Gilbert Buying the Dime

[BrushStart]

Is it really this easy to buy Downtown Detroit property? Where have all the other Detroit philantrophists/real estate moguls been?

Asleep at the wheel for decades. At this rate, Gilbert is going to easily surpass them as the dominate player in Metro Detroit.

[English]

Although, the greater downtwon is making some progress with people living there especially Midtown; we still need much more measurable and quantifiable
younger, educated dwellers with disposable income before a mall comes in. We need shops with walking accessibility, not an enclosed mall.

The more commercial movement is bound to create the demand for more residential however!!

If Whole Foods decides to locate here, it WILL be the first domino. Mark my words.

[Scottathew]

Simply awesome. He's buying buildings. Partnering on mass transit. He's making it happen. I know it's tough to like a business guy, and he is in this to make money, but hell, he's in it for Detroit too.

[Richard]

Is it really this easy to buy Downtown Detroit property? Where have all the other Detroit philantrophists/real estate moguls been?

It takes funding,the Gov diminishes brownfield and tax credits which in turn lowers the values and eliminates the middle man. Why fund others when you can corner the market and keep the profits for yourself and design the future how you choose.

No headlines saying Quicken Loans Approved Funding for XYZ company for the purchase and rehabilitation for [[insert any building here).

[canuck]

Eh... as an East Riverfront resident, I am suddenly NIMBY about an amusement park. Family fun center in the Globe Trading Company, sure. But Chene Park generates enough traffic in the area. I can't imagine what living next door to Six Flags Over Detroit would be like.

It is nice to have a dedicated area for a park like this with good access to transit for city suburban folks. We have one on Ste-Helen's island that is owned by Six Flags called La Ronde and it has grown since 1967. It is on an island almost the size of Belle-Isle in the middle of the river close to downtown. It is reached by the bridge to the southshore and by metro. It is hemmed in, so security wise it is quite OK. It is not as noisy and problematic since it is removed from neighboring residential areas.

[p1acebo]

If Whole Foods decides to locate here, it WILL be the first domino. Mark my words.

I couldn't agree more, especially with the occupancy rates near 100% in downtown and midtown.

[Packman41]

Is it really this easy to buy Downtown Detroit property? Where have all the other Detroit philantrophists/real estate moguls been?

Well, it is easy for Gilbert. Remember he was slick enough to get $200+ million of taxpayer incentives to move his company from Livonia. So he may not be spending "his" money, but rather the incentives that he got. Frankly paying $40 per square foot sounds a little rich to me.

Not every "real estate mogul" is as polictically connected as he is and can get such a gift. Without the discount from the taxpayers the math [[rate of return) does not work for them. They have to pay retail, while Gilbert get to pay wholesale [[after incentives).

Now if the citizenry want to start throwing around hundreds of millions of dollars you will see a lot more redevelopment. You won't necessarily see more tenants, but you will see more redevelopment.

Now about the philanthropists. By that you must mean the guy [[Waad Nadhir and his bank - Wells Fargo) that paid $40 million for the Dime in 2003 when times were good. Today the building is selling for a rumored $15 million. So Nadhir and Wells Fargo "gifted" about $25 million to Detroit. Now that is a philanthropist.

[stinkytofu]

^^^

I thought those tax incentives were based on Gilbert building a new building, not moving his employees into an existing building? I might be wrong.

[Packman41]

^^^

I thought those tax incentives were based on Gilbert building a new building, not moving his employees into an existing building? I might be wrong.

Ummm... That was not my impression. I assumed he could use the incentives to BUY or build.

Maybe this is something Dan Duggan from Crain's could follow up on. As a business/real estate reporter he has access to Gilbert, the CoStar database and other resourses to get the right answers. He could also track how much of AND where the $200+ million of incentives is going.

Now that would be a project to follow.

[stinkytofu]

Ummm... That was not my impression. I assumed he could use the incentives to BUY or build.

Maybe this is something Dan Duggan from Crain's could follow up on. As a business/real estate reporter he has access to Gilbert, the CoStar database and other resourses to get the right answers. He could also track how much of AND where the $200+ million of incentives is going.

Now that would be a project to follow.

I'm curious as well. Maybe he got a fraction of that to just relocate with no construction. I'd imagine the purpose of the $100+ million would be to help offset construction costs...then again I really don't know.

[R8RBOB]

Dan Gilbert has earned his new nickname: Ilitch Lite

Buying up downtown, one building at a time.

[stinkytofu]

Dan Gilbert has earned his new nickname: Ilitch Lite

Buying up downtown, one building at a time.

At least it appears Gilbert will show interest in the buildings he owns...

[Gistok]

Ummm... That was not my impression. I assumed he could use the incentives to BUY or build.

Maybe this is something Dan Duggan from Crain's could follow up on. As a business/real estate reporter he has access to Gilbert, the CoStar database and other resourses to get the right answers. He could also track how much of AND where the $200+ million of incentives is going.

Now that would be a project to follow.

One would hope that the money was for rehab... and not just giving a [[soon to be?) billionaire tax money to buy up city property.

One reason I doubt that it's just money to buy up whatever building he wants.... is that it would give all other building owners [[with building mortgages) a distinct disadvantage for setting lease rates... but dumber things have been done in this city... so I wouldn't be surprised...

Will have to wait and see what the specifics are for the city/state largesse....

[BrushStart]

I'm virtually bible-swearing certain that the money was for rehab and/or MAYBE for new construction as well, but not a blank check to buy property simply because he moved his company downtown. If Gilbert was actually given $200 million just for moving his employees from Livonia to Detroit, there would have been a REAL BIG stink about that, and rightfully so. Also, if such were true, then Gilbert's shopping list for buildings could likely include everything in the CBD, except One Detroit Center and the RenCen. I think he's spent under $30 million so far on acquisitions, the Dime Building being the most expensive to date.

[mikefmich]

I wouldn't worry too much about Gilbert biting off too much debt.... he's got the sole monopoly on the only Casino in Cleveland and Columbus Ohio.

With all of that Ohio real estate [[including the Cavaliers)... it's nice that he's making downtown Detroit his HQ.

There is no casino here in Columbus yet. Even though they did finally break ground a month or so ago, they are still litigating. It will be another 18 mos. at the least, without the litigation concerns & the idiocy coming from our fine new governor.

[Gistok]

There is no casino here in Columbus yet. Even though they did finally break ground a month or so ago, they are still litigating. It will be another 18 mos. at the least, without the litigation concerns & the idiocy coming from our fine new governor.

I was reading about the site they finally agreed upon... annexed land from a bordering township to Columbus... gotta love the comments... they wanted to put it into a crummy part of Columbus so that "spin off" will help the area.... LOL.....

[Richard]

This is a quote from a link that has expired from another site most of what I am getting is there was no time limit set on the details so in theory he could take the 200 mil ,invest it for 20 years and build from the profits.

http://freep.com/article/20090721/NE...-HQ-in-Detroit

Quicken Loans hopes to begin construction on a new downtown headquarters in mid-2013 and spend $192 million on it, the Michigan Economic Development Corp. said today in an analysis of the project.

And also here

http://www.businessleadersformichigan.com/node/50

The move will make Quicken Loans eligible for as much as $200 million in tax incentives over the next 12-20 years. The move likely will take about four years. To be eligible for the incentives, Quicken has 12 months to select a site in downtown Detroit and 18 more months for due diligence before beginning construction.

I believe the sites were Hudson's and or the Statler .



The only thing that irks me about this whole situation is in the meantime it is a musical chairs situation,the suburb where he is relocating from is going to hurt and it is further locking out new investment from outside investors from bringing new money and opportunities to Detroit.

Is it good that one person that has a personal vision control a city?
Why is it that the ones that have a different vision which does not include everybody with pocket protectors are not welcome ,blue collar need not apply.

Downtown and a section of Woodward are becoming territories to do anything there you will have to be approved and not by any city or state officials.

It is good that things are happening but I agree that what really is going on behind the scenes needs to be given some serious consideration,and decide if the ultimate price is worth it.

http://en.wikipedia.org/wiki/Quicken_Loans

In December 1999, Intuit Inc. [[makers of QuickBooks, TurboTax, and Quicken) purchased Rock Financial for a sum of $532M. The company was renamed Quicken Loans. In June 2002, Gilbert led a small group of private investors in purchasing the Quicken Loans subsidiary back from Intuit for just $64M.[4]

How would you have liked to have your retirement invested in those companies that took a $400 million bath.

[DetroitPlanner]

I don't get the feeling he's in the real estate business to make money either. He is in it for Detroit.

Don't kid yourself he is motivated by money and knows the market better than just about anyone else out there. He has started several mortage companies. He is probably seeing an opportunity no one else is seeing right now and is marketing it.

[bartock]

Well, it is easy for Gilbert. Remember he was slick enough to get $200+ million of taxpayer incentives to move his company from Livonia. So he may not be spending "his" money, but rather the incentives that he got. Frankly paying $40 per square foot sounds a little rich to me.

Not every "real estate mogul" is as polictically connected as he is and can get such a gift. Without the discount from the taxpayers the math [[rate of return) does not work for them. They have to pay retail, while Gilbert get to pay wholesale [[after incentives).

Now if the citizenry want to start throwing around hundreds of millions of dollars you will see a lot more redevelopment. You won't necessarily see more tenants, but you will see more redevelopment.

Now about the philanthropists. By that you must mean the guy [[Waad Nadhir and his bank - Wells Fargo) that paid $40 million for the Dime in 2003 when times were good. Today the building is selling for a rumored $15 million. So Nadhir and Wells Fargo "gifted" about $25 million to Detroit. Now that is a philanthropist.

Excellent points. It's not like this guy rode in on a white horse.

[bartock]

I'm virtually bible-swearing certain that the money was for rehab and/or MAYBE for new construction as well, but not a blank check to buy property simply because he moved his company downtown. If Gilbert was actually given $200 million just for moving his employees from Livonia to Detroit, there would have been a REAL BIG stink about that, and rightfully so. Also, if such were true, then Gilbert's shopping list for buildings could likely include everything in the CBD, except One Detroit Center and the RenCen. I think he's spent under $30 million so far on acquisitions, the Dime Building being the most expensive to date.

It was up to a $200 million package over the course of 20 years made 3 years ago with the then-Mayor and State of Michigan.

[daniel_duggan]

Ummm... That was not my impression. I assumed he could use the incentives to BUY or build.

Maybe this is something Dan Duggan from Crain's could follow up on. As a business/real estate reporter he has access to Gilbert, the CoStar database and other resourses to get the right answers. He could also track how much of AND where the $200+ million of incentives is going.

Now that would be a project to follow.

Glad to help out.
We reported in July, 2009 that it was a $47.2 million tax credit given to Quicken. At the time, his plans still included the construction of a new headquarters by 2013, but his tax credit was not based building or leasing. At the time, he said he's investing $240 million [[I think that's where the 200+ number came from).
But the tax credit is based on creating/retaining 2,200 jobs in Michigan, though there are several catches to the deal. He needed to move 1,000 people to Detroit from Livonia to get any money, and then he needs to have all 2,200 people in Detroit by 2015, otherwise he only gets a tax break based on the people in Detroit from that point on -- so if he has 1,800, he only gets the retention break based on those people.

The tax breaks are based on what he'll be paying over the course of 12 years, but when it's all said and done, the tax breaks WILL pay for all these deals. By my tally, there's $15M for the Dime, $16M for the Chase, $8M for the First National and $1.4M for the Madison Theatre [[all that's confirmed by CoStar as well). So, that puts him at $40.4 million, with another $7ish to go. But he's going to need to pour a lot of money into some of these buildings to get them up to the standards that Class A tenants demand.
And if anyone has seen his build-out in the Compuware Building, it's not cheap to get a building to the condition that Dan Gilbert wants, so I wouldn't be surprised if he still hits that $240 million figure without doing a new construction HQ.

[esp1986]

Don't kid yourself he is motivated by money and knows the market better than just about anyone else out there. He has started several mortage companies. He is probably seeing an opportunity no one else is seeing right now and is marketing it.

Don't get me wrong. He won't lose money on these, but by using his vast network of fellow business leaders around the area, he will be able to fill them up, and considering the low cost he is getting them for, the only expense on them [[Chase and Dime, for example) is upkeep. If Dan Duggan is right, then the tax credits will more than pay for the majority of these.

With all of the money he is supposedly saving via tax credits, he should have more than enough to spend elsewhere.

[Scottathew]

Dan Gilbert has earned his new nickname: Ilitch Lite

Buying up downtown, one building at a time.

With one key difference, he's buying building and trying to get people to move into them; not building a parking lot empire.

[Gistok]

The only thing that irks me about this whole situation is in the meantime it is a musical chairs situation,the suburb where he is relocating from is going to hurt and it is further locking out new investment from outside investors from bringing new money and opportunities to Detroit.

Is it good that one person that has a personal vision control a city?
Why is it that the ones that have a different vision which does not include everybody with pocket protectors are not welcome ,blue collar need not apply.

Downtown and a section of Woodward are becoming territories to do anything there you will have to be approved and not by any city or state officials.

It is good that things are happening but I agree that what really is going on behind the scenes needs to be given some serious consideration,and decide if the ultimate price is worth it.

http://en.wikipedia.org/wiki/Quicken_Loans

In December 1999, Intuit Inc. [[makers of QuickBooks, TurboTax, and Quicken) purchased Rock Financial for a sum of $532M. The company was renamed Quicken Loans. In June 2002, Gilbert led a small group of private investors in purchasing the Quicken Loans subsidiary back from Intuit for just $64M.[4]

How would you have liked to have your retirement invested in those companies that took a $400 million bath.

Richard... your group of paragraphs come across as excuses as to why we should be wary of Gilbert buying property downtown....

Your first paragraph.... how is what Gilbert doing locking out new investments? Last time I checked there's still 50 empty buildings downtown that investors can take a stab at.... and that "musical chairs" started decades ago when businesses moved OUT of Detroit into the suburbs... C'est la vie.....

Your 2nd paragraph.... how did you come to the conclusion that Gilbert is going to control downtown?? What about Karmanos and Ilitch?? And what about the hundreds of other business and property owners... Gilbert will be hard pressed to own more than 5% of downtown with the hundreds of properties there...

Your 3rd paragraph???... are you saying that Gilbert will come out with his own zoning regulations for everyone else to follow??

Your 4th paragraph... what is better... empty buildings or full buildings?? Do you think having full buildings and a thriving downtown is making a pact with the devil??

Your 5th paragraph.... so we're supposed to feel sorry for all those Intuit folks? Their bosses probably took some nice tax deductions for the company for the losses... but they didn't go bankrupt like GM or Chrysler... and their stockholders didn't lose 100%.
-----------------------------------

It sounds to me like you're trying to come up with reasons why Gilbert shouldn't be investing in Detroit... and so far you've stitched together a group of unrelated issues... I'm not trying to dis you, but really... feeling sorry for Intuit shareholders? Come on now... who's feeling sorry for Detroit?? Intuit is doing OK now... Detroit is not.... let's keep things in perspective...

[gthomas]

We also don't know how many companies he's bringing Downtown? Sears Holding is leaving Chicago..? Borders Headquarter moving Downtown from Ann Arbor..? Eprize...? So many others..and hes also bringing in retail and residential projects maybe..? He's doing what many leaders in this city should be doing!