New Businesses Coming to Downtown Thanks to Dan Gilbert/Bedrock

[emu steve]

" [DETROIT, MI - Six new businesses have officially moved into downtown Detroit offices, Bedrock Real Estate Services announced Monday.
Construction, parking, risk managements and other industry specialists moved into four different buildings on Woodward Avenue and Broadway Street, according to a release, representing "a wide range of industries from construction contracting to parking management, insurance and risk management and accounting."]"

http://www.mlive.com/business/detroi...l#incart_river

[Khorasaurus]

Thoughts:

1) The most newsworthy are the two moving into the Cary Building, since that was vacant when Gilbert bought it.

2) Presumably the new 1001 Woodward tenants will replace Meridian and M-1 Rail when they move out?

3)With these new tenants, the office space in the First National Building is darn near completely full. Bedrock's website lists about 12,000 sf available out of 800,000. Not sure if that's updated with the new leases announced today or not. Still plenty of retail space available.

4) Anyone know where all these companies were previously?

[Mackinaw]

Solid Gilbert-orchestrated turnarounds for all of the buildings mentioned.

[scooter]

the lobby area in the FNB needs to be filled,thats completly empty.

[animatedmartian]

4) Anyone know where all these companies were previously?

Dixon, Inc. used to be on Telegraph and Fenkell [[Detroit).

ColburnColburn is from Bloomfield Hills.

The Siegfried Group LLP was located in the Southfield Town Center.

JFM Consulting Group Inc seems like it was a home-based business and addresses for this company leads to a home in North Rosedale Park.

Ultimate Parking Management LLC doesn't seem to have any other address other than 1001 Woodward.

Great Lakes Architectural Products Group also doesn't seem to have any previous addresses in the Detroit area, though they do have presence in a few other cities it seems. Btw, they've already finished up the build out for their suite in the Cary Building.

[stasu1213]

Scooter I guess he will fill that space once he could get some type of retail in those spots. I noticed how the RenCen is getting into the game by filling it's Winter Gardens store fronts. Henry Ford Optim Eyes had opened last fall on the second level of the Winter Gardens across from Jos A Bank. It appear that something is set to open on the ground level in the Winter Gardens where the candy shop once were

[ABetterDetroit]

How in the wide world of sports did this thread last three hours without Danny and his "Gilbert town", "hipsters" and "Trayvon Martins"???

[stasu1213]

I cant wait for Restoration Hardware to open it's doors on Woodward. It's been a long time since a housewares store had been downtown

[archfan]

Jos A Bank made a quiet exit from the RenCen last month.

[davewindsor]

Thoughts:

...

3)With these new tenants, the office space in the First National Building is darn near completely full. Bedrock's website lists about 12,000 sf available out of 800,000. Not sure if that's updated with the new leases announced today or not. Still plenty of retail space available. ...

Ha, I don't believe for a second that the First National Building is 98.5% rented. It's the old scarcity scam they're playing. Unless the rent is free, there's no way. It probably has a vacancy rate similar to the Penobscott. 38% is probably "under renovation", so they say only 12,000 sq. ft available. The Penobscott is currently 40% vacant, so there's no way the First National is "darn near completely full" ==> http://www.freep.com/story/money/bus...ield/21891663/

[Dexlin]

The numbers may very well be bogus, but what does the Penobscot have to do with anything? They are owned by different companies, one of which can far more easily fill its buildings with suburban tenants it leases space to. Perhaps, you should cut out your reflexive cyncism.

[davewindsor]

The numbers may very well be bogus, but what does the Penobscot have to do with anything? They are owned by different companies, one of which can far more easily fill its buildings with suburban tenants it leases space to. Perhaps, you should cut out your reflexive cyncism.

It's not cynicism, it's clarity. It doesn't matter if it's owned by a different company. The Penobscott is the same class office building as the First National. It's not a Class A office building like the Compuware building. It's an apples to apples comparison. Just because they are suburban tenants doesn't mean they are going to pay more to rent the First National. Gilbert is not some kind of supernatural wizard that fills buildings with the wave of his wand. He's just manipulating numbers, twisting words and creating illusions.

[Dexlin]

You better believe Gilbert has cut all kinds of deals and specials to his suburban tenants to get them downtown when he wants good press. Yes, he very much can wave his hands and get his tenants downtown.

You are smarter than that reply of your's, but to admit otherwise would ruin your tired schtick.

[davewindsor]

You better believe Gilbert has cut all kinds of deals and specials to his suburban tenants to get them downtown when he wants good press. Yes, he very much can wave his hands and get his tenants downtown.

You are smarter than that reply of your's, but to admit otherwise would ruin your tired schtick.

Look, the owners of the Penoscott picked up the building at a steal, a lot less than the First National, so any kind of deal or special that Gilbert could make could easily be beat by the owners of the Penobscott because of their margins.

When you buy a big ticket item like a new car or sign a year lease on an apartment, are you that impulsive that you buy the first thing you see or do you shop it around to know you have gotten the best price? Why do you think businesses are any different? Businesses exist to make money. You only need to look at some of the threads here were tenants like that restaurant owner who's moving out because Gilbert bought the building and wants to double the rent to know that Gilbert doesn't have the best deals and specials. So it's you who needs to be "smarter than that reply of yours".

[RO_Resident]

Thoughts:

2) Presumably the new 1001 Woodward tenants will replace Meridian and M-1 Rail when they move out?

It looks like they are hard at work on the Woodward side of the Compuware Building refurbishing 1 to 1.5 floors. I'm assuming that'll be part of the space that Meridian will be moving into.

M-1's office space is further up north on Woodward, they're not in the 1001 building.

Ultimate Parking must have bought out/merged/changed names from Universal Parking. Not sure where the Universal offices were located.

[Khorasaurus]

Ha, I don't believe for a second that the First National Building is 98.5% rented. It's the old scarcity scam they're playing. Unless the rent is free, there's no way. It probably has a vacancy rate similar to the Penobscott. 38% is probably "under renovation", so they say only 12,000 sq. ft available. The Penobscott is currently 40% vacant, so there's no way the First National is "darn near completely full" ==> http://www.freep.com/story/money/bus...ield/21891663/

I got the number from Bedrock's listings: http://www.bedrockmgt.com/properties...d=3&suite=1539

It lists the specific spaces available. If they have tons more space to lease, why would they lie and claim they don't? That's not a very good way to market space for lease.

For other buildings, Bedrock has no problem admitting they're mostly or fully vacant. For example:

http://www.bedrockmgt.com/properties...=26&suite=200m

http://www.bedrockmgt.com/properties...d=43&suite=400

The difference between the First National [[which, by the way, is a Class A building) and the Penobscot is that Gilbert has a robust marketing strategy and talented brokers and is actively investing in the building, while APOP is a lazy slumlord who whines about parking and needs a guy to climb a 100 foot ladder for free just to change some light bulbs. Also the First National is located right on Campus Martius, which has become the most desirable office address in the entire region.

[stasu1213]

Jos A Bank made a quiet exit from the RenCen last month.

Wow. I didn't know that. I haven't been in the RenCen since the 1st of this month. The store had been in the Gardens 2002. I guess that it wasn't getting the customers that it needed to stay open. Plus, many office workers dresses more casually these days and those that wear business attires usually shop where they live which is in the suburbs or shop at place such as Men's Warehouse. I had on occasions asked the salespersons there if they are going to close and they had said no

[Mackinaw]

K'saurus, agreed that Bedrock's marketing is good and ambitions high. Bedrock is a city-building landlord, while Apop is garden-variety at best. Disagreed that FN is somehow head and shoulders above location-wise...Penobscot is like 100' from Campus Martius and perfectly located on Griswold St. Can't beat either location-- both are prestigious, but as you say, only one is managed well.

Not sure how you're deducing the vacancy numbers from their website. I don't see it.

It is very possible that notable portions of FN are off the market-- i.e. under legitimate renovation. While I'd love to know how much, I don't think it's fraudulent or anything to say that x percentage of your leasable space is occupied.

...as to Jos A Bank and the Ren Cen, while I hate to see emptiness in the Wintergarden, JABank is just not a great store. Frankly, a Mens Warehouse would be a step up for those of modest means, and Brooks Brothers would be a step up for the executives. JABank was hitting an unhappy, unstylish middle and I am not surprised if their overall business is declining. Either of those aforementioned other stores could be a hit downtown, and I'd seek them out if I were a landlord.

[Khorasaurus]

K'saurus, agreed that Bedrock's marketing is good and ambitions high. Bedrock is a city-building landlord, while Apop is garden-variety at best. Disagreed that FN is somehow head and shoulders above location-wise...Penobscot is like 100' from Campus Martius and perfectly located on Griswold St. Can't beat either location-- both are prestigious, but as you say, only one is managed well.

Not sure how you're deducing the vacancy numbers from their website. I don't see it.

It is very possible that notable portions of FN are off the market-- i.e. under legitimate renovation. While I'd love to know how much, I don't think it's fraudulent or anything to say that x percentage of your leasable space is occupied.

...as to Jos A Bank and the Ren Cen, while I hate to see emptiness in the Wintergarden, JABank is just not a great store. Frankly, a Mens Warehouse would be a step up for those of modest means, and Brooks Brothers would be a step up for the executives. JABank was hitting an unhappy, unstylish middle and I am not surprised if their overall business is declining. Either of those aforementioned other stores could be a hit downtown, and I'd seek them out if I were a landlord.

Reasonable point on the Penobscot. It's not right on the park, but it's close.

As for the vacancy numbers, Bedrock's website lists office availabilities of 2,414, 4,950, and 5,220 square feet [[total: 12,584). The FN is approximately 800,000 square feet, based on a quick Google search. So that's not a very high vacancy percentage.

Now, some of it could be under renovation, but, again judging by the rest of their website, which lists space that is obviously under renovation [[i.e. you can see the construction lights and unfinished walls and ceilings through the windows) as available, I don't think that's the case with the FN, or at least not a large portion of it. Here's an example - 1505 Woodward: http://www.bedrockmgt.com/properties...d=40&suite=100

That building is a construction site - it's completely gutted. And yet Suites 100-800 are all listed as "available." Gilbert may do things like turn on the lights in vacant or under-renovation space to make the city look brighter, but he isn't lying about the space he has available or not available.

Finally, on Jos. A Bank's, I really think the problem is that the Ren Cen is just an awful place to be a retailer. The Wintergarden is pretty, but the upper floors are dead ends, which is horrible retail design. Restaurants, fast food, and convenience stores like CVS work because of the many office workers and hotel guests, but people don't go to the Ren Cen to shop.

I do think Jos. A Bank could work downtown on an actual storefront on the street, although probably only somewhere that already gets a lot of a foot traffic. The First National Building's retail [[which does have quite a bit of vacancy) might be a good spot.

[Mackinaw]

RC's design definitely plays into it too. If I were the landlord, I'd be willing to get really creative about what uses I allow for the leases. The ground-level has some value for retail, particularly if Atwater St. gets activated with more residents in the future [[fingers crossed), but the upper-level spaces may as well become offices rather than retail.

[davewindsor]

I got the number from Bedrock's listings: http://www.bedrockmgt.com/properties...d=3&suite=1539

It lists the specific spaces available. If they have tons more space to lease, why would they lie and claim they don't? That's not a very good way to market space for lease.

For other buildings, Bedrock has no problem admitting they're mostly or fully vacant. For example:

http://www.bedrockmgt.com/properties...=26&suite=200m

http://www.bedrockmgt.com/properties...d=43&suite=400

The difference between the First National [[which, by the way, is a Class A building) and the Penobscot is that Gilbert has a robust marketing strategy and talented brokers and is actively investing in the building, while APOP is a lazy slumlord who whines about parking and needs a guy to climb a 100 foot ladder for free just to change some light bulbs. Also the First National is located right on Campus Martius, which has become the most desirable office address in the entire region.

When I click your links, I don't see the vacancy rate on there. I see some of the stuff they have available. Where does it say the First National has a 1.5% vacancy rate?

Why would he lie? I already answered that. It's called creating scarcity to sell. It's a common marketing 101 technique. Ex. if you said you have the last Furby [[when it first came out), newest playstation or video game before christmas or anything where you say you have the last one, it'll sell more quickly than a shelf full of them the public can view. Suggesting everybody wants to rent it by offering very little for rent is a very good way to market it. Scarcity sells and that's what they are doing. Government data is saying something completely different about downtown office vacancy rates. Why?

Yes, the First National and Penobscott are both Class A buildings. I know that. When I was comparing them, I meant for that age group of building. The 47 storey Penobscott was built in 1928. First National was built in 1930. They are block apart in distance. That's why it's an apples to apples comparison.

But, a lot of those large multinational corporations want newer Class A buildings like the CompuWare, not old buildings like the First National. Case in point. Look at GM moving from the classy old Cadillac Building diggs in New Center to the much newer RenCentre in downtown [[plus they had to spend over half a billion renovating it--couldn't they have just used that money to renovate the old Cadillac diggs?) Meridan could have gone to vacant buildings like the David Stott, Book Tower or Free Press building, but they want to be in a newer class A building like the CompuWare.

Whether APOP is slumlord or not, the Penobscott is still an amazing and elaborate piece of architecture and well built. The First National doesn't even have a giant ball on the top of it to complain about. And a business decision about building parking garages has nothing to do with the upkeep of the Penobscott. People working in downtown can rent a parking spot in downtown. Gilbert doesn't have a monopoly on parking spots in downtown. I have been in the Penobscott before and it was immaculate. It was just as clean and classy if not more so as the First National. I would choose the Penobscott over the First National any day of the week if I wanted to open an office in downtown. The Penobscott should have a lower vacancy than the First National, not a significantly higher one.

I don't know you where you get Campus Martius is the most desireable address. Of course, Bedrock is going to say that to promote themselves. Griswold was always known as the Wall Street of downtown. The Detroit Stock Exchange used to be on Griswold until they shut it down in the 70s. That location doesn't make the First National any more desireable to me and it's only a block apart.

[Khorasaurus]

When I click your links, I don't see the vacancy rate on there. I see some of the stuff they have available. Where does it say the First National has a 1.5% vacancy rate?

It lists all the space they have available. 12,000 square feet out of 800,000 total. It even shows where in the building the space is located! I know that that is the only available space because for other buildings, it lists the entire building as available. So unless they're only lying about the First National, they aren't lying.

Government data is saying something completely different about downtown office vacancy rates. Why?

Downtown Class A office space vacancy, according to the Freep article you posted, is 20.9%. [[That number is from a real estate analysis firm, not the "government" but that doesn't really matter).

That means if you add up all the available space and all the leased space, the leased space is 79.1% of the total space.

Crain's says there are almost 14 million square feet of Class A and B office space in greater downtown [[includes Midtown and New Center). That means about 2.8 million square feet are vacant. We know that the Penobscot has around 500,000 square feet of vacant space, which only leaves about 2.3 million square feet to be distributed over the entire rest of the market, and I bet we can think of plenty of other buildings with empty space. Is it that hard to believe that the First National is almost full based on those numbers?

You love the Penobscot - so do I. But, as you said, office tenants want quality buildings. The First National is a higher quality building than the Penobscot, and therefore is attracting more tenants. Now that is has very little space available, maybe some more companies will look at the Penobscot.

[davewindsor]

It lists all the space they have available. 12,000 square feet out of 800,000 total. It even shows where in the building the space is located! I know that that is the only available space because for other buildings, it lists the entire building as available. So unless they're only lying about the First National, they aren't lying.



Downtown Class A office space vacancy, according to the Freep article you posted, is 20.9%. [[That number is from a real estate analysis firm, not the "government" but that doesn't really matter).

That means if you add up all the available space and all the leased space, the leased space is 79.1% of the total space.

Crain's says there are almost 14 million square feet of Class A and B office space in greater downtown [[includes Midtown and New Center). That means about 2.8 million square feet are vacant. We know that the Penobscot has around 500,000 square feet of vacant space, which only leaves about 2.3 million square feet to be distributed over the entire rest of the market, and I bet we can think of plenty of other buildings with empty space. Is it that hard to believe that the First National is almost full based on those numbers?

You love the Penobscot - so do I. But, as you said, office tenants want quality buildings. The First National is a higher quality building than the Penobscot, and therefore is attracting more tenants. Now that is has very little space available, maybe some more companies will look at the Penobscot.

If you read the full article, it said that a lot of the empty buildings like the David Stott tower were excluded from the calculation. The GM Ren Centre with tower 500 & 600 has over 3m square feet of class A office space and it's all rented, which means that other buildings like the Penobscott and First National have to make up the difference for that 2.3m square feet of vacancy. So if the virtually empty buildings are excluded from that calculation, it makes absolutely no sense that the First National has a 1.5% vacancy rate if the Penobscott has 40%. The First National will never be a higher quality building than the Penobscott--they are both class A buildings from the same time period.

[stasu1213]

RC's design definitely plays into it too. If I were the landlord, I'd be willing to get really creative about what uses I allow for the leases. The ground-level has some value for retail, particularly if Atwater St. gets activated with more residents in the future [[fingers crossed), but the upper-level spaces may as well become offices rather than retail.

I would still have retail on the upper floors as well. I have a change of thought to whether clothing retail should open in the Gardens for many employees won't shop there. I do think the Ren Cen should get into the trend and lure more restaurants such as Potbelly, Starbucks, and Coffee Beanery to relocate in the Garden. More eateries should open in the garden as well as smaller stores such as a Sunglasses shop, Bath and Bodyworks, and maybe a Rockport shoe store. The Ren Cen just like other buildings in Detroit is guilty of leasing two or three storefronts combined to one retailer instead of one storefront to individual retailer. The closing of Joseph A Bank leave a huge gap that another retailer may deem too expensive to move into or renovate

[Khorasaurus]

If you read the full article, it said that a lot of the empty buildings like the David Stott tower were excluded from the calculation. The GM Ren Centre with tower 500 & 600 has over 3m square feet of class A office space and it's all rented, which means that other buildings like the Penobscott and First National have to make up the difference for that 2.3m square feet of vacancy. So if the virtually empty buildings are excluded from that calculation, it makes absolutely no sense that the First National has a 1.5% vacancy rate if the Penobscott has 40%. The First National will never be a higher quality building than the Penobscott--they are both class A buildings from the same time period.

I think you're forgetting about some buildings. There are plenty of buildings that, while nowhere near empty, have plenty of space available - Ford, Buhl, Cadillac Tower, Guardian, 150 W. Jefferson, etc. And then there are buildings that have space on the market, but empty or nearly empty, like the Marquette Building that recently sold. Hell, One Detroit Center is like 90% occupied, but that 10% is something like 100,000 square feet [[those are both estimates). And then you have Gilbert bringing buildings back onto the market but not yet filling them up [[the Federal Reserve is a great example). It doesn't need the First National to have secret empty space to add up to 20% vacancy.

The FN and Penob may have been built at the same time, but the current owner of the FN has put money into it and the Penob has had consecutive owners treat it like crap. I agree that the Penobscot SHOULD be the more desirable building, but right now it isn't.

Oh, and related to that, I saw an article recently that pointed out that most of the Penobscot complex's vacant space is not in the iconic tower, but in the two smaller buildings.