the space.

“It will be used for architectural research,” according to an email response to a request for information. “…Architecture and Urban Planning is still working out the specific details to determine the exact use of the space.”

Morningside is seeking building permits to complete improvements to the building’s shell: Add bathrooms, fill in panes of glass, refurbish the fire suppression system.

The work should be done by Nov. 1, Mucha said.

The use of the building by U-M is not a service function for the neighborhood, “but it should be complementary,” Mucha said. Other Old West Side buildings - like the Argus Building - successfully integrate the business function in the largely residential area, he said.

U-M says it considered on-campus spaces before signing the 5-year deal, but none met the specific need.

The five-story Liberty Lofts condo portion of the development was one of downtown's first-completed projects after a wave of condo proposals that started downtown in  2004. While others - like Lofts 322 and Ashley Terrace - were new construction, the redevelopment of Liberty Lofts preserved the historic aspects of the former factory.

Meanwhile, downtown Ann Arbor's office vacancy rate at the end of 2009 was 16.58 percent, according to Swisher Commercial of Ann Arbor.

Michael Giraud and Tim Guest of Colliers International represented Morningside in the transaction.