Somerset Collection owner buys former Kmart headquarters

[DetroitPlanner]

Maybe troy will build a lifestyle center, but dont expect it to be anything more than a glorified strip mall.

There has never been a lifestyle center that is not a glorified stripmall! Mixed use developments are not called lifestyle centers, they are called mixed use. A lifestyle center is a word used to mask a strip mall that all the folks are getting is a strip mall with maybe an extra provate road cut through it, and a maybe a fancy bar.

[Hermod]

Plus, remember, Troy like all the suburbs, was only possible through massive federal and state spending... the G.I. Bill, freeways, HUD... they allowed for the suburbs. Even City of Detroit through building water and sewage lines. Without that, we would have seen very little private investment.

The housing part of the GI Bill and the FHA part of HUD helped families acquire homes in the areas where people wanted to live. The GI bill and FHA provided "loan guarantees" so they were not "massive federal and state spending". Unlike the recent housing meltdown that took out Fannie Mae and Freddie Mac, the original GI and FHA loans in the 50s and 60s were paid back. The gummint never had to spend much for those programs beyond the salaries of the bureaucrats that ran them. A lot more state and federal money was poured into the freeways in Detroit than was spent in places like Troy.

[davewindsor]

And keep in mind that abandoned buildings are not included in the calculation of vacancy rates, because abandoned buildings typically don't have immediately usable office space.

Well then,. maybe you should be clear about your definition of empty office buildings when you say that your report shows "that Troy is a close second to the CBD in terms of vacancy rates. But I think I remember a later report saying that Troy had surpassed the CBD in terms of vacancies."

It doesn't take too long for a nearly vacant building in the CBD to go bankrupt and end up being abandoned because it doesn't make sense to secure them anymore for future use, like it would in Troy. Your analysis makes it sound like Troy looks something along the lines of the CBD.

[Detroitnerd]

The housing part of the GI Bill and the FHA part of HUD helped families acquire homes in the areas where people wanted to live. The GI bill and FHA provided "loan guarantees" so they were not "massive federal and state spending". Unlike the recent housing meltdown that took out Fannie Mae and Freddie Mac, the original GI and FHA loans in the 50s and 60s were paid back. The gummint never had to spend much for those programs beyond the salaries of the bureaucrats that ran them. A lot more state and federal money was poured into the freeways in Detroit than was spent in places like Troy.

The housing loans and FHA helped families acquire homes, but they wouldn't have been able to move out there without the freeways to carry them there. The loans were paid back, but they were loans to fighting men, which in WWII were white men. So you were offering special loans to white people to move out of the city, freeways for them to access them. Kind of hard to defend today.

Yes, more money was spent building urban freeways than suburban freeways, but that's because they were laying freeways out among beet fields in the suburbs and knocking down hundreds of buildings, commercials structures and homes to build them in the city, as well as building so many bridges. But the freeways did more to knock down Detroit than build it up.

[ghettopalmetto]

The housing part of the GI Bill and the FHA part of HUD helped families acquire homes in the areas where people wanted to live. The GI bill and FHA provided "loan guarantees" so they were not "massive federal and state spending".

The GI Bill wasn't massive federal spending? The FHA didn't provide below-market-rate interest rates on its loans? And to boot, FHA loans were available to all people, regardless of race, occupation, social class, geography, and whether they wanted to build a brand new home or an existing home, right?

I'd think someone who lived through that history would have the most basic understanding of it.

The gummint never had to spend much for those programs beyond the salaries of the bureaucrats that ran them. A lot more state and federal money was poured into the freeways in Detroit than was spent in places like Troy.

SOURCES?

[iheartthed]

Well then,. maybe you should be clear about your definition of empty office buildings when you say that your report shows "that Troy is a close second to the CBD in terms of vacancy rates. But I think I remember a later report saying that Troy had surpassed the CBD in terms of vacancies."

It doesn't take too long for a nearly vacant building in the CBD to go bankrupt and end up being abandoned because it doesn't make sense to secure them anymore for future use, like it would in Troy. Your analysis makes it sound like Troy looks something along the lines of the CBD.

Huh? My definition? That's EVERYONES definition. I'm just being clear for the purposes of being clear. That still doesn't change the argument. Of available office space that is ready to use, more of it is empty [[percentage-wise) in Troy than Detroit.

[Hermod]

The GI Bill wasn't massive federal spending? The FHA didn't provide below-market-rate interest rates on its loans? And to boot, FHA loans were available to all people, regardless of race, occupation, social class, geography, and whether they wanted to build a brand new home or an existing home, right?

The GI Bill and the FHA did not "make loans". They provided free loan insurance. The "quality" of the loan to the originating bank/loan company was such that it got a reduced rate and the loan could be originated with little or nothing down. The cost to the government was minimal IF the loan was repaid or IF the sale of the home after default did not bring in enough to cover the mortgage balance. Home prices rose pretty much on a steady pace during this period, so the house usually covered the loan and no cost to the government.

While "redlining" did occur in the bank's analysis of the loan, you did have to have a modicum of credit worthiness to get the loan. Race, occupation, and social class entered into the picture to the extent that these affected credit worthiness. Obviously, if you were black, poor, and worked as a day hire, you couldn't show much credit worthiness.

The current financial crisis we are in right now was triggered by the price of housing going down which knocked the props out of one hell of a lot of mortgages and cost the gummint, the banks, and the insurers bigtime. That didn't happen during the buildup of suburbia, so the loans didn't cost the goverment very much.

[ghettopalmetto]

The GI Bill and the FHA did not "make loans". They provided free loan insurance. The "quality" of the loan to the originating bank/loan company was such that it got a reduced rate and the loan could be originated with little or nothing down.

That's called a "subsidy", my friend.

The cost to the government was minimal IF the loan was repaid or IF the sale of the home after default did not bring in enough to cover the mortgage balance. Home prices rose pretty much on a steady pace during this period, so the house usually covered the loan and no cost to the government.

SOURCES?

While "redlining" did occur in the bank's analysis of the loan, you did have to have a modicum of credit worthiness to get the loan. Race, occupation, and social class entered into the picture to the extent that these affected credit worthiness. Obviously, if you were black, poor, and worked as a day hire, you couldn't show much credit worthiness.

Let's not forget that one qualification for an FHA loan was that you had to build a BRAND NEW house, i.e. in the suburbs. You couldn't use an FHA loan to purchase an existing home, i.e. in the city.

The current financial crisis we are in right now was triggered by the price of housing going down which knocked the props out of one hell of a lot of mortgages and cost the gummint, the banks, and the insurers bigtime. That didn't happen during the buildup of suburbia, so the loans didn't cost the goverment very much.

Um, WHAT??? Were you not paying attention to housing values from 2001-2008? Or are you just that willfully ignorant? Housing values SKYROCKETED to unprecedented levels, thanks to cheap credit.

Again, SOURCES?

[Hypestyles]

hmm.... wonder if they'll open another movie theater.. concert venue..? family sports arena?

say.. a movie production studio might be an out-the-box alternative...

[Hermod]

The loans were paid back, but they were loans to fighting men, which in WWII were white men. So you were offering special loans to white people to move out of the city, freeways for them to access them. Kind of hard to defend today.

By law, the armed services were required to induct "colored" personnel in the same ratio that they were in the general population. Black Americans served in WWII, almost all in segregated black units, most under white officers, and almost all in service type units doing menial jobs. So long as a vet got an honorable discharge, he was entitled to GI benefits whether or not he was an infantryman or a stevedore.

Inkster Township was largely settled by black vets under the GI bill.

[Detroitnerd]

Um ... yeah, vets could buy new homes with the loans after the war, but they were [[a) a much smaller percentage of those who qualified and [[b) could only buy where restrictive covenants hadn't locked them out. Anyway, it was basically what we call today "really fu**ing unfair".

[3WC]

R8RBOB, most people in the real estate business don't see anything unusual in the dispairity between prices of the Silverdome [[a terrible investment) and the K-Mart site [[possibly a good one - only time will tell.)

Reminds me of the [[very) old story of the two rich Texans who happened to be sitting next to each other on a plane, in 1st Class. The conversation got around to real estate.

1st Texan: I own 50,000 acres in West Texas; it's in the middle of nowhere but I got it cheap. It supports 500 head of cattle and makes me some good money most of the time, when cattle prices are high.. How much land do you own?

2nd Texan: 40 acres.

1st Texan [[laughing): 40 acres? My aren't you a big landowner. And where, may I ask, is this big spread you own.

2nd Texan: Downtown Dallas.

[Gistok]

Huh? My definition? That's EVERYONES definition. I'm just being clear for the purposes of being clear. That still doesn't change the argument. Of available office space that is ready to use, more of it is empty [[percentage-wise) in Troy than Detroit.

This is true... the statisitic that iheartthed has referenced is how office space is determined in every list that I've ever seen. Even Detroit Crain's Book of Lists only lists the available leaseable space when comparing Detroit and suburban office space.

The metric that davewindsor is thinking about [[total empty space including that not currently leaseable) is a statistic I don't ever remember seeing in any reference list.

[davewindsor]

Huh? My definition? That's EVERYONES definition. I'm just being clear for the purposes of being clear. That still doesn't change the argument. Of available office space that is ready to use, more of it is empty [[percentage-wise) in Troy than Detroit.

No, it's not everyone's definition and it's very misleading. Based on what you said, someone who's never been to Troy might think Troy looks desolate like the CBD. It's certainly not. The streets look like they're paved with gold [[figuratively). The streets are jammed packed with new car traffic, not rust buckets like in the D. There's newer glass office buildings everywhere and when you go to Sommerset Mall, which has stores that sell $950 dress shirts, it takes you 15 minutes driving around the parking lot to even find a parking spot. Troy is really undergoing an economic depression like the CBD. As far as comparisons go, these two areas are not even in the same universe.

[Hermod]

Um ... yeah, vets could buy new homes with the loans after the war, but they were [[a) a much smaller percentage of those who qualified and [[b) could only buy where restrictive covenants hadn't locked them out. Anyway, it was basically what we call today "really fu**ing unfair".

A vet could buy a new home, an existing home, or land to build a new home using the GI bill guarantees.

Many of the new homes around Detroit were not purchased by vets. They were purchased by industrial workers who married during the depression and were still living with Mom and Dad for economic reasons. During the war, they were immune from the draft either as pre-Pearl harbor fathers or as essential war industry workers. With rationing, they couldn't spend their overtime earnings. After the war, they had required down payments to buy one of the new houses springing up.

[lizaanne]

Some bean-counter in Pontiac is pulling his hair out this morning. The former K-Mart Headquarters which sit on 40 acres of land sold for 17.5 million yet the Pontiac Silverdome which included 127 acres of land was sold for $583,000. Now I know the Silverdome sale was done via auction but someone feelings got to be hurting knowing that an empty building in Troy with less acres can go for nearly 17 million dollars more.

location, location, location

[iheartthed]

No, it's not everyone's definition and it's very misleading. Based on what you said, someone who's never been to Troy might think Troy looks desolate like the CBD. It's certainly not. The streets look like they're paved with gold [[figuratively). The streets are jammed packed with new car traffic, not rust buckets like in the D. There's newer glass office buildings everywhere and when you go to Sommerset Mall, which has stores that sell $950 dress shirts, it takes you 15 minutes driving around the parking lot to even find a parking spot. Troy is really undergoing an economic depression like the CBD. As far as comparisons go, these two areas are not even in the same universe.

What the heck does gold plated streets have to do with vacancy rates? Methinks you should sit this conversation out until you do a little research on terminology.

[davewindsor]

What the heck does gold plated streets have to do with vacancy rates? Methinks you should sit this conversation out until you do a little research on terminology.

No, your arguments are just misleading and methinks I should set the record strait about Troy.

[iheartthed]

No, your arguments are just misleading and methinks I should set the record strait about Troy.

Yeah, me and Grubb-Ellis have hatched a plot in secret to mislead the world about lovely Troy, Michigan.

[Detroitnerd]

A vet could buy a new home, an existing home, or land to build a new home using the GI bill guarantees.

Many of the new homes around Detroit were not purchased by vets. They were purchased by industrial workers who married during the depression and were still living with Mom and Dad for economic reasons. During the war, they were immune from the draft either as pre-Pearl harbor fathers or as essential war industry workers. With rationing, they couldn't spend their overtime earnings. After the war, they had required down payments to buy one of the new houses springing up.

No doubt there was some of that, but I think you lay too much emphasis on this. Without the G.I. Bill, the Housing Act, the Interstate Freeway Act, the amenability of the Detroit Water & Sewerage Department and government subsidies, suburbia could not have happened. At least not in the scale we saw. Those houses could not have sprung up without government assistance.

I do appreciate your perspective, though! We must be careful when we look back. There is a great deal of mythology on both sides that we must penetrate if we want to see what really happened.

[Hermod]

the amenability of the Detroit Water & Sewerage Department .

Having been involved in inter-municipality water sales here in Florida, I can tell you that where a municipality has more than adequate water sources as does Detroit, they are more than happy to resell that water to adjoining municipalities. They make money on the deal as well as achieving greater economies of scale.

Selling water and sewerage services was a money-maker for the city. The growth of suburbia hurting the city was [[to the guys who made the water decision) an unforseen and unintended consequence.

[R8RBOB]

location, location, location

I will pretend like I didn't know that and I will play along with you.

Really!!! I didn't know that property in Troy was worth so much more than in Pontiac. Aren't both cities located in Oakland County?

[Hermod]

the Interstate Freeway Act,

When I worked for the City of Detroit, Bureau of Expressway Design in 1961, the freeways had hardly extended beyond the city. They were looked at by the city as essential elements in reducing traffic congestion within the city. The close-in suburbs of Warren, Royal Oak, Ferndale, and Southfield were already growing without the expressways. Subdivisions were being created all the way out to Rochester. The grid network of section line roads in Oakland and Macomb were amenable to commuter traffic even without expressways.

Remember that downtown was not a major destination for most workers. Detroit was unique in that the commuter destinations were scattered around. Most commuters were going to Rouge, to Yipsilanti, to Highland Park, and other industrial destinations. Downtown was mostly banks, retail, and professional offices. If we had built light rail up the expressway rights of way in 1961, it would have made little difference to what Detroit became.

[dtowncitylover]

When I worked for the City of Detroit, Bureau of Expressway Design in 1961, the freeways had hardly extended beyond the city. They were looked at by the city as essential elements in reducing traffic congestion within the city. The close-in suburbs of Warren, Royal Oak, Ferndale, and Southfield were already growing without the expressways. Subdivisions were being created all the way out to Rochester. The grid network of section line roads in Oakland and Macomb were amenable to commuter traffic even without expressways.

Remember that downtown was not a major destination for most workers. Detroit was unique in that the commuter destinations were scattered around. Most commuters were going to Rouge, to Yipsilanti, to Highland Park, and other industrial destinations. Downtown was mostly banks, retail, and professional offices. If we had built light rail up the expressway rights of way in 1961, it would have made little difference to what Detroit became.

So can we blame you for the extensive freeway network of Detroit that destroyed real, viable neighborhoods? What did you do for them?

[Detroitnerd]

When I worked for the City of Detroit, Bureau of Expressway Design in 1961, the freeways had hardly extended beyond the city. They were looked at by the city as essential elements in reducing traffic congestion within the city. The close-in suburbs of Warren, Royal Oak, Ferndale, and Southfield were already growing without the expressways. Subdivisions were being created all the way out to Rochester. The grid network of section line roads in Oakland and Macomb were amenable to commuter traffic even without expressways.

Remember that downtown was not a major destination for most workers. Detroit was unique in that the commuter destinations were scattered around. Most commuters were going to Rouge, to Yipsilanti, to Highland Park, and other industrial destinations. Downtown was mostly banks, retail, and professional offices. If we had built light rail up the expressway rights of way in 1961, it would have made little difference to what Detroit became.

Great to have you join this conversation, Hermod. I have to depart now, but I'll rejoin tomorrow. Thanks for contributing!