Developer wants to save Lafayette

[E hemingway]

That's ludicrous Retroit. No developer puts up a complete plan with all of the money for it up front. Homeowners don't do it. Commercial landlords don't. Nobpdy does. My educated guess [[and I have a pretty good idea of what I am talking about) is that Keffalinos can make that building viable and respectable looking for under $10 million. That means he fixes the roof, secures and cleans the exterior and rehabs the first floor or two so it's commercially viable. The whole building doesn't need to be done all at once.

The bottom line is the city is essentially broke. It doesn't have millions of dollars laying around for demolitions of choice. This is a demolition of choice, not necessity. It will create jobs, tax base and increase the property values in the surrounding area. This is an easy business decision. It would be a complete failure on the DEGC, DDA and city's part if they didn't find a way to make this investment happen.

[DetroitHabitater]

if you can get a $3500 roof on a house that needs $100,000 worth of restoration, it lives to see another day.

[EastSider]

Say Keffalinos slaps some paint on the place, clears out the first floor and preps it for commercial space...what's going to go in there? Downtown if chock full of empty commercial space. Woodward was rehabbed in time for the Super Bowl, and yet that prime space sits vacant how many years later?Why would anyone rent in the Lafayette versus any of those other spaces?

With no rents coming in, Keffalinos or anybody isn't going to be able to make a business case for the additional loans needed for the building. Sure, the DDA could float some loans, but even that isn't an endless river of money, but replenished by tax receipts in the district.

[Retroit]

E hemingway,

If Mike Illitch or Matty Maroun wanted to acquire an abandoned city-owned building and had a vague, unfunded proposal for it, you would have no problem giving it to them?

[ghettopalmetto]

I'm not in favor of tearing down the building, but I'm also not in favor of selling it to someone who is not able to do a decent restoration of it. The City of Detroit shouldn't sell the building for $1 to someone just because they have a some plan and some money. Can the city afford to be picky? If they want to stop the cycle of absentee landlordism, they'd better start being picky.

A decent restoration would probably cost $40 million [[uneducated guess), so giving the building to someone who only has $4 million would be like giving a home that needs $100,000 worth of restoration to someone that can only afford a $10,000 worth of restoration.

Until Dionysia submits a complete proposal and can come up with the complete amount to fulfill it, they should not be taken seriously.

You obviously don't know a damned thing about the construction industry. No one EVER has all the money up front. Typically, it trickles in from the banks, and through pre-sales and pre-leases.

You, of course, are well aware, that if the DEGC were interested in being picky, there is a mechanism known as a Request for Proposals. Of course, this also means you need to review the RFPs, and not just throw them all out the door on the basis of Cause like the DEGC did with Tiger Stadium. It also requires that the DEGC know more about development than just demolition.

On the other hand, if the mission of the DEGC is to promote development vis-a-vis being in the real estate business itself, just sell the damned building and let the free market work its magic. Developers know more about this kind of thing than George Jackson, anyway. Just ask John Ferchill, who saved the "unsalvageable" Book-Cadillac.

Now, let's consider. No one knows how much it would cost to return the Lafayette to an operating condition. And the costs depend on what the use of the space will be [[offices tend to use higher-end finishes than residences). So how you arrived at your bullshit $40 million figure is beyond me.

The $4 million, if you would pay attention, or knew anything about how construction projects work, is merely to conduct an investigation, determine a scope of repairs, perform any immediate stabilization that may be required, and engage an architect to develop a schematic design. THEN you can get a price. In other words, this $4 million needs to be spent IN ORDER TO develop a "complete" proposal.

Of course, since the DEGC doesn't believe in Due Diligence, you can't put numbers on jack shit, other than they're going to spend $1.4 million the City doesn't have.

[crawford]

On the other hand, if the mission of the DEGC is to promote development vis-a-vis being in the real estate business itself, just sell the damned building and let the free market work its magic. .

The building can't be sold because it's worthless. They tried when the economy was at its peak. Completely worthless.

If you are so hell-bent on selling the site, then the building first needs to be demolished. Then it will be least worth something, and can contribute some taxes and economic activity.

Developers know more about this kind of thing than George Jackson, anyway. Just ask John Ferchill, who saved the "unsalvageable" Book-Cadillac.

LOL, what nonsense. Taxpayers saved the Book-Cadillac. Ferchill was the beneficiary. He has no skin in the game.

Nobody ever claimed the Book-Cadillac was unsalvagable. The claim was that it was an albatross, which [[to date) has been proven 100% correct.

[Novine]

"If you are so hell-bent on selling the site, then the building first needs to be demolished. Then it will be least worth something, and can contribute some taxes and economic activity."

Like all of the other vacant lots that the DDA already owns? Let's jack up the supply of vacant lots so the value of each can go down that much more.

[E hemingway]

The building is valuable because a prominent downtown developer/millionaire wants to spend some of his millions redeveloping it. Say what you want about Keffilanos, but he understands the basics about economics better than anyone at the DEGC, DDA or city, including Dave Bing. It's why Keffilanos worked his way up from being an immigrant dishwasher to being one of the city's most prosperous businessmen. It's why businesses keep lining up for space at the Russell Industrial Center. The Lafayette won't stay empty long once his people start working on it because he understands the law of supply and demand, and will price his space to fit the market. Few other downtown landlords have shown they can do it. If anyone could turn that Lafayette into lemonade, it's Keffilanos. Anyone who can't see this is either blind or deliberately closing their eyes.

Fact:
Demolishing the Lafayette will create a couple of temporary jobs
Rehabbing the Lafayette will create hundreds of long-term jobs
Demolition erases tax base, something a broke city badly needs
Rehabilitation creates millions of dollars in tax base
Demolition will create a blighted vacant lot, make it harder for the Book Cadillac to succeed and destroy the Coney Islands [[see the Statler site)
Rehabilitation will raise property values, maintain the urban fabric and enhance downtown's tourism potential

Letting Keffilanos or anyone else who wants to put their money where their mouth is and rehab the Lafayette is a no-brainer. Letting this opportunity to create jobs, tax base and value pass by at a time when the city badly needs all three would be a complete and utter failure by the DEGC, DDA and city's part.

[Detroit500]

So, does anyone know if any progress with this has occurred? Have they been able to look at the site?

[ghettopalmetto]

The building can't be sold because it's worthless. They tried when the economy was at its peak. Completely worthless.

If you are so hell-bent on selling the site, then the building first needs to be demolished. Then it will be least worth something, and can contribute some taxes and economic activity.

LOL, what nonsense. Taxpayers saved the Book-Cadillac. Ferchill was the beneficiary. He has no skin in the game.

Nobody ever claimed the Book-Cadillac was unsalvagable. The claim was that it was an albatross, which [[to date) has been proven 100% correct.

As your junior high math teach says, Show Your Work.

Losing the potential of redevelopment would tend to DECREASE the value of the property, not increase it. Do you know how much structural steel costs these days?

But what do I know? I'm just an idiot engineer who has experience working on renovation projects.

[detourdetroit]

crawford, i would preface your comments with the caveat that they really belong on the message board, DETROITNO.

[Novine]

"Letting this opportunity to create jobs, tax base and value pass by at a time when the city badly needs all three would be a complete and utter failure by the DEGC, DDA and city's part."

Which is sadly why it is the most likely outcome.

[Fnemecek]

The building can't be sold because it's worthless. They tried when the economy was at its peak. Completely worthless.

That's some twisting of the facts.

The only efforts to "sell" the Lafayette Bldg. involved a pair of hand picked developers. No one else even had a chance to go through the building.

We don't know what the building would bring on the open market because the DEGC has been adamantly opposed to putting it on the market.

[DetroitDad]

Say Keffalinos slaps some paint on the place, clears out the first floor and preps it for commercial space...what's going to go in there? Downtown if chock full of empty commercial space. Woodward was rehabbed in time for the Super Bowl, and yet that prime space sits vacant how many years later?Why would anyone rent in the Lafayette versus any of those other spaces?

With no rents coming in, Keffalinos or anybody isn't going to be able to make a business case for the additional loans needed for the building. Sure, the DDA could float some loans, but even that isn't an endless river of money, but replenished by tax receipts in the district.

Completely different scenario. The Lafayette Building is in a much better location, and doesn't suffer from the problems that the Hudsons Block brings.

[EastSider]

Completely different scenario. The Lafayette Building is in a much better location, and doesn't suffer from the problems that the Hudsons Block brings.

What "different scenario?" I'm not talking about the Hudson's block. I'm talking about all of the existing retail space that is empty, like all of the spaces on either side of Woodward between GC Park and Campus Martius.

None of that has been filled since the Super Bowl was allegedly going to cause Detroit to rise, so why would it make economic sense to create even more retail space in the Lafayette?

[ghettopalmetto]

What "different scenario?" I'm not talking about the Hudson's block. I'm talking about all of the existing retail space that is empty, like all of the spaces on either side of Woodward between GC Park and Campus Martius.

None of that has been filled since the Super Bowl was allegedly going to cause Detroit to rise, so why would it make economic sense to create even more retail space in the Lafayette?

Until there is a significant potential client base on Woodward between Grand Circus and Campus Martius, there is no demand for retail. And you don't generate that demand by creating empty lots. It stands to reason that if you fill the Lafayette Building with office or residential tenants, there will be some level of demand for retail. Witness the Compuware building or the restaurants in the Book-Cadillac.

[Retroit]

ghettopalmetto and E hemingway, if reality is as you claim, then why does Detroit have such a long history of great projects that have gone bad? It seems every other week we hear about some proposal to renovate some building. How many have reached fruition? How many buildings have changed hands numerous times only to still be vacant?

I would love to agree with you that, yes, we should trust every renovation proposal that comes along. But how can we break the cycle of failed projects? How do we ensure that properties don't fall into the hands of those who claim to have plans, but end up sitting on properties in the hope of selling it to a Greater Fool [[or any other nefarious reason)?

[David Hall]

Fact:
Demolishing the Lafayette will create a couple of temporary jobs
Rehabbing the Lafayette will create hundreds of long-term jobs
Rehabilitation creates millions of dollars in tax base
Demolition will create a blighted vacant lot, make it harder for the Book Cadillac to succeed and destroy the Coney Islands [[see the Statler site)

I challenge you to prove [[or even make strong argument for) any of these"facts."

[French777]

I just don't understand why they can't hang a "HUGE" banner that reads "New Hotel and Lofts Coming Soon". If Lafayette is about to come crumbling down then thats another story...

[EastSider]

Until there is a significant potential client base on Woodward between Grand Circus and Campus Martius, there is no demand for retail. And you don't generate that demand by creating empty lots. It stands to reason that if you fill the Lafayette Building with office or residential tenants, there will be some level of demand for retail. Witness the Compuware building or the restaurants in the Book-Cadillac.

Ah, yes. Let's witness the Compuware retail.

Yesterday, I went to the Credit Union One in the Compuware complex so I could withdraw money to buy a new book at Border's to read over my lunch at The Woodward. I wanted to finish with desert at Ben & Jerry's, but you never know if the posted hours are their real hours, and it was already closed for the night.

As for creating more office space, you need to talk to anybody downtown who either owns an office building or is a leasing agent. The last thing downtown needs is more office space.

Residential? Please. We can't support the units we've got available right now.

The only thing new office or residential space in the Lafayette would do is push other space over the brink. The Stott's empty. The Penobscot is barely holding on. The Ford Building is sweating it out. 1001 Woodward is empty, and the Kennedy Square building isn't busting at the seams, either.

[ASR89]

Speaking of which, what are some ballpark estimated figures of occupancy rates of downtown buildings? I tried doing some research, but all I've found so far is:

David Stott - 50-60% occupancy in 2006
Penobscot - 80% occupancy in 1997
I also recall reading an article about the Guardian being around 46% occupied in 2007.

[spiritofdetroit]

Eastsider,

Aside from the ground floor restaurant space, One Kennedy Square is 100% leased and occupied.

150 W. Jefferson is at 80% as of last week
Ren Cen was at 90% last year

I received these numbers at the end of 2006:
Penobscot: 65%
Guardian: 50% [[with recent county purchase, I imagine this has/will be increasing)
Buhl: 85%
First National: 65%
Cadillac Tower: 78%
Ford Building: 70% [[97% in 2001)
211 W. Fort: 85%

[Gsgeorge]

Eastsider,

Aside from the ground floor restaurant space, One Kennedy Square is 100% leased and occupied.

150 W. Jefferson is at 80% as of last week
Ren Cen was at 90% last year

I received these numbers at the end of 2006:
Penobscot: 65%
Guardian: 50% [[with recent county purchase, I imagine this has/will be increasing)
Buhl: 85%
First National: 65%
Cadillac Tower: 78%
Ford Building: 70% [[97% in 2001)
211 W. Fort: 85%

Sources? Also "the end of 2006" is most definitely not the same as mid-2009.

[DetroitScooter]

More fuel for the fire: http://www.freep.com/article/2009071...-on-in-Detroit

Especially interesting is the side bar with "just imagine if we still had"
Old City Hall
Post Office
Detroit Museum of Art

[Huggybear]

Are you really making the argument that a little wedge block including a couple of coney islands and a closed Arcade Bar is a better location that Detroit's main street?

Completely different scenario. The Lafayette Building is in a much better location, and doesn't suffer from the problems that the Hudsons Block brings.