Galapagos Art Space of Brooklyn Will Make Detroit Its Home - NY Times Reports

[Lowell]

A combination of untenable NYC rents and Detroit's somewhat under-the-radar but vibrant art scene has lured another impresario and institution to Detroit. Robert Elmes of the renowned Galapagos Art Space in Brooklyn is making the move having boldly acquired the large space behind the Michigan Central Depot [between 18th and 19th and just north of Mexican Village] and the old Highland Park High School on Glendale between 2nd and 3rd.

Below Elmes [left] with former Michigan Building owner Anthony Pieroni surveying Highland Park High School. Click image for larger view.


I had met the energetic Mr. Elmes when he was considering acquiring the Michigan Building where the DetroitYES office is and have met with him on subsequent visits. But at his request I withheld reporting his impending moves until substantiated as they have been in today's NY Times:
Born in Brooklyn, Now Making a Motown Move - Galapagos Art Space Will Make Detroit Its Home

Over the past year, Mr. Elmes and his wife, Philippa Kaye, have bought nine buildings totaling about 600,000 square feet in that city’s Corktown neighborhood and in neighboring Highland Park, paying what he described as the price of “a small apartment in New York City” for the properties.

Among the buildings is “an old power plant that looks like a little Tate Modern,” Mr. Elmes said. The centerpiece of the new Galapagos will be a 10,000-square-foot lake, he said, and he is planning about 16 months of renovation work before opening.

Preliminary plans call for converting the spaces into artist resident/studio spaces with performance and exhibition spaces.

[Pcm]

Are we talking about the former Apac Paper building behind MCS?

[Lowell]

Yes that is the one^.

[rjlj]

I am really excited for this. This will bring national attention to the city & hopefully more investment.

[Gistok]

Lowell, is this thru Tony's friend... artist Camille Jose Vergara of New York?

[Lowell]

Lowell, is this thru Tony's friend... artist Camille Jose Vergara of New York?

It is unrelated as far as I know.

[Detroitnerd]

Corktown Shores!

[Novack]

Well...this looks very exciting indeed. The lake idea is stellar

[MSUguy]

From what I've been able to read about them, this sounds like the art world equivalent of getting a Fortune 500 moving its HQ to the city.

[nain rouge]

Detroit does have a nice art scene. I still think word hasn't gotten out there enough. Then again, if everyone knew about, it wouldn't be cool anymore. It'd be Arts, Beats, and Eats.

[Mackinaw]

Exactly, MSUguy.

This is a big, enormous, epic development for the city's cultural scene and for outsider perceptions.

[3WC]

I'm pretty much a lurker here but I find this to be a very interesting development.

I have friends who live in NYC who are very familiar with Galapagos and who claim it's a remarkable venue. Very popular. I talked with one a little while ago who hadn't heard about the closing and was shocked.

I can't imagine what the development of the project in Detroit may cost but it will be interesting to see what if anything the movers and shakers in Detroit, and the Administration will do to support this development. I'm not a part of it of course but the art "community" will have to step up as well.

It seems that with all the new young people thinking of moving downtown this deal should be a big draw. What do they all do at night for entertainment anyway?

[Jason]

Wow big news!

Their website is here and has some more interesting info: http://www.galapagosdetroit.com/

On the "a new funding model for the arts" they explain that art communities raise the real estate value and price themselves out. It looks like they're talking about is actually owning the stuff they're raising the value of. If I'm understanding correctly they're basically going to be developers who will take advantage of the opportunities their activities create, to keep the new value in the organization. I think it's a good idea and it definitely bodes well for us. If all goes well they'd be continuously buying and improving properties.

From what I can gather the school they bought in Highland Park is their main focus and I can't tell exactly what the Detroit space is for but I guess we'll find out.

Also interesting is that they thank Dan Gilbert, Duggan, the DEGC, and others, so there's been some big behind the scenes stuff going on.


This speaks well to the practicalities of the Packard plans too. I also think it shows some confidence in the long term prospects of that stretch of woodward, and maybe public transportation on woodward.

[Lowell]

Crain's weighs in...

“Young artists are bouncing away from the idea of going to New York because the costs here are so dramatic,” Elmes said Monday. “Detroit is a city that wants to reinvent itself while holding onto its past. It has a ballast of history and the opportunity to write its own future.

“While the city is experimenting, we can be experimenting.”

Galapagos, which Elmes said has $2 million per year in annual revenue, plans an ambitious — and expensive — renovation project over the next decade for the buildings he purchased for a song over the last year or so.

Among them are a 125,000-square-foot building at 1800 18th St. in Corktown for $500,000 from Eighteenth Street Investment Co. and five buildings totaling 300,000 square feet for $18,000 from the Highland Park School District, according to CoStar Group Inc., a Washington, D.C.-based real estate information service.

Elmes and top Galapagos management like Finance Director Moti Nahmany and Technical Director Kris Anton expect renovations — including the construction of a 10,000-square-foot indoor lake in one of the buildings — to cost $100 to $150 per square foot, or $60 million to $90 million.

“The arts have suffered far too long from the tin cup mentality of looking for grants and assistance where they should be looking for a funding model that’s sustainable,” he said, noting that Galapagos doesn’t accept government funding or grants for its operations costs.

“An organization typically spends 30 percent of its time fundraising. We can spend that same amount of time marketing the artists we produce, and when the curtains open with a larger audience, that’s bigger revenues.”

[DetroiterOnTheWestCoast]

Perhaps its time to invest in some Highland Park real estate before HP becomes the next Brooklyn!

[stinkytofu]

Exactly, MSUguy.

This is a big, enormous, epic development for the city's cultural scene and for outsider perceptions.

Pardon my ignorance, but is it really that big of deal? I'm not saying it's not...I just have never heard of this before, yet I'm not in tune with the art scene. My brother lived in Brooklyn Heights for a few years in the mid 2000s and he had never heard of Galapagos when I asked him today.

[Detroitdave]

Perhaps its time to invest in some Highland Park real estate before HP becomes the next Brooklyn!

I've said it before and I'll say it again , Detroit has been on NYC's radar for a while and now the words getting out .
I see it first hand at my job , I literally come in contact with New Yorkers at least about 5 times a month and not just visiting, they are looking for places to live .

[Lowell]

Pardon my ignorance, but is it really that big of deal? I'm not saying it's not...I just have never heard of this before, yet I'm not in tune with the art scene. My brother lived in Brooklyn Heights for a few years in the mid 2000s and he had never heard of Galapagos when I asked him today.

It may not be a ginormus deal like you say and this forum is cognizant of "Skipper's Rule" [No project is for real until tenants have moved in], but Galapagos is a significant institution on the NY art scene. Check these press accolades.

[Hypestyles]

Will they be hiring soon? hopefully..

[Det_ard]

Galapagos, which Elmes said has $2 million per year in annual revenue, plans an ambitious — and expensive — renovation project over the next decade for the buildings he purchased for a song over the last year or so.

Among them are a 125,000-square-foot building at 1800 18th St. in Corktown for $500,000 from Eighteenth Street Investment Co. and five buildings totaling 300,000 square feet for $18,000 from the Highland Park School District, according to CoStar Group Inc., a Washington, D.C.-based real estate information service.

Elmes and top Galapagos management like Finance Director Moti Nahmany and Technical Director Kris Anton expect renovations — including the construction of a 10,000-square-foot indoor lake in one of the buildings — to cost $100 to $150 per square foot, or $60 million to $90 million. “The arts have suffered far too long from the tin cup mentality of looking for grants and assistance where they should be looking for a funding model that’s sustainable,” he said, noting that Galapagos doesn’t accept government funding or grants for its operations costs.

The numbers don't add up.

$2 million in yearly revenue won't even pay the interest on a $60-$90 million renovation loan. Unless someone is funding this out of the goodness of their heart and doesn't expect to earn a return on their very sizable investment.

Realistically, you'll have expenses like salaries, taxes, utilities, maintenance, marketing, etc. to take out of the $2 million in revenue. Let's say this leaves $1 million in profit [[not likely). Say a bank or private lender loans $50 million out of the $60-$90 million required, meaning Elmes or someone invests the other $10-$40 million in equity.

What's the interest on a $50 million loan? At a lower than market rate of 5%, they'd owe $2.5 million per year just in interest. But their net is only $1 million, or probably less.

How's this going to work? Skipper's rule indeed.

[animatedmartian]

I've said it before and I'll say it again , Detroit has been on NYC's radar for a while and now the words getting out .
I see it first hand at my job , I literally come in contact with New Yorkers at least about 5 times a month and not just visiting, they are looking for places to live .

Most out-of-state developers also seem to be from NYC [[by that I mean 2 or 3 out of a dozen). Plus one of the members put on the financial advisory board for Detroit was a guy who dealt with NYC during it's near-bankruptcy [[though that may just more be coincidence because of similar circumstances). Either way, there's seemingly more connections coming from New York than from probably any other major city, especially within the Midwest. These New Yorkers could have easily picked Chicago or some smaller Midwestern city to move to [[which arguably could have been just as cheap with better chances of thriving), but they chose Detroit. There's clearly something unquatifiable that makes Detroit pretty similar to NYC otherwise it's kinda hard to understand why they even bother looking here.

[MSUguy]

The numbers don't add up.

$2 million in yearly revenue won't even pay the interest on a $60-$90 million renovation loan. Unless someone is funding this out of the goodness of their heart and doesn't expect to earn a return on their very sizable investment.

Realistically, you'll have expenses like salaries, taxes, utilities, maintenance, marketing, etc. to take out of the $2 million in revenue. Let's say this leaves $1 million in profit [[not likely). Say a bank or private lender loans $50 million out of the $60-$90 million required, meaning Elmes or someone invests the other $10-$40 million in equity.

What's the interest on a $50 million loan? At a lower than market rate of 5%, they'd owe $2.5 million per year just in interest. But their net is only $1 million, or probably less.

How's this going to work? Skipper's rule indeed.

Well, for one, the article you quote says that this is what they plan to invest over the next decade.

[animatedmartian]

The numbers don't add up.

$2 million in yearly revenue won't even pay the interest on a $60-$90 million renovation loan. Unless someone is funding this out of the goodness of their heart and doesn't expect to earn a return on their very sizable investment.

Realistically, you'll have expenses like salaries, taxes, utilities, maintenance, marketing, etc. to take out of the $2 million in revenue. Let's say this leaves $1 million in profit [[not likely). Say a bank or private lender loans $50 million out of the $60-$90 million required, meaning Elmes or someone invests the other $10-$40 million in equity.

What's the interest on a $50 million loan? At a lower than market rate of 5%, they'd owe $2.5 million per year just in interest. But their net is only $1 million, or probably less.

How's this going to work? Skipper's rule indeed.

Fundraisers add up. $2.5 million isn't hardly much. If you get 200,000 people to donate $25 each, you can get $5,000,000. I don't know how much they charge for their events, but being in NYC, I don't think it would have been to hard too reach those numbers or something similar.

[rjlj]

Who are these out of state New York developers that you speak of?

Most out-of-state developers also seem to be from NYC [[by that I mean 2 or 3 out of a dozen). Plus one of the members put on the financial advisory board for Detroit was a guy who dealt with NYC during it's near-bankruptcy [[though that may just more be coincidence because of similar circumstances). Either way, there's seemingly more connections coming from New York than from probably any other major city, especially within the Midwest. These New Yorkers could have easily picked Chicago or some smaller Midwestern city to move to [[which arguably could have been just as cheap with better chances of thriving), but they chose Detroit. There's clearly something unquatifiable that makes Detroit pretty similar to NYC otherwise it's kinda hard to understand why they even bother looking here.

[animatedmartian]

Who are these out of state New York developers that you speak of?

The buyers of the Old Wayne County Building, the new owners of Southfield Town Center, some office buildings in Livonia, they're certainly poking around the metro.