What’s next for the downtown Borders store?
“Word.”
That single apt graffito mars the front door of the vacant former Borders store on Liberty. Homeless people sometimes shelter in its once-bustling recessed entrance. And odds are slim that a single tenant will ever again occupy the onetime Jacobson’s department store. Walgreens took over the vacant Borders store in Birmingham, but State Street Area Association executive director Tom Heywood says the Ann Arbor store is too big for a drugstore. A Target could use the space, but Heywood says there aren’t enough residents to lure a big-box retailer: they want 15,000 customers living close by, and even with U-M’s large student population, downtown has only about half that.
But that doesn’t mean Borders will be a permanent blight on the State and Liberty retail scene. John Fingerle–the lumber company president who’s also the manager of Malcolm Properties, Inc., the firm that owns the land and the building on it that for decades was local bibliophiles’ ground zero–says he recently has been in preliminary discussions with developers about leasing the building. Although he says there is no deadline, Fingerle hopes to have a deal in place “as soon as reasonably possible.”
Fingerle won’t characterize the “several” interested parties who have approached him in recent weeks. Asked if they’re big-box retailers, a drugstore or grocery chain, or groups of smaller entrepreneurs looking to carve up the space, he answers: “None of the above. They are development companies.”
Whatever new use is made of the 48,000-square-foot space anchoring the campus retail area, Fingerle wants it to be “consistent with the history and vitality” of the corner of State and Liberty, in which the Malcolm family has had a stake since the early 1930s (the Malcolms and Fingerles are related by marriage). Before Jacobson’s consolidated a number of smaller storefronts, there were several first-floor retailers on the site, with apartments upstairs.
Malcolm Properties was created in the fall of 2007 when several members of the Fingerle and Malcolm families, along with their associated trusts, separately deeded their stakes in the parcel to the new management entity.
The adjoining rear office space, which extends under the parking structure on Maynard, has been mostly vacant since Borders corporate offices moved to Phoenix Drive. It is under the control of an entity called Ann Arbor Store #1 LLC
and Agree Realty. In November, AnnArbor.com reported Malcolm Properties was suing Agree over nonpayment of rent. Fingerle won’t comment on that report but says no litigation is currently in progress. He adds that Malcolm Properties and the office space owners are “friendly neighbors” and says there are no restrictions he is aware of that would prevent the two properties from being separately or jointly developed.
The State Street Association’s Heywood says Borders, which liquidated the store after going bankrupt last year, was paying only about $6 a square foot in monthly rent. Any new tenants would have to pay closer to market value–three or more times that much. Even at the low end, that means $1 million in annual rent, and a business would need to make more than $10 million in revenues to afford that, Heywood estimates–a daunting prospect in this economy.
Heywood and other observers believe the more likely outcome will be to divide up the space into multiple smaller storefronts–in a sense, taking the landmark corner back to the 1930s.
