With more than $100 million in downtown development in progress, Orion Construction and DTN Management Co. are a match made in heaven.
Following the construction of an apartment complex at East Lansing’s Eastwood Towne Center, it became obvious the values and goals of the two companies aligned, as did their individual expertise.
As Lansing-based DTN decided to hone in on the downtown Grand Rapids market, building on its more than 1 million square feet of space in the Greater Grand Rapids area, co-owner Ronald Uppal said Orion’s expertise in development and construction meshed perfectly with DTN’s asset management and management specialties.
“As we started working, it’s a shared vision of what we could bring to this town,” Uppal said. “We believe in — when we look at what’s going on in the urban core, the Medical Mile, how it’s transformed itself — that we wanted to be downtown.”
So, according to John Wheeler, Orion’s director of business development, the two companies started with a “small” experiment: the $60 million Arena Place.
“We’ve been developers for more than 30 years and we really needed a strong partner. Urban core construction is expensive and needs a long-term hold,” Wheeler said.
“They’ve been in it a long time and manage more than 8,000 apartment units. … It’s always good to start small so we started with Arena Place — we didn’t want to start big,” he laughed.
With Arena Place nearing completion — ground-floor retail is set to open this spring and offices and residential in later spring and summer — DTN and Orion broke ground on both Gateway at Belknap and Venue Tower. Orion hopes to start Warner Tower — the two-tower office and residential project on a parking lot site at Ottawa Avenue and Lyon Street NW — within the year.
The projects spare no expense, and while that scares some appraisers, DTN and Orion have their eyes on the future.
“You pay a little more and there’s a little pain upfront, but then you enjoy it forever,” Wheeler said. “We blew the appraisers away with Venue Tower. They said this isn’t worth that. Well maybe not to you, or today, but we’ll put more money in it because when are we ever going to find that site again?
“There are opportunity dollars that are hard to translate to current mindsets.”
Both companies expect to have multigenerational owners; Uppal and co-owner Colin Cronin already are second-generation, and Wheeler’s sons, Jason and Ryan, are partners.
“We want to be part of the town, make it better,” Cronin said. “We truly want to look at it and ask, ‘How do you make something better?’ Not, ‘How do you make some money and run.’ We design, build and own it for the next 40 years. It’s what we do.”
While partnerships between contractors and management firms are common, co-ownership isn’t. Wheeler said those who try to do it all can become complacent and lose the cutting-edge mentality that pushes new developments. Instead, Orion and DTN push each other to be better for the long investment, Cronin said.
“You have construction companies, but they’re not owners, or you have a management company and they’re not owners,” he said.
“Everyone at this table here is a part of it. You’re not trying to build and flip. Normally, a construction firm builds and walks away, or a manager can suck and they’re fired with no skin in the game. Here, everyone — we believe we’ll survive and have a good time together.”
The good times will extend beyond the development partners. Uppal said when looking at the potential spending power of the 100 residential units in Arena Place, it adds up to approximately $2 million annually. Add the 440 employees in the office portion and that annual spending power nears $6 million. Venue Tower adds another $2 million.
“Now all these restaurants around here have a stronger lunch,” Uppal said. “Then all the other retail coming in down here (gives) more reasons to live down here. We think these developments will create quite a lifestyle for our tenants.”
This is what companies are looking for when they choose to move to an urban core, such as Meritage Hospitality Group, which will move into the sixth floor of Arena Place this spring, Orion spokesperson Jason Wheeler said.
John Wheeler said the group would like to have 500 residential units in downtown by 2020, so that if there are 10,000 residents downtown, they make up 5 percent.
“The top 10 percent in any industry will make it through any recession,” Wheeler said. “When we’re spending money, we want to be the 500 best units in the community because they’ll be here 50 years. If downtown gets overbuilt — we don’t want that to happen, but we’ll be in the top 5 percent.”
Jason Wheeler said the partnership between the two companies is preferable to a developer partnering with a different manager for every project because they share a vision. Uppal and Cronin have watched Grand Rapids grow and recognize the 33,000 students in the area, the growing medical research community, the building momentum of downtown living, retail and office, and they want to build a better community for the potential 10,000 or more people who could, at some point live, work and play downtown.
Reaching 10,000 residents in downtown will mean retailers will regard it as a desirable place to be. More retail will add even more residential, which will likely also mean more offices. This is the future potential Orion and DTN see and hope will become reality in the years to come.
“All of this is progress,” John Wheeler said. “They are calculated risks — they aren’t gambles. People will live here if you deliver the goods.”