One Detroit Center Put On The Market

[mikeg19]

Looks like Gilbert won't be scooping this one up on the cheap...


http://www.freep.com/story/money/bus...cial/18533631/

[DetroitPlanner]

It is a nice place, but you would not want to live there.

http://www.freep.com/story/money/bus...cial/18533631/

Looks like the cost of real estate is moving up pretty quick.

[SpartanDawg]

It is a nice place, but you would not want to live there.

http://www.freep.com/story/money/bus...cial/18533631/

Looks like the cost of real estate is moving up pretty quick.

not sure what you mean, but this building is offices only. No residential in it whatsoever.

looks like it's 70% full though and will most likely pull in a higher sale than southfield town center in terms of $$/SF.

Hope it ends up in the right hands. I don't see Gilbert going after it.

[animatedmartian]

I could see Gilbert making a play for it, but he'll likely have much competition from other investors. That building is probably one of the best office buildings in SE Michigan to date and I wouldn't doubt Gilbert's ability to fill the rest of that space if he were to get it.

[DetroitPlanner]

please merge my thread into Mike G's... He posted first.

[southen]

if someone invests that kind of coin downtown it only helps gilbert. he's getting ready to drop a couple 100 million on the hudson's site, he doesn't need this building.

[mikeg19]

if someone invests that kind of coin downtown it only helps gilbert. he's getting ready to drop a couple 100 million on the hudson's site, he doesn't need this building.

Agree on that. This doesn't particularly fit Gilbert's MO of buying low and selling high. For him to invest $100M in a building just doesn't make sense when his ROI won't be much I'd assume.

[Packman41]

And the hits to the Pension Fund just keep on coming.

http://www.crainsdetroit.com/article...-elects-not-to

Back in July 2007 Mayfield Gentry Realty Advisors put out a PR release that they were they were the agent for the pension fund buying into the building. They said that “…the building was completed at substantially below replacement cost, therefore providing immediate cash flow for investors.”

The price paid for 10% of the building was $20 million – meaning that they thought the entire building was worth $200 million, or $209 per square foot. This was at a time when Detroit real estate values were in free-fall and the building was 63% occupied. [The Crain’s article said it was 40% occupied, but the MGRA PR release said 63%] This deal was mindless at the time, let alone in hindsight.

Now iStar put the option in play at “only” $100 million. This amount was most likely pre-negotiated back in 2007. So when the option holder [[the pension fund) declines to buy then it means they do not think that the building is worth that amount of money, i.e. $100 million. And probably everyone other buyer will have the same thought.

If the building was worth $100 million [[or more) then the pension fund would have exercised their option. You could say the pension fund did not have the cash on hand to swing the deal. If so, then they could have sold their option rights to someone else or partnered with someone that could get the cash.

So seven years later where are we on this “investment”?

Seemingly the value of the pension fund investment has been cut at least in half from $20 million to $10 million. Not to worry the taxpayers will be happy to make up the $10 million lost.

And Chauncey Mayfield has pleaded guilty to bribery in another pension fund investment and is awaiting sentencing. He could serve up to 5 years in Federal prison. Sentencing will probably announced after he testifies to the bribery trials of pension fund lawyer Ronald Zajac and pension trustee Paul Stewart. The trial is going on now and they could get 25 years in Federal prison if they are found to be guilty.

[anonJD]

if someone invests that kind of coin downtown it only helps gilbert. he's getting ready to drop a couple 100 million on the hudson's site, he doesn't need this building.

People have been saying that for five years. Stop parroting the propaganda that's not based on any reality. There is no where near the demand in downtown Detroit needed to justify $100M+ in new commercial or residential. Best case scenario: Hudson's site could be developed in 10 years. In other words, I wouldn't recommend holding your breath.

[southen]

People have been saying that for five years. Stop parroting the propaganda that's not based on any reality. There is no where near the demand in downtown Detroit needed to justify $100M+ in new commercial or residential. Best case scenario: Hudson's site could be developed in 10 years. In other words, I wouldn't recommend holding your breath.

people have been saying that since gilbert put out a design competition and hired a world class architecture firm to design a building... as for housing demand that has been proven to exist with actual numbers... and how many of Gilbert's buildings are sitting empty currently?

not surprised by the post though, everything I've seen you post has been ignorance or trolling.

[mwilbert]

People have been saying that for five years. Stop parroting the propaganda that's not based on any reality. There is no where near the demand in downtown Detroit needed to justify $100M+ in new commercial or residential. Best case scenario: Hudson's site could be developed in 10 years. In other words, I wouldn't recommend holding your breath.

$100M in residential development isn't much--that would be less than 1000 units, which I think could be absorbed pretty easily, although a lot depends upon price points. I don't know that I would expect that at the Hudson's site though, which seems more likely to be largely commercial, especially given that Gilbert has not done much in the way of residential space.

[animatedmartian]

Gilbert reported as one of three [[out of originally at least a dozen) bidders for ODC.

http://www.crainsdetroit.com/article...sts-in-gilbert

[Danny]

No problem folks! Once Dan Gilbert buys the One Detroit Center Building, he will called it Gilbert Tower.

[mikeg19]

Maybe I'm crazy, but I wouldn't mind seeing one of the other two firms bidding on the building getting it. Gilbert has done a fantastic job so far downtown, but I also think some diversity in ownership might be a good thing as well. Unless he's planning on reviving the original design concept and twinning that tower...

[Dexlin]

Maybe I'm crazy, but I wouldn't mind seeing one of the other two firms bidding on the building getting it. Gilbert has done a fantastic job so far downtown, but I also think some diversity in ownership might be a good thing as well. Unless he's planning on reviving the original design concept and twinning that tower...

Even apart from the second tower, I was always pissed that they literally built a parking garage next door to the existing parking garage. It makes the area so awkward from an urban planning standpoint. "Two Detroit Center" is now literally a 1,105-spot garage and it's next door to the 2,070-spot Lanier Garage.

As for the three owners, both Bedrock and REDICO are well known. The tower would be well off with either of these owners; I really don't care.

[southen]

im sure gilbert will end up getting it. my only concern between the purchase of this, compuware, and the new residential building in capitol park is that he wont be able to build on the hudson's site for a few more years.

the nice things about parking stuctures versus other buildings is that they arent a huge deterrent in future development. dan could always tear them down and build something new. i completely agree about that stretch being awkward and it may get worse if they ever build the garage they were talking about for city hall.

[bailey]

People have been saying that for five years. Stop parroting the propaganda that's not based on any reality. There is no where near the demand in downtown Detroit needed to justify $100M+ in new commercial or residential. Best case scenario: Hudson's site could be developed in 10 years. In other words, I wouldn't recommend holding your breath.

It depends if Gilbert cares about making money on the deal. The entire Hudson's project strikes me as a vanity project for him. I don' t mean that in a negative way either... I mean he seems to want an edifice of his own. Sometimes economics don't win out in those decisions. couple that with his general "build it and they will come" philosophy... it might not be that out of the realm of possibility. But that is entirely speculative on my part.

[Mackinaw]

Agreed, Baily, plus ODC is a top notch office building that Gilbert would seek out a big name tenant for, whereas the Hudson development will either be highly residential, an HQ for Quicken, or maybe both. Heck, if he got ODC he could put all of Quicken in that beautiful edifice.

[Gistok]

If memory serves me correctly... One Detroit Center was built for $244 million back in 1991-92 by Gerald Hines Associates of Houston Texas... one of the nations biggest office building developers. That $244 million included a generous $25 million UDAG [[Urban Development Action Grant) that CAY got from the federal government.

Gerald Hines learned a lesson that Denver developer John Madden [[builder of $150 million 150 West Jefferson), and later Peter Karmanos [[Compuware HQ, $350 million) learned the hard way. Spending huge amounts of money on glitzy office towers in Detroit.... just doesn't pay off in the long run.... unfortunately....