Portage Plaza Portage, Michigan

Portage Plaza Portage, Michigan
Presented by LBG Real Estate Companies, LLC
March 5, 2015
0
Deal Highlights
LBG Portage Center, LLC (“LBG”) is offering preferred non-participating equity for the recapitalization and redevelopment of a portion of Portage
Plaza in Portage, Michigan (Kalamazoo metro). Portage Plaza is a multi-tenant shopping center shadow anchored by Hobby Lobby (Not a Part),
Aldi (Not a Part), Dick’s Sporting Goods (Not a Part) and Jo-Ann’s Fabrics (Jo-Ann’s parcel is owned by an affiliate of LBG) and anchored by Toys R
Us, Chuck E Cheese and Chili’s. The property was acquired in 2014 on a quick close in an off market transaction using LBG’s cash equity. The
seller, the children of the original developer, had inherited the property and had no interest in maintaining it nor maximizing the value of the asset.
The anchor tenant leases had less than two years of term remaining and the center needed a new façade and suffered from deferred maintenance.
Subsequent to closing, LBG signed 10 year extensions with both Toys R Us and Chuck E Cheese. LBG’s plan is to put a new façade on the center
and address the deferred maintenance in order to make it into a class A shopping center. LBG will oversee the renovation of the property. LBG has
hired a local third party property management company and oversees a local leasing agent.
ACQUISITION OVERVIEW
ECONOMIC HIGHLIGHTS
Address
6207, 6185, 6175 and 6195 South Westnedge Ave
 $763,000 preferred non-participating equity offering
Portage, Michigan
 Stabilized property with new 10 + year anchor leases
Building Area (GLA)
+/- 77,630 Square Feet
 Seasoned tenants who have been in occupancy at this location since 1985,
Land Area
+/- 8.34 acres
Year Built / Renovated
1962/1964/1994/2015 to be renovated
Current Occupancy
95% (excluding Jo-Ann’s)
1994 and 2000.

New 10 year fixed rate debt in place at close

12% coupon plus 15 year amortization paid current to preferred equity

Toys R Us on a bond type lease with full responsibility for roof and structure

Chili’s on a ground lease with rent at 1/3rd of market and no landlord
responsibility with no extensions options after 2024, hence the ability to raise
rent to market and create additional value
Major Tenants of Center
Toys R Us
Chuck E Cheese
Chili’s
Jo-Ann’s Fabrics (Not a Part)
ABOUT THE SPONSOR - LBG REAL ESTATE COMPANIES, LLC
LBG Real Estate Companies, LLC (“LBGREC”) is a privately-held real estate company that specializes in the acquisition, investment and
development of commercial real estate in the United States with a focus on opportunistic retail investments. LBGREC’s key objective is to generate
superior risk adjusted returns through value creation and income appreciation while minimizing risk. Each principal has, on average, 20 years’
experience in commercial real estate, specializing in retail throughout their careers. Experienced with all major property types and geographic
regions, LBGREC’s principals have executed on over 100 transactions, all opportunistic. See Appendix for additional information. LBG is an affiliate
of LBGREC.
1
Property / Area Overview
Prime Regional Location: The center is located on the north side of
the City of Portage at the heart of the regional shopping corridor
adjacent to the regional mall. It is approximately 2.5 miles east of the
US-131 expressway and 0.50 mile south of the I-94 expressway.
The property is at the center of the primary commercial shopping
area in the Greater Kalamazoo metro area that encompasses a 3.0
mile span along the Westnedge corridor beginning on the north side
of the 1-94 expressway and extending southward to Centre Avenue.
Major retailers located in this corridor include Hobby Lobby, Dick’s
Sporting Goods, Kohl’s, Home Depot, Target, Best Buy, Petco, TJ
Maxx, Sears, Dunham’s Sports, JCPenney, Macy’s Burlington Coat
Factory, etc.. Traffic counts are in excess of 34,000 vehicles per
day. Surrounding the retail corridor is single family residential
housing built between 1960 and 2000.
Strong Anchor Tenants: The property features strong national
tenants: Toys R Us, Chuck E Cheese, Jo-Ann’s Fabrics (Not a Part)
and Chili’s. Toys R Us, Chuck E Cheese, Chili’s and Jo-Ann’s have
each been in occupancy at the center for over 15 years and have
limited local competition in their respective categories. As a
testament to the quality of the location, each anchor has recently
renewed their lease for an additional ten year term (including JoAnn’s). This creates a very stable tenancy for the next 10 years
during the entire term of the senior debt. The leases also have
favorable rental increases over the term and the opportunity for
increased upside in 10 years. Chili’s, on a ground lease, is paying
approximately $6.30/SF while the market rate for their building is in
excess of $20/SF. They have another 9 years of control after which
their rent can be raised to market.
Strong Demographics and Population Growth: Within five miles of
the property, there are 129,301 people with an average household
income of $59,799. Household formation growth is steady at
approximately 4% annually.
Retail Market in Balance: The area is densely built out with 95% of
the local land developed. The vacancy rate within a 1 mile radius of
the subject is low and there is limited comparable anchor space
available in the market. The retail surrounding the subject property is
class A while the subject exhibits deferred maintenance and has a
dated and older façade. After completion of the proposed renovation,
the center will be in line with other class A product in the market, all
of which is well leased.
2
Tenant Highlights

Toys R Us, TRU 2005 RE I, LLC, has been in occupancy in 52,050 SF at the center since 1985. They are fully responsible for
their building including roof and structure. They recently early exercised a 10 year lease extension (to 2/1/2026) in exchange for
the planned façade and signage upgrades. Their rent is $6.79/SF and has annual rent increases of $.06/SF. Their store sales
ending January 31, 2014 were $120/SF which is considered average for the chain. Founded in 1948, Toys R Us is a privately held
company and was acquired by Bain Capital Partners, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust for $6.6 billion in
2005. Toys R Us is the world’s leading dedicated toy and baby products retailer with 876 Toys R Us and Babies R Us stores in the
United States and Puerto Rico and 725 international stores and over 200 licensed stores in 36 countries. It also operates the FAO
Schwarz brand as well as on line with eToys.com, Toysrus.com, Babiesrus.com and FAO.com. It employs approximately 70,000
employees worldwide.

Chuck E Cheese, CEC Entertainment, Inc., has been in occupancy in 14,500 SF at the center since 2000. They recently signed
a 10 year extension to 9/30/2025. Their rent is currently $7.31/SF but will increase to $9.32/SF October 2015 and is flat for 10
years. CEC’s sales have been stable to increasing over the past 3 years and were $94.40/SF in 2013 which is considered
average for CEC. This is their only location within a 30 mile radius. Founded in 1977, CEC is a privately held company currently
owned by Apollo Global Management who acquired them in 2012 for $950 million. They currently have 577 locations throughout
North America, South America and the Middle East.

Chili’s, Quality Dining, Inc., ground leased and built their 6,897 SF building which opened in 1992. They are fully responsible for
their building and grounds maintenance. The franchisee is Quality Dining, Inc., one of the largest restaurant franchisees in the
country, operating 172 restaurants in six states. Their rent as of January 2015 is $6.38/SF NNN and their next renewal is
February 2019 at which time their rent increases to $6.96/SF NNN. They have one 5 year extension option remaining after which
the ground and building revert to Landlord. The current market rental rate for the building is in excess of $20/SF NNN. This is an
extremely well located outparcel and can be easily re-tenanted at much higher rents.

There is one vacant 4,100 SF space that is projected to be leased in the next 12 months. LBG is currently talking to prospective
tenants. The space has been vacant for the past two years as the former owner was not actively marketing the space and was
unwilling to invest in tenant improvements. It is projected to lease at $12/SF NNN with $25/SF in tenant improvements and an 8%
commission.
3
Property Being Offered
WESTNEDGE AVENUE
“Not A Part”
4
Trade Area
Toys R Us Plaza is located at the heart of the main regional shopping area in the Kalamazoo metro area. The property is adjacent to the Crossroads Mall as well
as all major regional retailers in the region.
5
Current Site Plan
“Not A Part”
Available
6
Property Photos
7
Conceptual Elevation
8
Conceptual Elevation
9
Project Economics
Project Financial Metrics
Value/Cap Rate:
$6,170,000 ($80/SF), 8.00% cap rate on income in place,
8.8% cap rate on stabilized NOI
Rental Rate (in place):
Average overall rent in place is $6.52/SF, increasing to
$7.74/SF in Year 5
Occupancy:
95.1% in place
Management Fee:
$1,200 per month fixed (approx. 2.0% of Gross Income) paid
to third party management company
Reserves:
$.15/SF (Toys and Chili’s responsible for own buildings)
Tenant Reimbursements:
All tenants are NNN, Toys R Us and Chili’s responsible for
100% of their R&M
Leasing Broker:
LBG to oversee third party leasing agent
Exit Strategy:
Sale/Refi in 10 years or sooner
Annual Cash on Cash to
Equity:
12% paid current out of cash flow, preferred equity
distributions take priority over any distributions to common
equity
NOI in place:
$496,496 year 1, $541,747 year 2 upon stabilization
Proforma Rents:
$12/SF NNN for 4,100 SF vacant shop space
Total Redevelopment Cost:
$300,000 projected for façade
Redo Tenant Improvements:
Up to $25/SF for tenant improvements
Redo Leasing Commission:
Market rate commissions for LBG and outside broker on new
leases
Redo Loan Escrow:
$384,250 escrow with lender for capital expenditures, tenant
improvements and leasing commissions
Total Debt:
$4,612,500
Value Upon Sale in Year 10:
$8,312,000 using an 8% cap rate
Source and Use of Funds
Use of Funds
Closing Costs
$100,000
Façade/TI’s/LC’s/Repair
Reserve
$384,250
Acquisition debt repayment
Note that LBG advanced the
$384,250 and $100,000 to
escrow prior to close
Total Use of Funds
$278,750
$763,000
Source of Funds
Preferred Equity
Total Source of Funds
$763,000
$763,000
Cash Flow After Debt Service: Approximately $92,000 year one and increasing
Investor IRR:
12% paid current and capped with no participation in profit or
other return in excess beyond said 12%
Venture Sponsor:
LBG Real Estate Companies, LLC
10
Project Economics
Senior Debt and Equity Terms
Ownership Entity:
LBG Portage Center, LLC, a recently formed entity controlled by principals of LBG Real Estate Companies,
LLC. Those principals are Leslie Lundin, David S. Goldman and Douglas T. Beiswenger. See Appendix for
additional information on LBGREC’s track record or visit www.lbgfunds.com. The principals have guaranteed
the Senior debt.
Senior Debt:
1st Mortgage CMBS
Senior Debt Loan Amount:
$4,612,500 ($60/SF)
Senior Debt Constant:
4.4% annually/30 year amortization, 6.01% constant, $23,097.60 per month
Equity Structure:
Preferred equity 12% rate fixed plus 15 year amortization
Total Equity:
$1,557,500 total equity, $763,000 preferred equity, $794,325 LBG principal’s equity
LTV:
75% LTV on senior debt at close, 87% LTV on preferred equity at close
Senior Debt Prepayment:
Open during the last 3 months of the loan, closed until year 3, defeasance thereafter.
Appraised Value:
$6,170,000 upon completion of the façade renovation
Senior Debt Recourse:
Leslie Lundin, David S. Goldman and Douglas T. Beiswenger have executed standard carve-out guarantees
on senior debt.
Senior Debt Term:
10 years: March 6, 2025 maturity date
Senior Debt Amortization:
30 years amortization
Senior Debt Impounds/Escrows:
Lender escrow of $318,000 for the façade renovation
Monthly tax and insurance impounds per actual expenses
Monthly replacement reserves of $1,413 ($16,956 annually)
Tenant Improvement and Leasing Commissions reserves of $50,000 at close plus commencing in the 61st
month, $6,916.67 monthly. $16,250 lender escrow for immediate repairs.
Investment Structure and Fees
The property is held in LBG, a single purpose limited liability company. The capitalization includes senior debt of 75% of value plus preferred equity
up to 87% of value based on a recent third party appraisal. LBG principals have contributed 51% of the total equity and signed personally on the
senior debt. The preferred equity will earn a 12% preferred return and a 15 year amortization, paid quarterly. The remaining cash flow will be
distributed to the common equity per their ownership interests. Upon sale or recapitalization, the preferred equity and its preferred return will be
repaid prior to any capital distributions to the common equity. The preferred equity is capped at a 12% IRR with no participation in profit or other
return in excess of said 12% IRR.
11
Cash Flow Statement – Preferred Equity Proforma
Preferred Equity - Schedule of Prospective Cash Flow
In Inflated Dollars for the Fiscal Year Beginning 1/1/2015
Schedule Of Prospective Cash Flow
In Inflated Dollars for the Fiscal Year Beginning 1/1/2015
For the Years Ending
Effective Gross Revenue
Operating Expenses
RE Taxes
Insurance
Management Fees
CAM
Total Operating Expenses
Year 1
Dec-2015
___________
Year 2
Dec-2016
___________
Year 3
Dec-2017
___________
Year 4
Dec-2018
___________
Year 5
Dec-2019
___________
Year 6
Dec-2020
___________
Year 7
Dec-2021
___________
Year 8
Dec-2022
___________
Year 9
Dec-2023
___________
Year 10
Dec-2024
___________
639,795
___________
689,652
___________
697,495
___________
705,474
___________
717,076
___________
725,656
___________
734,070
___________
742,638
___________
751,363
___________
841,165
___________
85,000
6,901
6,398
45,000
___________
143,299
___________
87,550
7,108
6,897
46,350
___________
147,905
___________
90,176
7,321
6,975
47,741
___________
152,213
___________
92,882
7,541
7,055
49,173
___________
156,651
___________
95,668
7,767
7,171
50,648
___________
161,254
___________
98,538
8,000
7,257
52,167
___________
165,962
___________
101,494
8,240
7,341
53,732
___________
170,807
___________
104,539
8,487
7,426
55,344
___________
175,796
___________
107,675
8,742
7,514
57,005
___________
180,936
___________
110,906
9,004
8,412
58,715
___________
187,037
___________
496,496
541,747
545,282
548,823
555,822
559,694
563,263
566,842
570,427
654,128
Net Operating Income
Debt Service
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
$
277,171
Cash Flow after Debt Service
$
219,325
$
264,576
$
268,111
$
271,652
$
278,651
$
282,523
$
286,092
$
289,671
$
293,256
$
376,957
TI/LC Reserves
Capital Reserve
0
16,956
Cash Flow after DS and Reserves
$
202,369
Preferred Equity payments at 12%
Preferred Equity Amortization
91,560
18,327
Cash Flow after Pref Equity Payments
$
Cumulative Cash Flow after Pref Equity Payments
92,481
Preferred Equity Balance
763,000
744,673
0
16,956
$
247,620
0
16,956
$
89,361
20,527
$
$
137,732
230,214
724,146
251,155
0
16,956
$
86,898
22,990
$
$
141,267
371,481
701,156
254,696
0
16,956
$
84,139
25,749
$
$
144,808
516,290
675,407
261,695
83,000
16,956
$
81,049
28,838
$
$
151,807
668,097
646,569
182,567
83,000
16,956
$
77,588
32,299
$
$
72,679
740,776
614,270
186,136
83,000
16,956
$
73,712
36,175
$
$
76,248
817,025
578,095
189,715
83,000
16,956
$
69,371
40,516
$
$
79,827
896,852
537,579
$
$
193,300
83,000
16,956
$
277,001
64,509
45,378
59,064
50,823
83,412
980,265
$
167,113
$ 1,147,378
492,201
441,378
12
Cash Flow Statement - Proforma
Schedule of Prospective Cash Flow
In Inflated Dollars for the Fiscal Year Beginning 1/1/2015
For the Years Ending
Potential Gross Revenue
Base Rental Revenue
Absorption & Turnover Vacancy
Scheduled Base Rental Revenue
Expense Reimbursement Revenue
RE Taxes
Insurance
Management Fees
CAM
Total Reimbursement Revenue
Total Potential Gross Revenue
General Vacancy
Effective Gross Revenue
Operating Expenses
RE Taxes
Insurance
Management Fees
CAM
Total Operating Expenses
Net Operating Income
Year 1
Dec-2015
___________
Year 2
Dec-2016
___________
Year 3
Dec-2017
___________
Year 4
Dec-2018
___________
Year 5
Dec-2019
___________
Year 6
Dec-2020
___________
Year 7
Dec-2021
___________
Year 8
Dec-2022
___________
Year 9
Dec-2023
___________
Year 10
Dec-2024
___________
$562,701
(49,200)
___________
513,501
$587,683
$591,790
$595,917
$603,730
$608,231
$612,419
$616,628
$620,859
$710,286
___________
587,683
___________
591,790
___________
595,917
___________
603,730
___________
608,231
___________
612,419
___________
616,628
___________
620,859
___________
710,286
80,067
6,147
87,551
6,742
90,177
6,946
92,882
7,155
95,669
7,369
98,538
7,589
101,494
7,817
104,539
8,052
107,676
8,293
110,906
8,543
40,080
___________
126,294
43,973
___________
138,266
45,292
___________
142,415
46,650
___________
146,687
48,049
___________
151,087
49,490
___________
155,617
50,975
___________
160,286
52,505
___________
165,096
54,080
___________
170,049
55,702
___________
175,151
___________
639,795
___________
639,795
___________
___________
725,949
(36,297)
___________
689,652
___________
___________
734,205
(36,710)
___________
697,495
___________
___________
742,604
(37,130)
___________
705,474
___________
___________
754,817
(37,741)
___________
717,076
___________
___________
763,848
(38,192)
___________
725,656
___________
___________
772,705
(38,635)
___________
734,070
___________
___________
781,724
(39,086)
___________
742,638
___________
___________
790,908
(39,545)
___________
751,363
___________
___________
885,437
(44,272)
___________
841,165
___________
85,000
6,901
6,398
45,000
___________
143,299
___________
496,496
___________
87,550
7,108
6,897
46,350
___________
147,905
___________
541,747
___________
90,176
7,321
6,975
47,741
___________
152,213
___________
545,282
___________
92,882
7,541
7,055
49,173
___________
156,651
___________
548,823
___________
95,668
7,767
7,171
50,648
___________
161,254
___________
555,822
___________
98,538
8,000
7,257
52,167
___________
165,962
___________
559,694
___________
101,494
8,240
7,341
53,732
___________
170,807
___________
563,263
___________
104,539
8,487
7,426
55,344
___________
175,796
___________
566,842
___________
107,675
8,742
7,514
57,005
___________
180,936
___________
570,427
___________
110,906
9,004
8,412
58,715
___________
187,037
___________
654,128
___________
Leasing & Capital Costs
Tenant Improvements
Leasing Commissions
___________
Total Leasing & Capital Costs
Cash Flow Before Debt Service
& Taxes
___________
$496,496
===========
102,500
43,098
___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
145,598
___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________
$396,149
$545,282
$548,823
$555,822
$559,694
$563,263
$566,842
$570,427
$654,128
=========== =========== =========== =========== =========== =========== =========== =========== ===========
13
Rent Roll
Tenant Name
Type & Suite Number
Lease Dates & Term
_____________________
Floor
SqFt
Bldg Share
___________
Rate & Amount
per Year
per Month
_____________
1 Toys R Us
Retail, Suite: 1
Aug-1985 to Jan-2016
366 Months
$0.00
$0
$0.00
$0
Feb-2014
Feb-2015
$6.79
$6.85
-
-
- See method: Toys
-
-
52,050
73.67%
Option
See assumption:
Toys
1 Toys R Us
Option, Suite: 1
Feb-2016 to Jan-2026
120 Months
$6.91
$359,603
$0.58
$29,967
Feb-2017
Feb-2018
Feb-2019
Feb-2020
Feb-2021
Feb-2022
Feb-2023
Feb-2024
Feb-2025
$6.97
$7.03
$7.09
$7.15
$7.21
$7.27
$7.33
$7.39
$7.45
-
-
- See method: Toys
-
-
52,050
73.67%
Market
See assumption:
Toys
2 Chuck E Cheese
Retail, Suite: 2
Sep-2005 to Sep-2015
121 Months
$7.31
$105,996
$0.61
$8,833
-
-
-
-
- See method: Chuck
E
-
-
14,500
20.52%
Option
See assumption:
Chuck E
2 Chuck E Cheese
Option, Suite: 2
Oct-2015 to Sep-2025
120 Months
$9.32
$135,140
$0.78
$11,262
-
-
-
-
- See method: Chuck
E
-
-
14,500
20.52%
Market
See assumption:
Chuck E
3 Vacant
Retail, Suite: 3
Jan-2016 to Dec-2025
120 Months
$12.00
$49,200
$1.00
$4,100
Jan-2017
Jan-2018
Jan-2019
Jan-2020
Jan-2021
Jan-2022
Jan-2023
Jan-2024
Jan-2025
$12.24
$12.48
$12.73
$12.99
$13.25
$13.51
$13.78
$14.06
$14.34
-
-
- See method: NNN,
no mgmt
$25.00
4,100
5.80%
$102,500
$10.51
8.00%
$43,098
Market
See assumption:
Vacant
4 Chili's
Retail, Suite: Pad
Feb-1994 to Jan-2019
300 Months
$44,000.00
$44,000
$3,666.67
$3,667
-
-
-
-
- Full Service:
Pays no expense
reimbursement.
-
-
1
0.00%
Option
See assumption:
Chilis
4 Chili's
Option, Suite: Pad
Feb-2019 to Jan-2024
60 Months
$48,000.00
$48,000
$4,000.00
$4,000
-
-
-
-
- Full Service:
Pays no expense
reimbursement.
-
-
1
0.00%
Market
See assumption:
Chilis
Total Occupied SqFt
Total Available SqFt
66,551
4,099
Changes Changes
on
to
_________
______
CPI & Current
Porters' Wage
Miscellaneous
________________
Months
Pcnt Description of
to
to Operating Expense
Abate Abate Reimbursements
_______ _____ __________________
Imprvmnts Commssns
Assumption about
Rate
Rate
subsequent terms
Amount
Amount
for this tenant
_________ _________ ________________
14
Appendix A – Market Information and Comparables
Assembled from third party sources which LBG believes reliable but as to which no representation or warranty is made.
15
Kalamazoo-Portage MSA
The Kalamazoo-Portage MSA benefits from strong economic indicators, including
a low unemployment rate, job growth and new development activity and growth
across all major sectors of the economy.
Notable facts about the Kalamazoo-Portage, MSA:
 The unemployment rate in Kalamazoo-Portage Metro Area is lower than the national
and state averages.
Unemployment Rate
Sep 2014
National
5.90%
Michigan
7.20%
Kalamazoo-Portage MSA
5.70%
 Recent job growth is Positive. Kalamazoo-Portage Metro Area jobs have Increased by
2.82 percent.
 As of 2014, Kalamazoo-Portage Metro Area's population is 326,853 people. Since
2000, it has had a population growth of 3.81 percent.
 The median home cost in Kalamazoo-Portage Metro Area is $113,400. Home
appreciation the last year has been 3.70 percent.
 Compared to the rest of the country, Kalamazoo-Portage Metro Area's cost of living is
14.50% Lower than the U.S. average.
 Kalamazoo-Portage Metro Area public schools spend $12,756 per student. The
average school expenditure in the U.S. is $12,435. There are about 17.4 students per
teacher in Kalamazoo-Portage Metro Area.
.
16
Kalamazoo-Portage MSA
Bridge, “Economy and competitive position” (11/7/2014):
The region's 2013 annual growth stood at 2.4 percent, above the national average for metropolitan areas. Manufacturing grew by 4.2 percent,
though it remains more than 11 percent below pre-recession output in 2007.
Professional, scientific and technical services grew by 12 percent in 2013 to $521 million. Educational services rose 8.4 percent and health care and
social services increased as well, by 4.6 percent. The information sector, though a small portion of the region's economy, fell 13.7 percent in 2013
and is 28 percent below 2007. Administration and waste management services fell 8.9 percent in 2013. Construction fell by 1 percent and remains
22 percent below 2007.
“I see GDP growth of 2.4 percent, but when I look at employment growth, I see just a 1 percent increase. It shows that GDP growth is largely due to
productivity growth,” said George Erickcek, economic analyst for the Kalamazoo-based Upjohn Institute for Employment Research. “Productivity is
great in terms of competitiveness. But maybe that's why there are people in Kalamazoo who feel we are not growing that fast.”
For Erickcek, the key to the region’s future is its wide economic base, which includes pharmaceutical, medical instruments, paper and auto
suppliers. “What's interesting in Kalamazoo is its (economic) diversity. We are not as auto related as the rest of the state,” he said.
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Kalamazoo-Portage MSA - Article
18
Kalamazoo-Portage MSA - Article
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Kalamazoo-Portage MSA - Article
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Kalamazoo-Portage MSA - Article
21
City of Portage
The City of Portage is rich with opportunities – it is a family-oriented area with a high quality of life, a strong economy and outstanding educational
choices for lifelong learning. Portage has bountiful natural resources, including seven lakes, state game areas, significant open spaces and
wetlands. The community provides 17 parks, including three dedicated to nature preservation, and more than 57 miles of bikeways and multi-use
trails. Portage combines the convenience of an urban lifestyle with that of a close-knit, friendly community. Today, Portage remains a growing and
thriving community, offering distinctive advantages in living, working and learning that area residents and businesses have discovered
make Portage, “A Natural Place to Move.”
The City of Portage maintains a strong ranking in four important census
categories (educational attainment, per capita income, poverty status
and median home value) when compared to Kalamazoo County, State
of Michigan, and the United States.
Educational
Attainment
BA or Higher
City of Portage
38.5%
Kalamazoo County
33.4%
State of Michigan
25.0%
United States
27.9%
Per
Capita
Income
$29,256
$25,138
$25,135
$27,334
Family
Poverty
Status
6.0%
11.2%
10.6%
10.1%
Median
Home
Value
$156,600
$145,900
$144,200
$188,400
Source: 2006-2010 American Community Survey
Portage has always attracted great businesses and enjoyed the benefits
of a highly educated, energetic and creative work force. Below is a list
of the largest employers in the City of Portage.
Company
Stryker Instruments
Pfizer
Portage Public Schools
State Farm Insurance
KRESA
Meijer
Summit Polymers
Wal-Mart / Sam's Club
Bowers Manufacturing
Product/Service
Medical Equipment
Pharmaceutical
Education
Insurance
Education - Intermediate
General Retail
Injected Plastic Molding
General Retail
Extruded Aluminum
Employees
2,300
2,100
950
950
610
600
472
406
295
Year after year, the City of Portage is recognized for excellence in
public safety, innovative use of technology, financial planning &
budgeting, public works projects, parks & recreation programs,
public communications and other areas of public service.
Recent Awards and Recognition
 Promoting Active Communities - Gold Recognition
 Arbor Day Foundation – Tree City USA
 Bicycle Friendly Community – League of American Bicyclists
 Commission on Accreditation for Law Enforcement Agencies
– Continued Accreditation
 National Association of School Resource Officers
Exceptional Service Awards
 Award for Excellence in Traffic Safety – Office of Highway
Safety & AAA Michigan
 National Weather Service – “StormReady” Community
 Government Finance Officers Association - Distinguished
Budget Presentation
 Government Finance Officers Association - Certificate of
Achievement for Excellence in Financial Reporting
 Southwest Michigan Chapter of the American Public Works
Association/American Society of Civil Engineers Project of
the Year For Transportation Projects Less Than $1 million –
Romence Road/ Moorsbridge Road Reconstruction Project
 Astrid Bronze Award – “Portager” Newsletter
 Sunshine Review Transparency in Government Award
22
City of Portage – Retail Market
Distinct Retail Advantages in Portage
Local, regional and national retailers all find Portage an excellent location to do
business. Due to strong employment growth and demographics, Portage has been
experiencing a renaissance over the past few years in the retail market and a nearly
continuous influx of new retail businesses make Portage an ever-changing, always
invigorating retail landscape.






Regional consumer population of 524,000
Disposable income higher than the national average
3rd fastest growing city in southwest Michigan - cities 45,000+
Largest regional center in southwest Michigan - Crossroads Mall
Crossroads of two major interstates - I-94 and US 131
Primary commercial locations
South Westnedge Avenue Commercial Corridor
Toys R Us Plaza is located at the center of the South Westnedge Avenue Retail
Corridor, the retail heart of Portage and the southwest Michigan region. The retail
along the corridor is strong with overall vacancy at 4.22% and positive absorption
year to date. There has been considerable market activity with several new tenants
having opened over the past 2 years, including Dick’s Sporting Goods, Hobby
Lobby, Aldi, Five Below, and Art Van Pure Sleep.







4,807,174 sq. ft. of commercial space
Occupancy rate of 95.8%
Nearly 450 businesses
Location of the Downtown Development Authority
The only regional mall (Crossroads Mall)
Location of the Southland Mall Power Center
Location of the Portage Commerce Square
23
Recent Developments – Portage
Portage’s retail market has continues to grow with new tenants opening in the market and new developments recently completed, planned or under
construction. Below are several developments that have occurred within Portage’s retail sector just over the past 4 months:
• Walmart has received corporate approval to continue with its plan to expand its existing store into a Supercenter with a gas station, an
additional 41,000sf of GLA. Company officials would like to start on the expansion this year with completion set for 2015. (Aug 2014)
• Aldi opened a 17,000sf store at 6291 S. Westnedge Ave., formerly home to a Big Kmart and Ace Hardware. (Aug 2014)
• Certified Apple retail chain Simply Mac opened its first Michigan location (4,100sf) at 6800 South Westnedge Ave. (Sep 2014)
• Carter’s recently opened at 6216 S. Westnedge Avenue in the Southland Shopping Center. (Oct 2014)
• Sky Zone Indoor Trampoline Park is opening a new location at 5103 Portage Road. (Nov 2014)
• John Tsui, owner of popular restaurant Chinn , is opening Zingo, his second restaurant, at 3830 W Centre Street. (Sep 2014)
• Renovations are underway at Water Street Coffee Joint’s newest location, set to open late 2014. (Jul 2014)
• Keller Williams Realty has expanded their office in Romence Village by over 2,000 more square feet. (Jul 2014)
The manufacturing and office sectors have also experienced significant growth in recent years. Below are several developments that have occurred
within Portage’s manufacturing and office sectors just over the past 4 months:
• Scannell Properties plans to construct a 300,300‐square‐foot manufacturing and distribution center at Romence and Portage Roads.
Scannell will lease the property to Kenco Logistics Services. The Planning Commission has approved the project, with the possibility of
adding a 200,000‐square‐foot addition at a future date. The project is scheduled for completion by the end of 2015. (Oct 2014)
• Mann+Hummel USA opened its second location in Portage. The 220,000‐square‐foot manufacturing facility will have enough space
for current business and for future business opportunities. Production of air cleaner systems, battery frames and the assembly of intake
manifolds and coolant reservoirs will be housed in the new facility. (Oct 2014)
• Summit Polymers Inc. will invest $7.3 million in its Portage, Vicksburg and Sturgis facilities for remodeling, new jobs and additional
equipment, after the start of 2015. (Oct 2014)
24
Recent Developments – Kalamazoo/Portage MSA
The Kalamazoo-Portage MSA (excluding Portage) has also experienced significant growth and new development across all sectors. Below are
several developments that have occurred just over the past 4 months:
• Costco has officially agreed to purchase land at the northwest corner of Stadium Drive and Drake Road in Oshtemo Township. In a
development of nearly 40 acres, Costco will be the anchor store in the largest commercial development in Oshtemo Township since
2003. Construction is set to begin immediately with a target opening date of November 1, 2014. (Jul 2014)
• Demolition work of the Gull Crossing retail center, located on Gull Road south of Sprinkle Road in Kalamazoo, was completed in March.
The 224,732‐square‐foot retail complex was demolished in preparation for the construction of a new Menards home improvement center
that will occupy the site in 2014. (Sep 2014)
• 2700 West, a $13million mixed‐use development, is currently under construction at West Michigan and Lafayette Avenue. Will include
apartments, restaurants and retail shops. (Oct 2014)
• Dollar Tree will be opening a new store on W. Main Street at Berkley Street. estimated to open in November. (Oct 2014)
• The former PNC Bank building at the corner of East Michigan and the Kalamazoo mall has been purchased by Tom Huff with the
intention of converting it into a mixed‐use, commercial and retail property. (Sep 2014)
• West Century Center welcomed Kalamazoo’s first Blaze Pizza location. (Sep 2014)
• A $2.2 million retail/commercial center has been proposed next to the KVCC campus in downtown Kalamazoo. Habib Mandwee plans to
convert properties he owns in the 600 block of Portage Street into a 23,000‐square‐foot retail center to better serve the student and
professional traffic just south of downtown. The center will feature a Biggby Coffee, On The Rock Market and new space for four other
tenants. Mandwee hopes to begin construction in the spring of 2015 and open in the fall. (Aug 2014)
• Menards has proposed a building plan on a 27‐acre site on the west side of Belleville Road between Tyler Road and I‐94. (Aug 2014)
25
Lease Comparables
Earth Fare Retail Center / Lowes Shadow
Willow Creek
SWC S. Westnedge and Kilgore
NRSF:
NA
Lease:
Earth Fare; 20-yr lease; 23,800sf new
construction @ $16/sf.
5132-5228 S. Westnedge Avenue
NRSF:
46,253 SF
Tenants:
Dollar Tree, Verizon
Asking Rent:
2,168-6,487sf @ $19-20/sf
1
2
SUBJECT PROPERTY
S. Westnedge Retail Center
5747 S. Westnedge Avenue
NRSF:
11,102 SF
Tenants:
Casual Male XL, Sleep Doctor
Asking Rent:
1,260 – 2,520sf @ $20-$22/sf
3
6195 South Westnedge Ave
NRSF:
77,630 SF
Asking Rent: 4,000sf @ $19/sf
Leases:
Toys R Us-52,050sf @ $6.79/sf
Chuck E Cheese-14,500sf @ $7.31/sf
4
Dick's / Hobby Lobby Shopping Center
Home Depot Center
6255-6355 South Westnedge Avenue
NRSF:
120,000 SF
Asking Rent: 6,000-13,777sf @ $12/sf
Leases:
Hobby Lobby-52,400sf @ $6.25/sf
Dicks-50,000sf @ $5.50/sf
5
SEC Ruth St and South Westnedge
NRSF:
23,800 SF
Tenants:
Home Depot
Asking Rent:
23,800sf @ $8-10/sf
6
7
Former Walgreens Building
NEC Romence and South Westnedge
NRSF:
13,000 SF
Leases:
Pure Sleep; long term lease; end-cap;
4,000sf @ $31/sf
Sam’s Club Center
SEC Romence Rd and S Westnedge
NRSF:
NA
Tenants:
Sam’s Club
Asking Rent:
10,000-15,000sf @ $10/sf
Retail Center
8
3279 West Centre Avenue
NRSF:
13,055 SF
Tenants:
Biggby Coffee
Asking Rent:
1,500 – 2,900sf @ $19/sf
26
Sales Comparables
Status
Property
Tenants
Occ.
GLA
Price
$/SF
CAP
Sold
SUBJECT PROPERTY
6195 South Westnedge Ave
Toys R Us, Chuck E Cheese,
Chili’s
96%
77,630
$6,200,000
$80
8.1%
Sold
Meridian Town Centre
4886 Marsh Rd
Okemos, MI
Marshalls
94%
86,891
$11,000,000
$127
8.25%
Sold
Algonac Plaza
2600-2680 Pointe Tremble Rd
Algonac, MI
Kroger Grocery
98%
69,305
$9,442,550
$136
7.89%
Sold
Chesterfield Village Square
51382 Gratiot Dr
Chesterfield Township, MI
Dunham's Sports, Staples
76%
150,543
$10,300,000
$68
8.24%
Sold
Village Lakes
300 Town Center
White Lake Township, MI
Marshall's
100%
70,748
$11,250,000
$159
8.58%
On Market
Kroger Food & Drug
2910 Center Ave
Bay City, MI
Kroger, O'Reillys (NAP),
JoAnns (NAP)
100%
64,562
$6,807,000
$105
6.00%
On Market
Tractor Supply and Big Lots SC
710-754 Perry Rd
Big Rapids, MI
Tractor Supply, Maurices, Big
Lots, Rue 21
96%
94,500
$5,500,000
$58
8.10%
On Market
Pirates Plaza
4071 Miller Rd
Flint, MI
ULTA, Five Below
100%
46,503
$6,000,000
$129
8.17%
On Market
Gordmans
2772 Tittabawassee Rd
Saginaw, MI
Gordmans
100%
46,614
$5,975,000
$128
8.00%
On Market
Max & Erma's Restaurant
4255 Baldwin Rd
Auburn Hills, MI
Max & Erma's restaurant
100%
6,264
$2,821,875
$450
8.00%
27
Appendix B – LBG Information
28