MIDDLE MARKET HIGHLIGHT, SEPTEMBER 2007

Kalamazoo
Dan Marcec

Located between Detroit and Chicago on the Interstate 94 corridor, Kalamazoo is currently seeking economic development across a variety of sectors. Southwest Michigan First, a private economic development organization focused on growing business in the Kalamazoo region, recruits nationally to develop industries, such as advanced manufacturing and logistics, that have traditionally been strong in the area. A recent goal has been to attract life sciences companies, including neutraceuticals, medical device companies and drug development. The efforts have paid off, with 25 such businesses entering and expanding recently in the city, occupying approximately 100,000 square feet of space altogether.

“We believe in community capitalism, and we believe if we teach a man to fish, he’ll feed himself,” says Ron Kitchens, CEO of Southwest Michigan First. “We’re in a business of relationships — much like real estate — where we work with companies and individuals to ensure that quality expansion can take place.”

Job creation is a major focus of the organization, and through a $50 million venture fund — the largest in the state of Michigan — it makes every effort to shape a quality business infrastructure. By employing creative financing and staying up-to-date on business incentives, Southwest Michigan First works as a liaison between the city, companies and individuals. As a result, it has to ensure appropriate abatements, brownfield credits and shovel-ready sites are in place to provide a smooth transition for companies entering the market.

In Kalamazoo’s commercial real estate market, a large number of vacancies have been leased up, and several businesses have opened shop, including a preeminent medical device company that recently brought its headquarters to the city. Downtown continues to grow, as a new hospital complex and other projects — such as a 15-screen movie theater, restaurants and retail shops, and the $40 million redevelopment of a Radisson hotel — have spurred commercial development.

Construction and revitalization efforts also have continued around Western Michigan University, which is located in the city, as well as along the Westhedge Avenue retail corridor connecting Kalamazoo and nearby Portage.

“We’ve experienced pent-up demand recently, because the market hasn’t moved as quickly as people have expected over the past 3 years —now, that demand has become a need for new space downtown,” Kitchens says. “In fact, a new 8-story building downtown opens this winter, and law and accounting firms will be taking that space, with other companies picking up [the subsequent vacancy] and driving the local market.”

One major project underway in Kalamazoo is the $35 million redevelopment of the former General Motors stamping plant into Midlink Business Park, a 1.6 million-square-foot, multi-tenant complex.

“We should see approximately 1 million square feet of distribution space taken up in the next year, which will occupy everything already existing,” Kitchens notes. “Michigan has passed new tax laws favorable to new distribution space, so we should see a rise in construction there as well. In addition, there will be a big growth curve over the next 18 months for the life science industry.”


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