Lansing’s High-Tech Industry Goes to Schools

Ivy Hughes reports on a revitalization trend in Lansing: High-tech companies are buying abandoned schools, transforming them into business hub — and changing neighborhoods in the process.

The Cedar Street School in Lansing, soon to be home to high-tech industry. David Trumpie

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For some, the well-publicized woes of Michigan’s auto industry symbolize an entire state in desperate need of national aid. At 14.5 percent, Michigan’s unemployment rate is the highest in the nation and although unemployment in the state’s capital city is slightly lower at 11.7 percent, a group of entrepreneurs in Lansing is capitalizing on these losses, creating new industries and jobs for Lansing residents while reinvigorating deteriorating infrastructure.

Nanotechnology, biotechnology, and health care companies are scooping up abandoned school buildings ranging from 20,000 square feet to more than 50,000 square feet in size. After purchasing them for $100,000 to $400,000 or less than $20 a square foot, these firms are rehabbing them and turning them into economic generators. “Over the last 20 years, we have taken five buildings that had really begun to be eyesores on the community and converted them into offices and manufacturing space,” says James Herbert, founder and CEO of the Neogen Corporation.

Neogen is a publicly traded company that develops food and animal safety products. Each year Neogen manufactures more than $50 million worth of product at its Lansing headquarters, which is divided into two campuses, both of which are situated in old school buildings.

The Lansing School District has sold more than 20 school buildings in the last four decades to a small group of tech companies, including Neogen. The school closures correlate directly with the flight of industry from the Midwest. In the 1970’s, the Lansing School District comprised of 57 schools and 33,971 students; today, it has only 13,977 students in 31 schools.

Families continue to look for work outside of the state and as a result, the Lansing School District student population continues to decline however, the decline is slowing down. The district projected a population loss of 1,000 students from the fall of 2008 to the fall of 2009 but lost only 607 students. Loss projections for the 2010-2011 school year stand at 500 students.

“GM pared back, but Lansing still has two of the most advanced assembly plants in the world,” says Stephen Serkaian, spokesman for the Lansing School District. “At the same time, we have emerging technology and biotechnology industries in Lansing that have seized the opportunity to rehabilitate some of these architecturally grand buildings in ways that preserve the character of the neighborhoods and the buildings.”

Herbert was the first to see the value in the old schools; he purchased the 26,000-square foot Oakpark Elementary School in 1985 for $200,000. He upgraded the 1916 building, slowly transforming the school into Neogen’s international headquarters by replacing classrooms with laboratories and office space. In 2005, he acquired the 55,000 square foot Allen Street Elementary, which he outfitted to support the company’s growing research and development unit.

Thanks to their expansive plumbing systems, large spaces and impervious surfaces that allow for easy cleanup, the old schools are perfect lab settings, Herbert says. The moderate initial investment can balloon during renovations, but even with the additional renovation costs, the schools still cost less than new buildings. “Totally retrofitted, these buildings would cost about $60 a square foot and that would be comparable today to having a single story, concrete floor building with steel skin on it and a minimum of office space,” says Herbert. Herbert’s conservative estimate is that the school buildings cost about a quarter what a new building would cost, all told.

Other tech startups looking to house new business in schools have consulted Herbert for advice. In 2006, Terry and Beth Grimm started Niowave, a high-tech research and manufacturing company that specializes in designing and manufacturing parts for particle accelerators. After seven months of searching for a suitable building to accommodate their business, the Grimms paid $300,000 for the 45,000 square foot former Walnut Street School.

“The price was a very appealing factor and the condition of the building was great,” says Beth Grimm about the 1924 building. Niowave shares the building with other tenants who have converted classrooms into art studios, community space and video production studios. “We have about 50 employees working here and that’s going to keep on growing,” Grimm says. “We’re going to need another building soon. We’re growing every year.”

Gail Shafer-Crane and Carla Guggenheim, two health care professionals who specialize in hand rehabilitation and rheumatology, initiated the most ambitious rehab of a Lansing school building to date. In 2008, they purchased Lansing’s first elementary school for $450,000, spending an additional $2.8 million to renovate the 21,000-square-foot building, which had been closed since the 1980s.
Rehabbing the 1918 building while preserving its historical integrity was challenging, especially because Shafer-Crane and Guggenheim wanted to adhere to LEED guidelines. “We rebuilt probably one-third of the existing roof structure, rebuilt over half of the south wall that was falling out onto the side street by tearing it down to the base of the third floor and building it back up to support the existing roof,” says Ryan Kincaid, general contractor for the project and owner of the Kincaid Henry Building Group. “Instead of disposing of the existing masonry and brick, we reclaimed the materials and used them as part of the reconstruction.”

The former Cedar Street School, which was an eyesore in Old Town,one of Lansing’s up–and-coming neighborhoods, is now a thriving fitness and medical center as well as an example of sustainable building. Shafer-Crane and Guggenheim are in the process of seeking LEED certification for the new Old Town Medical Arts Center, which won the Michigan Mainstreet Downtown Redevelopment of the Year Award in 2009.

The rehabilitations are not a cure-all for Lansing. Like the rest of the state, Lansing is striving to invest in additional new economy jobs, but the schools are a good first step.

“Each elementary could represent 50 to 100 high paid jobs where the average salary is about $40,000 to $50,000,” says Karl Dorshimer, vice president and director of the downtown core for Lansing’s Economic Development Corporation.

Not only are these companies revitalizing the region’s economy by providing jobs, they’re also revitalizing neighborhoods. Unlike many newer schools that sit off of highway exits or in the middle of fields, Lansing’s old school buildings are smack in the middle of neighborhoods. “We always hold community meetings and after parents ask about what school their children will attend, the second question always is, what’s going to happen to the building?” says Serkaian.

The district maintains schools while they sit on the market, paying an estimated $25,000 on each building annually, for maintenance alone. When businesses buy the schools, these costs are absorbed, new property taxes are generated for the city and nearby businesses and community groups see a resurgence in support.

“No one likes to see a school torn down, even if someone is building a new one,” says Kincaid. “That’s why cities and townships get behind these projects. They have so much historical and sentimental value to the community, not to mention most of their locations are central in our vital living and working communities. These structures are not just old warehouses or storage buildings; they have a lot of underlying principle that starts with educating ourselves about repurpose.”

When Neogen outgrew Oakpark Elementary, Herbert purchased three rundown houses adjacent to the property and fixed them up, prompting other neighbors to pick up paintbrushes and spruce up their own houses. “We sponsor events with the neighborhood associations and we help maintain the park across the street,” says Herbert. “They help us too, because they know we’re there and they give us good references on jobs and help us look after our property.”

Herbert has taken neighborhood involvement a step further, offering $5,000 grants to employees who purchase a home within a one mile radius of either Neogen campus. “It provides them an opportunity to buy houses they can afford and they get a good price on their property so that continues to help with pride in the overall neighborhood in which our businesses are located,” says Herbert.
At least one school building remains on the market. It’s been rumored that the building will serve as an art incubator, though an offer has yet to be made on the property, but Serkaian points out that the schools have been selling faster in recent years.

“I think this does speak to what’s happening in Lansing with new technology and new business,” said Serkaian. “We’re entering into a whole new era of business and we’re no longer centered on factories.”

Ivy Hughes is Managing Editor of Capital Gains Magazine and David Trumpie is Photography Editor Capital Gains Magazine.

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