New building projects down in Grand Rapids as developers grapple with coronavirus pandemic

GRAND RAPIDS, MI — Last year, as construction cranes dotted the skyline and workers hammered away on new projects, Grand Rapids marked a new milestone: an estimated $560 million committed to new construction citywide. That total, included in nearly 3,000 building permits filed in 2019, seems unlikely to be replicated […]

GRAND RAPIDS, MI — Last year, as construction cranes dotted the skyline and workers hammered away on new projects, Grand Rapids marked a new milestone: an estimated $560 million committed to new construction citywide.

That total, included in nearly 3,000 building permits filed in 2019, seems unlikely to be replicated this year. Amid the coronavirus pandemic, the number building permits filed with the city between January and August is down 18 percent when compared with the same time last year, city data show.

The value of the projects outlined in those permits is also down.

Permits filed between January and August of 2019 were valued at $390 million, compared with $199 million during the same time this year.

The coronavirus pandemic and the ensuing economic restrictions and fallout have greatly hampered the development industry.

“We’re having a more difficult year, but it’s not the kind of year that’s unheard of,” said Lou Canfield, development center manager for the city of Grand Rapids. He noted that construction is ongoing on some of the big projects that received permits in 2019, such as the $40 million renovation of the Amway Grand Plaza hotel.

The drop in new permits is far from surprising, city officials and developers say.

Gov. Gretchen Whitmer’s executive orders, designed to minimize spread of the coronavirus, brought a big chunk of the economy, including the construction industry, to a temporary standstill. The ensuing economic fallout and unemployment spike has left some lenders and investors less eager to jump into new developments.

Changes to how people work, eat out and shop as result of social distancing is also playing a role.

“How do you build a new office building or sign a 10-year lease for space when you don’t know what that space is going to need to look like to comply?” said Chris Beckering, executive vice president of Pioneer Construction.

The building permit data provided by the city to MLive/The Grand Rapids Press covers all commercial and residential construction in Grand Rapids. Renovations to existing buildings are included in the data.

While permits are down this year, the news isn’t all bleak, city officials say.

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The number and value of permits issued so far this year is still higher than totals in the aftermath of the Great Recession.

For example, there were 1,219 building permits issued from January through August of 2010. Those permits were associated with $109 million in construction costs.

The last year the value of construction permits issued between January and August dipped below $199 million was 2013. That year, there were 1,406 building permits issued during the eight-month period, with estimated construction costs of $183 million, city data show.

“It’s not the worst year ever,” Canfield said, referring to 2020. “It’s the worst of the last seven.”

Added Jono Klooster, the acting assistant economic development manager for the city of Grand Rapids: “I can tell you that it hasn’t been crickets. We are still working on things.”

Despite the obstacles, developers and construction firms are planning for the future and pushing forward with projects that were in the pipeline prior to the pandemic.

Grand Rapids-based Wheeler Development Group is working with the city of Grand Rapids to transform the small, city-owned parking lot across from Van Andel Arena into a 24-story mixed use building. The project, which is in the planning stage, was announced in January but temporarily put on hold once the pandemic hit.

“The challenges we are dealing with as a developer are confidence within the lending community and the logistical aspect,” said company spokesperson Jason Wheeler, referring to challenge of holding in-person meetings and accomplishing other tasks that were disrupted by the shut-down orders.

Jacey Ehmann, the founder of Metric Structures, a construction, design and development firm based in Grand Rapids, said she sees continued demand for new housing projects in the city. Her firm is planning to break ground in the spring on three small buildings, containing a total of 10 apartments, at 341 Henry Ave. SE, near the corner of Wealthy Street and Eastern Avenue.

Construction is expected to cost $1.8 million, according to city documents.

“I think Grand Rapids is still seeing growth,” Ehmann said. Later, she added: “I think people are showing serious resilience in the face of serious challenges.”

While demand for housing appears strong, new projects in some sectors of the economy may be tougher to pull off. Bars and restaurants, for example, have been hit hard by the pandemic.

This spring, the governor’s executive orders required them to close their dinning rooms and pivot to takeout only. They were given the go-ahead in June to once again offer in-person dining. However, to comply with social distancing guidelines, they can only operate at half capacity.

Those changes have paused some new restaurant projects in Grand Rapids.

“Uncertainty is one of the biggest difficulties,” said David Ringler, the founder of Cedar Springs Brewing Company. Prior to the pandemic, he was hoping to open Kusterer Brauhaus, a German-inspired beer hall, at 642 Bridge St. NW in Grand Rapids by mid- to late-2020.

He still hopes to move forward with the project, but the endeavor is being delayed given the disruption caused by the pandemic.

“The difficulty is that there’s really no end in sight,” Ringler said. “We have no idea how long this is going to go. Will it be weeks? Will it be years?”

In early June, restaurateur David Reinert said he had indefinitely shelved plans to transform an old, industrial building at 337 Summer Ave. NW into a restaurant. The property is located near the Bridge Street commercial corridor, where Reinert owns two other restaurants: Butcher’s Union and O’Toole’s Public House.

Reinert was not immediately available for an interview Friday.

While setbacks have occurred, city leaders remain hopeful that new projects will pick up this fall.

“I remain optimistic when it comes to economic development in the city,” said Grand Rapids Mayor Rosalynn Bliss. “I do think that the pandemic paused a lot of projects, but I also think that many of them in the long run will come to fruition.”

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