How REO Town is making an epic comeback

LANSING - Dominik Neumann sat outside Blue Owl Coffee in REO Town, reading a book and sipping decaf coffee.

The doctoral student at Michigan State University said he'd discovered the coffee shop a few weeks earlier and spent nearly every day since hanging out there.

"It's nice because it's super clean and bustling, but not too busy," said Neumann, 28, who lives in East Lansing. "I like the open spaces and the vintage stores. I want to move here."

On a Wednesday afternoon in August, REO Town's little business district on South Washington Avenue was alive with activity. A few feet away from Neumann, a handful of people sat at picnic tables, chowing down on meals from Saddleback BBQ. A few Lansing Board of Water & Light employees strolled down Washington Avenue on their lunch break.

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Once vacant buildings are now filled with vintage shops, thrift stores, a record shop and even investment firms and development companies. More will be opening in the neighborhood within a year: Pablo's Mexican Restaurant, Sleepwalker Spirits & Ale, Wheel House Studio, Rusty Nail and Fusion Shows.

Since BWL invested $182 million four years ago to build its headquarters and cogeneration plant on the corner of Washington Avenue and South Street. Roughly $7 million more in investment has followed from businesses and the City of Lansing.

"REO Town really symbolizes the creative rebirth of Lansing," said Bob Trezise, president and CEO of the Lansing Economic Area Partnership, which is headquartered in the neighborhood. "Not very long ago, this was kind of a dangerous, unappealing area. It's hard to imagine."

REO Town's rebirth

Just days after Roxanne Landes bought Dalmatians Firehouse Grille in 2003, someone shattered a window in an attempted break-in.

Welcome to REO Town.

"My family said I was crazy," said Landes, who ran the diner at 1107 S. Washington Ave. from 2003 to 2010. "(REO Town) was a little bit scary, but I saw potential. I loved it."

Rent was cheap and started attracting people young entrepreneurs like Ryan Wert, who opened Elm Street Recording in 2004.

The neighborhood's business strip was pretty desolate back then. Vacant storefronts lined Washington Avenue, though there were businesses peppered throughout: a thrift shop, nightclub, metal bar, a pizzeria and the diner. Only the thrift shop is still open. Landes now owns REO Town Pub, which she started in 2010.

"There was a lot of fluctuation; businesses would open and close," said Wert, the executive director of the REO Town Commercial Association. "The whole 2000s were kind of a shit show."

Wert remembers police responding to frequent calls at the South Town Restaurant & Lounge. Down Washington Avenue on the corner of Malcolm X Street, the Deluxe Inn was a hotbed for drug dealers and prostitution. A woman was murdered there in 2006.

There were a few attempts at hosting concerts and events in the neighborhood in that time period, but the commercial association couldn't turn a profit and folded, Wert said. It restructured as a volunteer organization. Members focused on small beautification projects, like picking up garbage in the streets or creating signs.

By 2010, things started building momentum. BWL announced its plan to build a cogeneration plant and headquarters in the neighborhood, which would bring 180 employees to REO Town. The Ingham County Land Bank tore down the Deluxe Inn, which closed in 2009. In its place, the commercial association erected the large painted "REO Town" sign.

In 2013, in conjunction with the BWL project, the City of Lansing spent $3 million to improve the streetscape on Washington Avenue, creating bike lanes, adding landscaping and benches as well as widening the sidewalks to improve the neighborhood's walkability.

"It was that one-two-three punch that ignited REO Town's huge success," said Trezise, who moved LEAP's office from the Stadium District building on Michigan Avenue REO Town in 2013.

BWL's investment brought an extra 180 people to support retail and restaurants during the week, Wert said. Riverview Church spent $1 million that year to renovate the former Cadillac Club into a worship and event space, attracting 400 people on the weekends.

"When you build a new plant, you see economic development around it," said Dick Peffley, BWL's general manager. "When we started the development, there wasn't much here. When we got done, you could see the interest in the area. People started coming down here again. On Fridays and Saturdays, it's bustling here."

The neighborhood has evolved in the five years that Paul Trowbridge has been running Cuttin Up Barbershop at 1135 S. Washington Ave.

"When I opened there were still hookers ... here," said Trowbridge, 49, a member of the commercial association board. "Now people walk Labradors down the street. It's changed here."

The commercial association restructured itself, and the low-budget festivals started to gain traction, among them Art Attack, Lansing Beerfest and the Thrift Store Gala.

Good Truckin' opened at the former site of Dalmatians in 2014. Saddleback BBQ and the Robin Theater opened on that same block in 2015. Lansing Clothing Co. opened across the street in 2016. Blue Owl Coffee and The Record Lounge opened this spring.

"If you look around, things are getting built up here," said Jennie Kahn-Jacques, a state employee who eats lunch in REO Town a few times a month. "There's new restaurants and shops. There are things to do here now."

New wave of investment

By the time Reuben Levinsohn of L&P Properties started buying buildings in REO Town with his partners Nick Pope and Leo Trumble, the neighborhood was no longer considered a risky investment.

"We were coming in on the backs of a lot of people who already invested in the area," Levinsohn said. "We wanted to be part of REO Town's transformation and what we think will be a vibrant food, art and music community for Lansing."

L&P Properties brought Blue Owl and Michigan Creative to 1149 S. Washington Ave. this year. REO Brew School operated out of the space last summer before moving to Lansing's east side. The building was renovated as part of a $700,000 project that includes rehabbing the former Lansing Uniform building at 1141 S. Washington Ave. into a restaurant with apartments above.

Levinsohn recently moved his financial firm, Washington Avenue Advisors, across the street from Blue Owl.

Wert's Super Fancy Too LLC is renovating the other end of the block to move in Sleepwalker Spirits & Ale, and Daniel Nunez is rehabbing the building next door to open Wheel House Studio, where he will teach ceramic classes. The total investment between the two projects is roughly $500,000.

But REO Town's business district isn't the only part of the neighborhood experiencing revitalization.

Developer Brent Forsberg is turning vacant lots into affordable housing with his Tembo home project.

Forsberg, the president of T.A. Forsberg in Okemos, built a 600-square-foot, one-bedroom home at 127 E. Elm St. this spring. The home sticks out with its slanted roof and cathedral ceiling, but Forsberg plans to build eight more in the neighborhood by this winter. Rent will range from $600 to $850 depending on the amenities.

"Affordable housing isn't a problem yet, but gentrification is," he said. "As REO Town becomes more popular, affordable housing will become a problem."

Forsberg said REO Town is a desirable place to live because its right down the street from Lansing's urban core. He and other developers believe projects will soon fill in the gap between Elm and Lenawee streets to connect the two districts.

REO Town's success is similar to Old Town's rebirth in the late 1980s and '90s.

It started with pioneers such as Robert Busby, who helped transform the former seedy neighborhood into an arts district. Galleries started popping up and the shops, restaurants and bars followed. The city supported those efforts, in part with federal money. In 1998, for instance, Old Town landed a community block development grant worth nearly $150,000 that reconstructed some streets, rehabbed houses and built the parking lot on Grand River Avenue and Turner Street.

"It was very grassroots," said Vanessa Shafer, executive director of the Old Town Commercial Association. "There was a committed group of people that wanted to see the community build."

Wert believes REO Town is 20 years behind Old Town in terms of redevelopment. But Shafer believes REO Town will catch up much sooner thanks to BWL's large investment, which spurred further redevelopment. Old Town didn't have one large development project help anchor the district, she said.

"REO Town is on the precipice of doing amazing things," Shafer said.

As REO Town continues to forge its own identity, Wert recalls a time when people didn't know much about the neighborhood at all. Business owners rebranded the area as REO Town in 2002 in honor of Oldsmobile founder Ransom E. Olds.

"When I would tell people I live in REO Town, they would say, "I think you mean Old Town,'" Wert said. "That happens much less frequently. For the first time in its history, REO Town has a lot to offer."

Alexander Alusheff is a reporter for the Lansing State Journal. Contact him at (517) 377-1096 or aalusheff@lsj.com. Follow him on Twitter @alexalusheff.