At Marketplace Changes, it’s been a truism that once a restaurant takes over an Ann Arbor location, it will never be retail again. Restaurants cost so much to build, our theory goes, and make so much more money per square foot of space, that no store can ever compete.

So much for that theory: on State St. at Liberty, La Marsa will be replaced by an expansion of the M-Den.

The landlord of both businesses, Ed Davidson, also owns Bivouac down the block. He first floated the idea of the all-things-Michigan store buying out the balance of the Mediterranean restaurant’s lease. While the lease allowed La Marsa’s owners to sublet to any suitable tenant, as a merchant on the block himself, Davidson really didn’t want the obvious replacement: a fast-food restaurant.

Dave Hirth and Doug Horning spun the original Briarwood M-Den off from their downtown sports store, Stein & Goetz, in 1982. The chain has since grown to six stores, a catalog/Internet business, and a sales presence at most campus sporting events. Two years ago, Hirth sold his share of the business to his son, Scott Hirth, and daughter Julie Corrin, and Horning sold his share to his son Steve.

Just last year, M-Den took over part of the space previously occupied by a competitor, All About Blue. That was “something we sought out,” Scott Hirth says. “There was a bit of brand confusion between us and our neighbors,” who also specialized in Michigan merchandise. Because it wasn’t physically feasible to combine the space, they instead used it to create a separate, more upscale store called the Victors Collection, featuring brand-name clothes–Brooks Brothers, Ralph Lauren–that also incorporate subtle Michigan indicia.

When another chance to grow came up so soon, Hirth says, “I didn’t know what to think.” But recognizing an “opportunity-knocking kind of thing,” they jumped. This time, they’ll incorporate the added space into the existing store.

M-Den also has a presence on Main St., in a sliver of the former Stein & Goetz space, but it offers only a select subset of the company’s 5,500 Michigan-branded items. After the expansion, on the other hand, State St. will be a Block M superstore. Once it’s done, Hirth says, the store will have about 20,000 square feet of floor space. “If we carry it,” he promises, “it’s at the State Street location.”

M-Den, 303 S. State St., 686-3002. Mon.-Sat. 9 a.m.-9 p.m., Sun. 9 a.m.-7 p.m. mden.com