Banker: Penobscot Building in default

[EastsideAl]

What the hell is with Detroit? Every other major city in the country manages to have a central core of old and new buildings without having to have a dedicated parking lot adjacent to each one of them. Even cities without good public transport.There are several parking decks within a block or two of the Penobscot. But, no, a beautiful building like the Penobscot, which would be a central civic landmark anywhere else, can't possibly be viable without its own parking lot [[despite having stood there without one for over 80 years).

Can't people here walk a couple of blocks, like people do in, say, every other major city on earth? Or does everyplace have to have valet parking next to the door so that no one is ever more than a couple of steps from their oh-so-precious vehicles, and no one is threatened with more than a couple of seconds of weather? They don't even have that in Anchorage. Does everyplace here really have to be modeled on the ideal of the suburban shopping mall? What the hell ever happened to our urbanness and our urban life?

Sometimes, just every now and again, I wonder why I came back to this stupid stuck in the '60s and '70s place.

[gumby]

Can't people here walk a couple of blocks, like people do in, say, every other major city on earth?

Simple answer is , no. We are much to fat and lazy to do shit around here.

[Lorax]

Eastside, I hear you!

This city, if it had alot more money, would waste every building that didn't have a parking lot. The mallification of America really caught on in Detroit, since it's the largest American city by pouplation and land mass without a decent regional mass transportation system.

Fat and lazy breeds fat and lazy.

And the Penobscot would make terrific apartments or condos, as would the Stott and Book Tower. Large, long units with banks of windows, probably four to a floor.

[bailey]

Can't people here walk a couple of blocks, like people do in, say, every other major city on earth? Or does everyplace have to have valet parking next to the door so that no one is ever more than a couple of steps from their oh-so-precious vehicles, and no one is threatened with more than a couple of seconds of weather? They don't even have that in Anchorage. Does everyplace here really have to be modeled on the ideal of the suburban shopping mall? What the hell ever happened to our urbanness and our urban life?.

Of course it's not as simple as people being fat and lazy...you people can not be that dense can you?. And it's not a lack of wanting to be urban. If no one wanted Urban...the suburbs wouldn't be busy trying to re-create it in their little faux downtowns and "new urbanism' developments. The reality is NOT that people don't want urban-ness, the reality is they just don't want to deal with Detroit. These buildings aren't empty because people are lazy... it's the fact that the vast majority of the "market" for these buildings has de-camped for Southfield, Troy, or further out. The vast majority of the "money" left the CBD for lower taxes, shorter commutes from their employees' and clients' suburbancommunities, better services....and yes the added benefit of convenient and FREE parking from which one does not have to run a gauntlet of bums to get from one's car to where one is going. If Detroit wants to bring them back, there has to be a reason for them to come. Doing business in a high cost, low return, decimated urban core, with expensive parking relatively far from the door just not attractive...but more importantly, it's not attractive to the clients and customers.

Think about what historically populated these buildings.... lawyers [[not BIGLAW, but small, mid and solos) , accountants, manufacturing reps, doctors, dentists...etc. What possible business case is there for a CPA, Lawyer, Dentist or whatever to be in Detroit when he lives in Birmingham and his clients area all in Oakland County?

For example, for a long time my employer maintained two offices. One in it's "historic" home in the CBD [[where it was founded) and the other in a bland big beaver-esque office park. When the last of the old guard finally retired, the downtown location was closed as it was simply a drain and every year was staffed by fewer and fewer people BUT, the most important fact was; it serviced fewer and fewer clients.

Would I love to be working downtown still? of course. However reality is, clients dictate where we are to do business. And fewer and fewer were willing to put up with all the bullshit associated with coming downtown to conduct their business when they had no reason to.

[digitalvision]

Bailey has it 100% right. And I'm going to sound like a dick, but tough medicine is needed.

Businesses go where the clients go. Jobs go where the clients go. And clients do not want to come downtown. That's just the hard truth, after working downtown off and on for a decade and dealing with suburbanites coming down. It's HELL to watch, especially when you know it's not as bad as they think it is, or it's just outright inaccurate.

It's them checking out the window every 20 minutes to see if their car is stolen. It's refusal to go one block to go to the Thai place. It's demanding all meetings be at their office because they won't come down.

Some of it is logical, most is not from experience, but perception is reality and it will kill your business. It's killed many friend's businesses, even though they were really passionate, you have to go where the customers are. A friend of mine was forced to move to Southfield when a key client of his told him he would not hire his company anymore if he had to come down to work with them. [[BTW, if anyone thinks it's a race thing, it was a black-owned business with his biggest client being black). In short, he was out in 3 months. And his business has tripled in the last year.

Also, there's other points in the professional sector that some forget about. Women won't walk long distances in heels [[something many men forget); everyone doesn't like to pay $10-$20 to park, even if you pay their parking for them, the taxes are many times higher than the suburbs, and most of the business community is north of 696 now.

Bing has to get to work on the basics - the DEGC's/DDA's mission should be completely refocused to handling these basics [[I know, however, that in the past, city council has been obstructionist to the business community). Because if these basics are not taken care of, your incentives will only go so far, as shown. I think if those basics were taken care of, we wouldn't be facing the possibility of an empty Penobscot, the reality of demo'd Lafayette as well as other buildings on the precipice.

What works downtown are bars and restaurants and stuff related to the engines that are the sports venues or casinos, or residents. I WOULD do a well-planned one of those, because they have draws that support them. CVS's - basic services for the residents. If you want to invest downtown, that's where downtown is on the chain of development. Think about what a town of 3,000 people can support daily, and that's what you can do downtown with additional business for the stadia/conventions. There's a ton of business opportunity there. Unfortunately, those kinds of business don't fill skyscrapers.

[EastSider]

Bailey has it 100% right. And I'm going to sound like a dick, but tough medicine is needed.

Businesses go where the clients go. Jobs go where the clients go. And clients do not want to come downtown. That's just the hard truth, after working downtown off and on for a decade and dealing with suburbanites coming down. It's HELL to watch, especially when you know it's not as bad as they think it is, or it's just outright inaccurate.

It's them checking out the window every 20 minutes to see if their car is stolen. It's refusal to go one block to go to the Thai place. It's demanding all meetings be at their office because they won't come down.

You can't sound like a dick and offer tough medicine and then in the next paragraph write about how "it's not as bad as they think it is, or it's just outright inaccurate."

The sea of auto glass that routinely appears on Congress tells people it really is that bad.
The stench of piss and shit drifting from alleyways tells people it really is that bad.
The stale, mildewy moldy smell wafting from long-abandoned buildings tells people it really is that bad.
The squad of deputies outside Bert's on Broadway tells people it really is that bad.
The 20+ cars stolen in the last 30 days in the CBD tell people it really is that bad.
The sea of larceny icons on the CrimeView map tell people it really is that bad.

[MikeM]

Of course it's not as simple as people being fat and lazy...you people can not be that dense can you?

Yes they can!

[kraig]

The same thing that's been going on in the City of Detroit is the same thing going on with the penobscot. As residents are leaving, the remaining residents/tenants are being charged more and more to make up for the loss of the residents that left.

As time goes on the remaining residents/tenants start to leave because they can't afford to keep making up the difference while getting nothing back in return and there are options for newer buildings with better amenities, free parking being one of them, available to them.

Meanwhile, that ends up putting a larger and larger burden on the residents/tenants that have stayed until they eventually leave as soon as they are able. Same old story.

[Gistok]

The same thing that's been going on in the City of Detroit is the same thing going on with the penobscot. As residents are leaving, the remaining residents/tenants are being charged more and more to make up for the loss of the residents that left.

As time goes on the remaining residents/tenants start to leave because they can't afford to keep making up the difference while getting nothing back in return and there are options for newer buildings with better amenities, free parking being one of them, available to them.

Meanwhile, that ends up putting a larger and larger burden on the residents/tenants that have stayed until they eventually leave as soon as they are able. Same old story.

Sorry kraig... but I don't agree with that analog. Anyone who has an ironclad lease can't just be charged more due to making up differences because other tenants left.

[Lowell]

We need a building triage. Similar to a battlefield triage, an order precendence needs to be reached as to what should be saved and in what order, based on a formula that considers such things as aesthetics, history, potential reuse, and I am sure you all could think of some others.

If a building is high enough in the triage queue but has no current use, like the Stott or the Book Tower would be, then public measures protect and preserve them [mothball] for a day when they can be retranslated.

Many of these buildings are architectural marvels and works of art. Buildings with that much art and quality of materials will never be made again. Information age business life is too short and de-localized. We did not have a royalty and palaces. These are our palaces. Smashing them down is like pounding a Bernini sculpture to bits.

There has to be some way to at least save the best and, alas, allow for the rest to sink or swim on their own. Otherwise all will be allowed to disintegrate, fall victim to scavengers and become financially impossible to recover.

[kraig]

Sorry kraig... but I don't agree with that analog. Anyone who has an ironclad lease can't just be charged more due to making up differences because other tenants left.

No, but when it's time to renew their leases, the management is raising the rates. Rather than pay the higher rates, a lot of the tenants are choosing to go elsewhere.

[digitalvision]

Something dramatic is happening... check out this newer article, buried in the business section. Either there's a huge drop or some funny business. If there actually is this kind of drop as outlined below, we're looking at a total collapse, probably due in large part to the economy or lack of service [[because although tenants may not pay in higher rents when folks leave immediately until they renew, they pay in less services).

http://www.detnews.com/article/20090...60333/1001/biz

"Historically, rents in the building average $650,000 a month, according to court records.
In May 2009, the building only brought in $99,000, according to an income and expense statement cited by Capmark. "

That's HUGE. That means they've lost almost all their revenue, if true, if that's all they're getting, that place is shutting down soon. It's expensive to keep that beautiful girl open.

"As of about four months ago, the building, at 645 Griswold, was 63.1 percent leased, according to CoStar Group Inc., a commercial real estate research and information service."

Running a building at 37% or so vacancy is really tough.

I was told a much higher occupancy rate [[I don't remember exactly, but it was around 80%) two years ago. So either a) there's lying along the line [[entirely possible), b) there's funny business c) they're in a death spiral or d) some combination thereof.

[K-slice]

In the world I see - you are stalking elk through the damp canyon forests around the ruins of New Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Brodrick Tower. And when you look down, you'll see tiny figures pounding corn, laying strips of venison on the empty car pool lane of some abandoned superhighway.

-Tyler Durden [[well, sort of...)