Third Coast In The News

What's up on the hill? Medical initiatives turn Grand Rapids economy in new direction Chris Knape, The Grand Rapids Press - Grand Rapids, Mich. E.1 8 Dec 11, 2005

It's been dubbed the "Medical Mile," but if supporters are right, this burgeoning stretch of Michigan Street NE also is the road to West Michigan's future.

By 2010, nearly $1 billion will have been spent in an effort to remake Michigan between Fuller and Division avenues -- reshaping the region's economy from manufacturing to helping people live longer, healthier lives.

In doing so, hospitals, community leaders and developers are promising to deliver thousands of new jobs.

"I drive that stretch every day, and for the next five years it will be ugly," said Birgit Klohs, president of the economic development group The Right Place Inc. "But I keep reminding people ... when you see cranes in the city, that's a good thing."

Such a transformation would be no small feat for a community in search of a 21st century identity that reaches beyond the industrial, conservative Christian image forged during the past century.

It's also a major challenge that relies on such high-risk ventures as a new medical school, commercializing drug and treatment research, and the premise that Grand Rapids can find a place among internationally known treatment destinations such as the Mayo Clinic in Minnesota.

"A lot of what we do is very risky, but it's not done without research," said Richard Breon, president and chief executive of Spectrum Health, the area's largest health-care provider.

Most of the investment along Michigan Street has been, or will be, tied to Spectrum's growth. In five years, the hill will be a different place, Breon said.

"At the end of the day, you're not going to just see structure, but the coexistence of research education and clinical care," Breon said.

The result: a "tremendous halo effect" on other areas of the economy, Breon said.

The Michigan Hill redevelopment mixes public and nonprofit developments alongside private-sector investments.

Spectrum already has started construction on the $78 million Lemmen-Holton Cancer Pavilion at the site of a former Burger King across from the main hospital.

By fall, preliminary work on the $190 million Helen DeVos Children's Hospital building, now a hospital parking ramp, could start.

And Van Andel Research Institute plans a spring groundbreaking on its $150 million to $200 million expansion that eventually will result in 400 new jobs.

Meanwhile, the private-sector effort is led by the $120 million Rich DeVos/Christman Co. development of three medical-office buildings. Much of the space will be leased to Spectrum and its affiliated doctors, atop a parking garage.

Area leaders have estimated the DeVos/Christman project will create up to 2,000 jobs.

That project replaces an ambitious, but never finished, development from the 1970s that resulted in the Towers medical building and an adjacent parking ramp.

The parking ramp already has been torn down, while the Towers building is expected to come down in 2007.

Another private effort, at Sinclair Avenue and Michigan Street, features a group of neurosurgeons planning what could be a $10 million to $20 million office building on 1.6 acres bought for nearly $4 million.

Meanwhile, developers of Mid Towne Village have spent millions buying and demolishing houses along Union, Dudley and Paris avenues to make way for a mixed-use project anchored by medical offices.

The keystone building for the Mid Towne project -- a 104,000- square-foot, seven-story women's health center -- is expected to cost more than $20 million.

Putting together enough property to make projects work near Spectrum has become an expensive proposition.

Alticor co-founder Rich DeVos shelled out $6.25 million to buy the Burger King, a move that inflated other property prices around the hill.

Dave Levitt, a commercial real-estate agent and developer who helped put together the Mid Towne project, said the hill will command higher rents that will be worth it for many in the health and medical industry.

"Cost is an issue, clearly, but proximity is important, too," Levitt said. "If your business requires that proximity, you're going to want to (be on or near the hill)."

Building on potential

Gov. Jennifer Granholm lauds Grand Rapids for its economy- diversifying efforts at a time the state's economic backbone, the automotive industry, has been suffering.

"In the effort to diversify our economy, we need an edge," she said. "It's important for both research and development, but mostly development. I'm excited about transforming a great idea into great products that employ people."

In the wake of Delphi Corp.'s bankruptcy filing and other manufacturing- sector troubles, The Right Place's Klohs said the Michigan Hill project is a breath of fresh air.

The risk of not pursuing the dream is greater than the risk of falling short, Klohs said.

"What do you want me to market? Do you want me to market a mediocre city that no one wants to come to?" she said. "Do we want to be a mediocre city in the upper Midwest? If you're average, then I don't want to market this community."

The medical boom is promising for the entire market if it brings talent and investment into the community, said Tim Kwekel, a commercial real-estate agent representing doctors planning the women's health center at Mid Towne Village.

Thus far, Kwekel said he has seen only existing practices move from one location to another, some due to growth and others because of lease incentives or a better location.

"The real question is, how much of the medical development is going to pull in resources?" said Kwekel, who attributes half of his business to health care. "The last five years I've worked with only a handful of tenants that have come in from out of the market."

That chicken-or-the-egg situation has been a driving factor behind the effort to lure Michigan State University's College of Human Medicine to Grand Rapids.

The med school -- along with an expanded Van Andel Research Institute and improved specialty-care facilities -- are expected to become the draws that encourage physicians to come to, and medical students to stay in, Grand Rapids.

A recently released framework for the school suggests focusing research efforts on cancer, obesity, cardiovascular diseases, arthritis and neurobiology. Such efforts would build on areas where Van Andel Institute, Spectrum and Saint Mary's Health Care already specialize.

A building housing MSU's West Michigan Medical School is expected to be built on or near Michigan Hill by 2010 for $60 million to $70 million.

The DeVos/Christman towers and Mid Towne Village site are among locations being considered.

Area doctors have long lamented the difficulty they face in recruiting and retaining specialists. Other communities provide higher pay, lucrative start-up incentives, better climates and better reputations.

"A cluster of research, medical and education, that's a huge leveraging agent to further things," Klohs said.

Huntington Bank is making its biggest investment since entering the West Michigan market by being lead lender of the DeVos/ Christman project.

Bank steps up

The investment -- bank officials will only say it was "tens of millions of dollars" -- was big enough for the Columbus, Ohio, company's board to meet in Grand Rapids to get a better community overview in October.

"I believe very much there will be some very significant steps forward that will be attributed to the investments that Grand Rapids and its citizens have made," said Thomas Hoaglin, chairman, president and CEO of Huntington.

The Michigan Hill project already is being cited by developers as at least partial motivation for projects elsewhere around town.

About a mile east of the hospital on Michigan Street, a former U.S. Army Reserve Center has been torn down to make way for a two- story, $6.6 million medical office building.

Karl Carlton, who plans a 200-room Country Inn & Suites at East Beltline Avenue and Int. 96, is banking on patient and business guests coming to Grand Rapids for medical treatment or meetings on the Medical Mile.

West of the hill, developer Robert Grooters has said at least part of the market for his River House at Bridgewater Place tower is doctors, companies and others who want to be close to the action.

Work on the tower, expected to be the city's tallest building, is slated to begin this month.