Penobscot Building conditions update

[401don]

It's wild to me that it sold for so little in 2012, DetroitYES should have pooled money together and bout it ourselves and made a 1000% profit.

All of the buildings were worth nothing by office tower standards back then. It wasn't until Gilbert demonstrated you could renovate them and draw tenants from the suburbs, which seemed obvious to him based on every other city, that the values increased. You still need very deep pockets, like 100 million plus, to renovate a building like the Penobscot.

[ABetterDetroit]

We need to change our property tax system that rewards slum lords who do not invest anything in buildings and houses with rock bottom tax bills while at the same time punishing the people who do invest in brick and mortar with much higher taxes. That way of operating obviously has failed spectacularly in Michigan.

[JonWylie]

Penobscot Building owner, former Pontiac Silverdome owner, dies at age 69

[Satiricalivory]

WOOOW! Ya know, I did think in the back of my head "just wait for him to die and the buildings will be free", but then I thought he was way too young for that to be a feasible option. Lets hope whoever gets control of the properties isn't too much like him.


I've got nothing nice to say so I'll just end my comment here.

[Gistok]

Too bad he had to die... but like the guy who owned the Park Ave. Building on W. Adams and Park Ave., it took his death to get it on the market before it was too far gone.

Maybe the family will accept $70 million, if that offer still stands [[for the tower and 2 annex buildings).

[Seven&wyo]

Too bad he had to die... but like the guy who owned the Park Ave. Building on W. Adams and Park Ave., it took his death to get it on the market before it was too far gone.

Maybe the family will accept $70 million, if that offer still stands [[for the tower and 2 annex buildings).

Meh fuck him. He clearly thought low of Detroit and Detroiters, why else would he destroy several beautiful buildings for no reason, lie as to why and then slum up one of our city’s most iconic buildings. When people like him die it’s not sad. At all

[mikeg19]

Meh fuck him. He clearly thought low of Detroit and Detroiters, why else would he destroy several beautiful buildings for no reason, lie as to why and then slum up one of our city’s most iconic buildings. When people like him die it’s not sad. At all

Putting that aside, the guy had a wife 3 sons and 5 grandkids. Just because you [[as well as I) thought he was a slumlord piece of crap doesn't mean that he died and nobody cared or was sad.

[Zacha341]

Well one can argue he did not go thru any unique portal uncommon to all at some point.

And no, a money truck is never seen parked or idling at a grave site.

You're taking nothing of material value with you.

[Honky Tonk]

You're taking nothing of material value with you.

How do you know?

[Satiricalivory]

Putting that aside, the guy had a wife 3 sons and 5 grandkids. Just because you [[as well as I) thought he was a slumlord piece of crap doesn't mean that he died and nobody cared or was sad.

Nobody said that. And we have no reason to care.

[Zacha341]

I dunno, LOL! Worked with a local large estate seller years back. And assisted in the handling, storage and dispensing of a few deceased friends and family members belongings...

I guess we could always consult the pharaohs. They most certainly packed much for the journey!

How do you know?

[Gistok]

He certainly was one of the odder [[tight wad) self made businessmen. I was going to say maybe that is common among Greek immigrant businessmen [[cough Dennis Kefallinos), but Jim Pappas and the late Ted Gatzaros did a good job with their Greektown businesses, including the Atheneum Hotel and 400 Monroe office building [[former Ferry-Morse Seed Warehouse) where Fishbone's is located.

I guess I can't make such a generalization... but the the Penobscot Building owner sure was el-cheapo.

[Jimaz]

FWIW, I think I heard on the radio that the cause of death was not released.

[401don]

You've got to hand it to him. The guy saw an opportunity to buy a building for 5 million bucks and flip it for 15-20 times that amount while barely investing anything in it. It was perfect, except for the whole dying thing.

[Satiricalivory]

You've got to hand it to him. The guy saw an opportunity to buy a building for 5 million bucks and flip it for 15-20 times that amount while barely investing anything in it. It was perfect, except for the whole dying thing.

That's just real estate. Everybody who bought after the 08 crash has seen massive returns on their properties, especially here.

[Dexlin]

I mean, not everyone is a slum lord. You don't have to be a slum lord to make money in real estate, even in Detroit. So, no, that's not "just real estate."

[Richard]

^ But it is,called speculation.

If the city does not enforce the rules,people are going to exploit them,I do find it very informative finding out one man has been the reason of Detroit’s demise and the reason so many historical buildings have been needlessly destroyed or demolished for the last 50 years,glad that part is cleared up.

A slumlord is a person that purchased a piece of property and fixed it up or not,rented it out at a discount,because it will only get trashed every time.

A perfect landlord buys a property,rehabs it,rents it out for a year while collecting 6 months rent,gets it back trashed,spends thousands more rehabbing it again,rinse and repeat.

Perfect landlord walks away and leaves the house,which gets looted and burned.

Slumlord continues on.

This guy never said anything about buying this building for restoration,the people he bought it from never bought it for restoration,they were speculators,so it should be no surprise or expectations when a speculative purchase happens and no getting upset when it does not get restored.

They are not doing anything different in life that others also do each day,they are just at another level.

It’s your city,if you let people do as they will,they will,until you get involved you cannot complain about what happens,well you can,but it does not help.

Even if everybody sent $5 to the local preservation board or historical society,it gives them money and power and a following that buys influence to stop this stuff from happening.

Like a dog chasing its tail,spinning around and around in a circle,this week it is this building,next week another,just like it has always been.

[stasu1213]

Someone working inside city government probably is paid not to enforce ordinances and look the other way

[Satiricalivory]

I mean, not everyone is a slum lord. You don't have to be a slum lord to make money in real estate, even in Detroit. So, no, that's not "just real estate."

I think you misinterpreted my comment, I was in no way justifying his slum lording as "just real estate". I mean that the increase in value was no genius foresight on his part. There is nothing to give him credit for.

[Richard]

I think you misinterpreted my comment, I was in no way justifying his slum lording as "just real estate". I mean that the increase in value was no genius foresight on his part. There is nothing to give him credit for.

Seriously,if you could buy a building for 5 million,sit on it for a couple of years while spending little and flip it for 60 million,and view it as not a wise move?

Actually he probably did not even spend the 5 million in cash,it was proably with a bank loan.

People buy and flip houses everyday,they are not doing it because they want to improve the city,they are doing it to make money,it’s a business.

It does not mean you have to agree with it,or even if it is right,it is what it is.

One can not say what a greedy butthole,because they buy products every day that makes people multi billionaires,so they must be greedy as they also profited.

I understand what you are saying,I parroted here during the bankruptcy when everybody thought Detroit would no longer exist and everybody was so quick to give up city accets based on today and not what the future would bring.

The city had some really strange ideas in the past,that to me actually encouraged speculation and led to the needless demise of many of its historical stock.

I also agree cash envelopes played a role.

Honestly that whole thing of any project over 70 million has to provide millions in social services,killed this building no matter who owns it and any other large buildings in the city,not everybody is like Ford and can write off millions.

Anybody going to the bank or in front of investors is going to be hard pressed explaining why there needs to be another 10 million added to the top for social services,let alone make many large projects no feasible.

One figures the city would be doing stuff to encourage investment in buildings like this and get them back on line but all they are doing is repeating destructive polices of the past,that brought you here in the first place.

Detroit is special but when you are looking at investing 100 -150 million into a building countrywide there are a heck of a lot of buildings out there that will show immediate results or return on investments.

You can buy something ready to go without the headache of a restoration and see the same returns.

When your own pension funds are buying in Florida instead of your own city,it might be time to be looking at,why?

What can we do to change it does not include,tack another 10 million on the top for social programs.

It actually devalues buildings like this which leads to devalued finished buildings in the city.

Unless somebody has really deep pockets,this building is still only worth 5 million,because if you are to buy it with the intention of restoration,you would have to keep it under the 70 million threshold.

[Gistok]

When we talk about the Penobscot Building, a lot of folks don't know that there are 3 separate, but connected, buildings.

Besides the 47 story 1928 Tower, there is....

The 1905 original Beaux Arts style 13 story Penobscot Building connected to the tower on the NW...
https://en.wikipedia.org/wiki/Penobscot_Building_[[1905)

The 1916 Penobscot Annex 23 story Renaissance building connected to the tower on the SW...
https://en.wikipedia.org/wiki/Penobscot_Building_Annex

And the remainder of the block [[south of the Penobscot Tower) is the Ford Building on the SE.

[401don]

Seriously,if you could buy a building for 5 million,sit on it for a couple of years while spending little and flip it for 60 million,and view it as not a wise move?

Actually he probably did not even spend the 5 million in cash,it was proably with a bank loan.

People buy and flip houses everyday,they are not doing it because they want to improve the city,they are doing it to make money,it’s a business.

It does not mean you have to agree with it,or even if it is right,it is what it is.

One can not say what a greedy butthole,because they buy products every day that makes people multi billionaires,so they must be greedy as they also profited.

I understand what you are saying,I parroted here during the bankruptcy when everybody thought Detroit would no longer exist and everybody was so quick to give up city accets based on today and not what the future would bring.

The city had some really strange ideas in the past,that to me actually encouraged speculation and led to the needless demise of many of its historical stock.

I also agree cash envelopes played a role.

Honestly that whole thing of any project over 70 million has to provide millions in social services,killed this building no matter who owns it and any other large buildings in the city,not everybody is like Ford and can write off millions.

Anybody going to the bank or in front of investors is going to be hard pressed explaining why there needs to be another 10 million added to the top for social services,let alone make many large projects no feasible.

One figures the city would be doing stuff to encourage investment in buildings like this and get them back on line but all they are doing is repeating destructive polices of the past,that brought you here in the first place.

Detroit is special but when you are looking at investing 100 -150 million into a building countrywide there are a heck of a lot of buildings out there that will show immediate results or return on investments.

You can buy something ready to go without the headache of a restoration and see the same returns.

When your own pension funds are buying in Florida instead of your own city,it might be time to be looking at,why?

What can we do to change it does not include,tack another 10 million on the top for social programs.

It actually devalues buildings like this which leads to devalued finished buildings in the city.

Unless somebody has really deep pockets,this building is still only worth 5 million,because if you are to buy it with the intention of restoration,you would have to keep it under the 70 million threshold.

Thank you Richard. I was going to respond to that post but couldn't be bothered. Nothing wrong with the guy flipping a building but when tenants pay rent and do not receive safe conditions, never mind proper maintenance, that makes him a greedy slumlord.

[Richard]

Thank you Richard. I was going to respond to that post but couldn't be bothered. Nothing wrong with the guy flipping a building but when tenants pay rent and do not receive safe conditions, never mind
proper maintenance, that makes him a greedy slumlord.

Its not weather I agree with the greedy slumlord aspect,which has been around sense probably the cave man days,but when it sold,it was put up for sale anybody could have bought it.

But everybody knew a “greedy slumlord “ bought it.

He did not buy it to be a landlord,he bought it to speculate,he never intended to spend any money on it,my speculation would be,the only reason there are still tenants in there was to keep it from being looted and burned if it had sat empty.

He probably would have preferred to have zero tenants in there.

Even as it stands now,if you had 150 million or more to throw at it,what would you do with it but speculation.

You are going to throw 150 million into renovations but with the uncertainty of everything what are you going to base your return on?

Apartments ? Speculation that the demand for living space will maybe increase.

Office space ? Who knows right now where that market will end up,let alone there is little demand with a lot of uncertainty in that market.

If it sold tomorrow,it would sell to another speculator and nothing would change.

Right now as it is,it would probably be more suited as a federal,state or local government complex.

[Satiricalivory]

Office space in downtown is still strong despite the pandemic. Renovations would not be complete for what, two years? That's if they started now, the pandemic would be mostly over. This building could have been 90% occupied and running smoothly many years ago, the only reason we're here now is because of a slumlord.

[Richard]

Not really

That building is 1 million sqft,in 2015 it was 40% vacant.

It took 9 years for Mr Gilbert and others to bring positive absorption of 1.3 million sqft of office space to the downtown.

In the meantime Rencen lost large tenants to the suburbs because of incentives and reduced costs per sqft,one customer saved 1.5 million per year in lease payments alone in the move.

Residential is at 94% but if you brought and renovated building like this online with residential it would upset that balance.

The demand for office space may be high but there is also a glut,mixed in there is the increased costs for the renovations,which drives up rents,and little incentives that the suburbs are offering.

From 2015 until now only 60% of those who received NEZ abatements have completed their projects and are online,that leaves a backlog of 40% of the market is already waiting in the wings to move forward,but have not.

If you buy this today it becomes a race to get it marketable,keeping in mind 40% of the future market is 100 steps ahead of you in the process.

They have not moved forward because the demand is not there.

So you run the risk of coming online at a time when there could be a glut and it is too late to change what you targeted in the market.

It is not as simple as buy it,spend 150 million renovating it,and they will come.

So all one can really do is speculation until the market forces,makes it feasible.

Like I already posted,the added 20 million in social programs will be passed on down to the renters,increasing the cost of the rental in fixed costs and lowering the ability to compete with the suburbs.

That whole social program is not taxing the developers,because they just pass it on to the end user in increased rents,so it ends up increasing rents while forcing lower income out and removes the property owners ability to be flexible or competitive with the rents.

It actually encourages speculation.

In the last 1/4 in Detroit the healthiest market was actually industrial real estate at 2.1 % occupancy versus 14% office space.

Which was really good news for the surrounding neighborhoods and setting up to put back online some of the long vacant industrial buildings.

But the numbers are not out yet pandemic affect,cost of materials has also skyrocketed,which would actually make industrial buildings more feasible to bring online because you are just dealing with big open spaces.

Which is kinda good news for places like Packard and Fisher body but not so much as downtown office build renovations.

This gives a better picture

https://www.commercialcafe.com/offic...us/mi/detroit/