Several recently vacant storefronts and office spaces on East Liberty Street are filling up, while others have yet to remove their “For Rent” signs.

The rental office of Zaragon West has moved into the space vacated by the This & That candy store, which closed last month. Poshh, a clothing store that called East Liberty home for a decade, also closed this fall, and there is a potential tenant lined up to use the space. However, the 37,000 square-foot building that formerly housed Borders remains vacant.

Tom Heywood, executive director of the State Street Area Association, said the Ann Arbor community will have to wait a while before it sees another store in the former Borders building.

Heywood said the wait is due to an ongoing legal issue stemming from the current lessee, who was subletting the building to Borders when the bookstore went bankrupt in February. The East Liberty Borders location closed in September.

According to Heywood, the owners of the building are suing the current lessee in Washtenaw County District Court in an effort to terminate the lease. The owners will not be able to lease the space to another tenant until the current agreement is terminated.

Heywood said he does not know the names of the owners and lessee involved in the legal battle, and the courts will determine when the building will have another retailer.

“Until all this gets ironed out, they can’t legally lease it out to anyone, and who knows who may have shown interest,” Heywood said.

Other recently vacated properties have had more luck finding tenants.

Randy Maas, associate broker with Swisher Commercial who manages the property once occupied by Poshh, said a prospective tenant of the space is looking at a five-year lease term. Maas said he expects that the lease will be signed by the end of the year.

Maas declined to comment on who the prospective tenant is, but said he is not surprised that the property has generated so much interest.

“We figured it would turn around fairly quickly for that location,” he said. “It’s a great location in Ann Arbor near one of the busiest intersections in the county.”

Apart from retailers, other more entrepreneurial-focused businesses are moving into office spaces on East Liberty.

Menlo Innovations, a software design and development company, recently signed a 10-year lease for the space next to TechArb, which is managed by the University’s Center for Entrepreneurship. The business accelerator leases space in the Offices at Liberty Square, located on the corner of East Liberty and South Division streets.

Carol Sheridan, factory floor manager for Menlo, said the company moved because of space constraints in its former Kerrytown offices, and the business is excited to be in its new location next to the TechArb.

“I think the proximity to the University of Michigan is a draw for us,” Sheridan said. “Another draw for us is that we’re right next door to TechArb, which we think is an interesting collaboration.”

Tom Gritter, vice president and managing director of commercial real estate with McKinley Inc., which owns the Offices at Liberty Square, said he has seen a variety of businesses move onto East Liberty during his time in the area.

“It’s really turned into an entrepreneurial hub for offices right there because you have all the retail amenities and the benefits of being right next to the University of Michigan campus, but then you also have a lot of creative companies that want to be right next to each other,” Gritter said.

Gritter added that McKinley has been involved in real estate on East Liberty for the past five years, and he believes that the reduced foot traffic caused by Borders’ absence is temporary.

“A lot of retail streets … go through transitions,” Gritter said. “Borders, obviously being a big anchor tenant, I think hurt some of the smaller users that aren’t as much stand alone (businesses) or maybe just benefit from the traffic that comes from a Borders type of operator in the space.”

Andrea Graef, owner of the former This & That store, told The Michigan Daily in October that the Borders closure resulted in less patrons for East Liberty Street stores, which was a factor in her decision to close her store. Other reasons for her store’s closing were panhandling in the area and an increase in competition.

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