COVID throws a wrench in City Tower

Other Wheeler Development Group projects are on hold as state sorts out construction rules.
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The Hanover townhome project in Caledonia has about 48 completed units, with five occupied and another three scheduled to move in over the next month. Courtesy WDG

The 24-story City Tower promised to be Wheeler Development Group’s next flagship project, but now COVID-19 and the ensuing shelter-in-place order for the state of Michigan has put the project on ice as the developers examine the next steps.

The city of Grand Rapids earlier this year entered a one-year agreement with Wheeler Development Group to conduct due diligence and negotiate a development agreement for the build site at 22 Ottawa Ave. NW in Grand Rapids, but with COVID-19 putting a stranglehold on contractors and architects, it looks like the process may take longer than expected.

“We were finalizing preconstruction, working with architects and engineers, so we can put that project to bid,” said WDG VP of Marketing Jason Wheeler. “All of our subcontractors are frozen, and we can’t just be forking dollars over to an architect until we know when construction is going to come back online.”

Planned features and uses for the building include 5,215 square feet of ground-floor retail, five floors of parking with approximately 185 spaces, three floors or approximately 44,000 square feet of office space, 10 stories for about 118 apartments and five floors for about 19 condominiums.

Wheeler said WDG may ask the city for a deferment on the months of progress lost due to Michigan’s shelter-in-place order, allowing the company essentially to pick up where it left off.

“When it first came out — the first phase of shelter-in-place — we were under the impression that essential services did include home construction,” Wheeler said. “It later became more defined as any work that presented a safety issue.”

The Business Journal previously reported on communications between the Home Builders Association of Michigan and Gov. Gretchen Whitmer’s office. When Whitmer declared industries like housing construction are not essential under her “Stay Home, Stay Safe” executive order, she offered only the exception of completing construction to eliminate onsite safety hazards.

HBAM called on Whitmer to re-think her assessment and to consult with federal Homeland Security officials.

The Department of Homeland Security, meanwhile, designated single- and multifamily housing construction as essential infrastructure. The designation serves as a recommendation and not a mandatory action for state governments to comply.

Wheeler Development also had to halt a previously unannounced project with the city of Rockford. The company had planned Hotel Rose, a standalone, four-story hotel building slated to begin in the fall, but the project now is on hold, as well.

Wheeler Development also has three ongoing multifamily projects that are its main priority: Michigan Meadows in Grand Rapids, the Hanover in Caledonia and the Preserve in Spring Lake, all of which are in various stages of completion.

WDG originally had ribbon cuttings scheduled for each townhome community throughout 2020, but the projects can only be shored up for now. Both Hanover and Michigan Meadows have people living on them and require essential construction to prevent safety issues.

“We had to enclose the buildings, make sure they were locked and there were no safety hazards,” Wheeler said.

Hanover has about 48 completed units, with five occupied and another three scheduled to move in over the next month.

Michigan Meadows, which started earlier, currently has 11 occupants and 13 scheduled move-ins out of the 87 units planned for the site. The site currently has 38 completed units.

“The main challenge is discovering what services are deemed critical so we can complete the maximum number of units and then turn them over to PURE for lease,” Wheeler said. “That will hopefully allow us to keep some stability and presence.”

Anne Ficeli, president of PURE Real Estate Management, which manages all WDG-owned properties, said some of the scheduled move-in units are in various stages of completion, and some may not be complete by move-in day if construction remains nonessential.

“Some are complete, but not move-in ready,” Ficeli added. “We don’t have certificates of occupancy on all of them.”

PURE has remained open as an essential service, although many agents now are working from home. The company’s service technicians still are onsite maintaining the properties, but they are not allowed to enter people’s units unless it’s an emergency, Ficeli said.

“I know management is important, because we need to maintain people’s homes, but I don’t understand why construction is not essential,” Ficeli said. “People are still looking for places to live. We have some places to put them, but unless we can get construction online, it’s going to be difficult.”

Ficeli said she has weekly calls with the Property Management Association of West Michigan, and construction is frequently discussed as a necessity. Both PMAWM and HBAM are in on the effort to convince Whitmer to designate construction as an essential service.

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