Talks of redeveloping former YMCA site resume as Ann Arbor looks to sell property

Three firms are under consideration as the city of Ann Arbor looks to hire a commercial real estate broker to help sell the city-owned property known as the Y Lot.

The city received bids from Colliers International, CBRE and Peter Allen & Associates in response to a recent request for proposals for brokerage services.

City Administrator Steve Powers said he's reviewing the proposals, which were opened last Friday, and will provide an update to the City Council by June 17.

Peter Allen, a local real estate developer and consultant, told Downtown Development Authority officials on Wednesday he thinks the market value of the Y Lot, located at 350 S. Fifth Ave., could be $5 million to $7 million or more depending on how it's configured.

He said the idea of adding air rights on top of the adjacent Blake Transit Center and doing a development that spans both lots — rising above the new transit center being built right now — is very feasible.

"I've already heard interest from boutique hotels, from grocery stores, from certainly ground-level retail — there's a demand," Allen said. "So I think the mix of uses are going to be very consistent with what the Connecting William Street idea came up with."

Jim Chaconas of Colliers International doesn't share Allen's enthusiasm at this point. He said Ann Arbor is not Chicago or New York City.

"We see no new construction going on, so this may take a while," he said of redeveloping the former YMCA site. "The only thing that's being built right now is student high-rises. We still have plenty of office space, so there's nobody rushing to build offices. We still have a high vacancy there."

Chaconas said he still needs to find out what the city wants, and right now there's really not much he can say about the Y Lot's potential.

"Until you market something, you don't know. We don't speculate," he said, going on to add: "All we know is no student housing."

The city acquired the property in 2003 for about $3.5 million. The city eventually demolished the old YMCA building on the site, including 100 units of affordable housing.

The city has a $3.5 million balloon payment due on the property in December after years of interest-only payments. It's one of four sites that are now surface parking lots that the city is considering selling for redevelopment as part of the Connecting William Street initiative led by the DDA.

The Y Lot is about 0.82 acres or 35,879 square feet.

Mayor John Hieftje noted the net proceeds from the eventual sale of the property — after the city's debt on the property is paid off — will go toward an affordable housing fund.

"Of major importance to me is I'd like to put away that debt, and it sure seems like we can do it. In fact, the city may even come out ahead on this," he said.

The Ann Arbor Planning Commission voted in March to make the Connecting William Street plan an official city planning document.

The lengthy report produced by the DDA and its consultants, which recommends strategies for improving the William Street corridor and redeveloping five city-owned properties, is now among the official documents city planners will rely on in the course of their work.

The fifth property, in addition to the four surface parking lots, is the first floor of the Fourth and William parking garage, which could be retrofitted for ground-level commercial use, possibly office space.

The plan includes a number of recommendations for the Y Lot, identifying it as a good site for a development that helps generate activity downtown.

"This site is highly visible from Main Street and should stress high-quality architecture, providing a visual connection and iconic presence," the plan states.

Any future development on the site should "seek to bring more people downtown and create synergy with the Blake Transit Center and downtown library," the plan states.

"Any future building on this site, facing three streets, will have a significant impact on the pedestrian environment and should be designed to create a vibrant experience," the plan continues, specifically recommending large floor plate office and hotel uses for the site.

The plan also suggests residential development as a secondary use for the site. If either large floor plate office or housing for working professionals are included in future development plans, the DDA has indicated it might be willing to contribute grant dollars.

The plan specifically recommends providing a pedestrian connection from the development site to the Blake Transit Center at the ground floor, with consideration given to expanding the development footprint and building up and over the new transit center that's now taking shape.

The plan also encourages future developers of the Y Lot to discuss with the DDA the potential for parking at the Fourth and William parking garage or the Library Lane underground garage, and the potential to expand the Library Lane garage beneath the Y Lot.

The city should seek to maximize the purchase price for the site so that the greatest amount of net proceeds can go to affordable housing, the plan states.

Allen said he understands the city expects to have a broker hired by early August. He said he could see his Ann Arbor-based firm working together with Colliers International, which does a large amount of commercial real estate work in downtown Ann Arbor.

"I hope it's a team approach," he said. "I think Jim Chaconas is well-wired to the marketplace, so I've got a number of clients, he's got a whole number of clients. I'm sure between the two of us we'd solve the problem quite quickly and bring some active buyers to the table."

Chaconas is among the most prolific brokers in Ann Arbor, inking deals involving the State Theater, the former Ann Arbor News building, Westgate Shopping Center, the former Borders bookstore and headquarters, and the 601 Forest high-rise now known as Landmark.

"You give us a project and we can get it out to the world better than anybody else," he said. "We do 250 to 300 deals a year. Nobody does the kind of volume we do."

Allen most recently helped facilitate the 14-story high-rise project now approved above Pizza House. He connected Pizza House owner Dennis Tice with the Minnesota-based Opus Group, which brought forward a development unanimously approved by the City Council in March.

Asked to describe the kind of buyer he'd like to find for the Y Lot, Allen said a developer like the Opus Group makes sense.

"Somebody that has had experience with mixed-use development," he said. "Somebody that really knows the role of sidewalk retail to excite the sidewalk — and placemaking. And somebody that knows the right combination of hotel, residential ownership, and residential rental. Putting office with hotel doesn't work well. Putting residential with hotel does work well."

Allen said he likes the location of the Y Lot — along the north side of William Street between Fourth and Fifth avenues.

"A block from Main Street, next to the Blake Transit Center, across from the library, and with a great view of Michigan Stadium — it's one of the anchor sites in town," he said. "It'll be the kickoff of what they do with the whole Connecting William Street idea."

Tim Guest, a senior associate with CBRE in Southfield, could not be reached for comment.

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.