Eye doctor's growing Ann Arbor holdings raise concerns
Having shelled out just shy of $16 million over six years for prime parcels of downtown real estate, Reza Rahmani is quickly becoming one of Ann Arbor's most influential and controversial property owners.
The Northville-based ophthalmologist owns the Rahmani Eye Institute, with locations in Brownstown, Novi and Rochester Hills. He said Ann Arbor's "vibrant" nature has drawn him to buying property there.
"I personally always am thrilled when I come to Ann Arbor," Rahmani said. "It gives me a large-city feeling with a lot of restaurants. It's alive, so that's my attraction. And I think the city is doing very well."
In February, Rahmani paid $6.45 million for the entire real estate portfolio of music entrepreneur Al Nalli, including two choice Main Street parcels and an entire block nearby on Ashley, just west of Main. That's just the latest acquisition for Rahmani, who began buying Ann Arbor property in 2009, when he paid $1.3 million for a parcel on State Street. He's since concentrated his purchasing on downtown Ann Arbor's main drag, dropping $8.2 million on Main Street properties over three purchases in 2011, 2012 and 2014.
In addition to his recent acquisition of the Nalli portfolio, Rahmani is overhauling the former Selo/Shevel Gallery at Main and Liberty. Rahmani purchased the property last year from retiring owners Elaine Selo and Cynthia Shevel. New tenants expected to move in this year include a deli and an Ann Arbor outlet for Detroit's Shinola watch and luxury goods purveyor. Permits filed with the city of Ann Arbor detail extensive renovations to the building, including addition of a roof deck.
"It's highlighted how successful downtown Ann Arbor is that we have someone willing to make such an investment in our downtown," said Main Street Area Association director Maura Thomson.
"What we've seen so far, at least with the property on Main and Liberty, is that he is restoring that building and taking his time and doing it right."
Selo said she and Shevel chose to sell to Rahmani because of his "vision" for the downtown. She's pleased with the development in the building, in which she and Shevel owned and operated their business for more than 30 years.
"He obviously could have just made a restaurant out of it and he didn't," Selo said. "He brought in Shinola, which I think is a great thing for the downtown area."
Rahmani's vision has been more controversial in other cases. Jim Johnston and Kay Gould-Caskey closed their Falling Water gift shop in December after 25 years on Main Street, shortly before Rahmani acquired their building as part of Nalli's portfolio. In a statement on their website, Johnston and Gould-Caskey cited the imminent change to Rahmani's ownership as a key reason for their decision to close.
Similarly, the 100-year-old Seyfried Jewelers closed in 2013, shortly after Rahmani acquired the property. Seyfried owners Jim and Bill Hart told the Ann Arbor News at the time that they chose to retire early rather than agree to Rahmani's lease renewal terms, which they said would have raised their rent 60 percent. Johnston and Gould-Caskey declined further comment for this story; the Harts could not be reached for comment.
Rahmani has since split the former Seyfried space between a Life Is Good store and the Black Pearl restaurant. The Falling Water space has yet to be leased. Rahmani said he has "no interest in pushing anybody out," but in some cases — the Harts, specifically — he acquires existing tenants who have had long-term leases at below-market rates and can't afford the increase.
"Some of the businesses that are paying $4 or $5 a square foot on Main Street or on Ashley Street, that's not even close to what the market rate is," he said. "$4 to $5 a square foot doesn't work. The businesses that want to rent for $4 to $5 a square foot, I don't think they can find a space in Ann Arbor. Not just in Ann Arbor. Anywhere."
That's raised some concern on Ashley Street, where Rahmani's latest acquisitions include buildings housing legendary Ann Arbor businesses including the Fleetwood Diner and Krazy Jim's Blimpy Burger. Blimpy Burger owner Rich Magner said he doesn't have "a problem so far" with his new landlord, but he couches his contentment within the terms of his current lease.
"I have a lease, so as long as I pay my rent I should be OK for a bit," Magner said.
Dana Forrester owns Lucky Monkey Tattoo Parlour, which is also among Rahmani's newly acquired tenants on Ashley. She said the block was "the unofficial red light district" of Ann Arbor when she leased the property in 2001, but thanks to Nalli's investment in her and other local businesses, the area is thriving. Forrester said she fears Rahmani, whom she describes as "just a straight-up businessman," will increase her rent by an unaffordable amount when her lease ends next year.
"I do respect Dr. Rahmani's business acumen, and I understand that this is purely an investment and a business transaction for him," she said. "He bought the block at a premium and he obviously is in it, as any successful businessman is, to make money. … But it makes me sad that Ann Arbor will, if it continues in this way, (have) only chain restaurants or chain businesses."
Rahmani said Forrester is not paying market rate for her space and he will re-evaluate the rate when her lease is due for renewal. But he promised to go out of his way to make the rent affordable. He said it's still premature to consider turnover or redevelopment on the Ashley block.
"A lot of the tenants in that block have long-term leases, so we can't do anything," he said. "At one point, we might do something; but that's years away."
Any long-term changes on the Ashley block will still have a single holdout with which to contend. Mary Hathaway owns the building at 310 S. Ashley, in the middle of Rahmani's newly acquired properties.
Hathaway and her late husband purchased the building in 1970 and maintained it as a community events space known as Hathaway's Hideaway. Hathaway said she's turned down multiple offers to sell the property over the years (although Rahmani didn't approach her), and she and her children intend to continue maintaining the space as a tribute to her husband.
She recalls an occasion when Nalli was considering redeveloping the entire block as a single building.
"I said, 'That's fine,' " Hathaway said. "'Go ahead. But you can't have my building. You'll have to build around it.' "