A retail center home to several boutiques and shops in downtown Traverse City's Warehouse District is about to undergo a dramatic transformation under new ownership – plans developers say could revitalize the district, but that existing tenants fear could drive them out of business.

Dan and Meridith Falconer purchased the Warehouse Marketplace – formerly home to the Lighting Center – at the corner of Hall and Garland streets four weeks ago. The facility was previously owned and operated by Dan's parents, Julie and Bruce Falconer.

Shortly after the purchase was finalized, Dan and Meridith met with the principals of the seven businesses in the building – including Holland's Nest, The Red Dresser, Waara Technologies, Relish, Soul Soup Studio, Handz on Art and Grey Wolf Creek – to outline their vision for the property and announce a rent increase.

“We view the Warehouse Marketplace as a keystone building in the Warehouse District...and feel a responsibility to turn it into a focal point of downtown,” Dan explains. “We are excited to have the opportunity to create a fresh, vibrant atmosphere...both updating the exterior of the building and re-imagining the interior.”

Last week, rent change notification letters were delivered under every tenant's door. Many received significant increases in rent; others, such as Kristen Jongen of Soul Soup Studio, received an eviction notice (Dan Falconer notes that most tenants were operating on a month-to-month basis).

“Everyone is reeling...it is shocking,” says Jongen, who has been in the building since summer 2012. “I rented this space and decided to invest in such a costly build-out because...rent was affordable. I haven't had time to recoup my initial expenses, and will be forced to go out of business. I will be closing my gallery and selling my (products) wholesale and online.”

Dave Wood of Grey Wolf Creek, a lighting and fan service company, says he's unable to afford the rent increases that begin in December and will also be vacating the building after Christmas. “It's going to be tough. I've been looking for other places, but it's hard to find something reasonable. I understand times change and costs go up...but I didn't think it'd be this drastic,” he says.

Tammy Simerson, owner of furniture and gift store The Red Dresser, and Courtney Reinhardt, co-owner of resale boutique Holland's Nest, both say they plan to leave the Warehouse Marketplace at the end of January and open in new locations.

Other tenants plan to remain in the building, including Todd Waara of Waara Technologies, Julie T. O'Hearn Cox of Handz on Art and Tracey Gabel of Relish. “I will continue to be open...and I am excited about the improvements that will be made to the building and for my store's future in this area,” says Gabel.

Dan Falconer says he's aware that some tenants are upset about the changes, and calls the rent increases and evictions “tough decisions on our end." He adds that rent had been “way below the going rate” and wasn't covering operational costs. Taxes on the property increased 40 percent after an official assessment was made at the time of the building's sale, he notes.

The Falconers have hired local architect Michael Fitzhugh to remodel the Marketplace, with construction set to begin in February. The couple also plans to operate their own store called Wood + Cloth, featuring a mix of furniture, clothing and gifts.

"I'm excited about the future and all the possibilities offered by this project...which is the vision we have to serve first and foremost," says Dan, noting that prospective new tenants have also stepped forward. "I think the tenants who are staying are optimistic about the future as well."

The remodeled Warehouse Marketplace is expected to open in summer 2014.