MAVD News: 2007

Ann Arbor Business Review

AUGUST 16-22, 2007, VOLUME 5, ISSUE 3, REPRINT FROM PAGE 6

Local commitments remain strong as MAV shifts West

One local company that continues to invest in this region even as it looks elsewhere for opportunities is MAV Development Co.

As reported on Page 3 of this edition of Ann Arbor Business Review, the company is concluding a $2 million renovation of its 40,000-square-foot office building on South State. The property – now officially known as South State Commons III – joins two other buildings that are high-tech showcases constructed by MAV in recent years in the Briarwood office market.

The building has no tenant yet, but company president Rob Aldrich isn’t worried. After all, it sits near a quarter-million square feet of spec offices that filled to nearly 100 percent occupancy in a down market.

Nor is he worried about moving forward with an upscale residential development in Scio Township in the middle of a real estate crisis. Bridgewood offers 12 lots starting at $275,000 for high-end, custom homes with Huron River access.

That type of property is not for every buyer, Aldrich said. But it will appeal to the ultra-high end purchaser who wants a new house by builder Tim Powell of Handcrafted Homes.

“This segment of the market is less prone to a downturn,” Aldrich said.

Yet even as MAV remains committed to quality projects in this region, the company is pursuing opportunities in Colorado.

There are similarities to Ann Arbor in the greater Denver market, Aldrich said. It’s a younger community with a vibrant urban core and university ties.

But it’s also larger and growing, and a place where a developer can stay busy right now, and that makes it appealing, too.

So far, MAV has bought two office buildings in Denver and a 100-acre site in Fort Collins, which closed in February.

“The market in Colorado is very different from here,” Aldrich said.

The office occupancy rate is climbing. So are rental rates. Development is ongoing, and employment rates are steady. That region also has a global outlook, exemplified in its approach to mass transit – in particular, light rail.

MAV’s buildings in are in the “LoDo” part of Denver, or lower downtown. Aldrich describes the properties as B office buildings in need of renovations.

The company closed in May on the Wazee Exchange, a three-story, 83,000-square-foot retail and office building built in 1871. It’s near the company first acquisition, Blake Street Terrace, a 93,000-square-foot office.

Both are in areas where landlords are charging about $25 per square foot, and both are near Union Station, Aldrich said.

“Now there’s not a lot of activity,” he said. “There’s some. But in five or 10 years, when the light rail system matures, it will be a transit hub.”

The Ft. Collins property is an unbuilt, entitled business park that cost $14 million, Aldrich said. His company plans some changes to maximize its potential: “We’re trying to enhance the layout,” he said.

MAV expects to build on spec.

Why Colorado? In short, because it’s the next best thing to Ann Arbor, Aldrich said.“We want to grow and diversify, but you only can get so big in Washtenaw County,” Aldrich said.

Detroit offered no potential for growth, Aldrich said. So the company identified the characteristics it wanted from another community, and came up with 35 potential locations. Three of the top 10 happened to be on the Front Range, or the eastern edge of the Rocky Mountains.

Initial interest in Colorado Springs waned. But it was replaced by a willingness to consider Denver, which MAV had considered too big before discovered the LoDo district.

The opportunities continue, Aldrich said. Company officials are spending a lot of time traveling, but telecommuting options are making it easier in many ways, he added.

“So far, we’re finding interesting opportunities,” Aldrich says. “We like the long-term possibilities.”

But that doesn’t mean that the company is shutting the door on Washtenaw County, especially since its portfolio includes a major parcel near Toyota in York Township that just passed a rezoning request.

The level of activity between greater Denver and Ann Arbor may be different today.

But that will change as Michigan rebounds, and MAV expects to develop in both locations in coming years.

“The community here,” Aldrich said, “is just as strong.

Contact Paula Gardner at (734) 302-1715 or pgardner@mbizreview.com.

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