Hudson's site and New Downtown Developments Summary

[Lowell]

Today's Free Press has an excellent recap of downtown developments, the Hudson site in particular, in pandemic Detroit and in Chicago for comparison by JC Reindl. While this might belong in the Hudson site thread, and I'll likely move it there later, it is a summary that belongs outside of it also as it deals with the broader subject of the relevance of office space post-pandemic. Some snips...

The day-to-day population of downtown workers is about 20% of what it was before the pandemic...

However, famous hotelier Ian Schrager, cofounder of the legendary New York nightclub Studio 54, mentioned Detroit and referred to Gilbert and the Hudson project in several interviews this year about his ultra-luxury EDITION Hotels, which is a joint venture with Marriott. EDITION representative did not respond to a message seeking comment about whether the brand has any Detroit plans.

Huntington Tower coming along
Back in downtown Detroit, construction of the 20-story Huntington Tower office building, 2047 Woodward, began in September 2019 and is now about 60% finished.

...convention business has collapsed and the reported average occupancy rate at downtown hotels was 36% in September, down from about 70% for the full year before COVID-19.

The entire $900 million-plus, 1.1 millionsquare- foot Hudson site project was originally given a summer 2022 completion estimate...The last announced date, according to Crain's Detroit, was late 2023 for the 11-story midrise building to contain nearly 400,000 square feet of office space in addition to exhibition space, and 2024 for the taller tower with 250 upscale apartments.

The vacancy rate for available office space in the CBDwas 14.6% in the third quarter, according to Newmark.

During the pandemic, Bedrock completed a 300,000-square-foot addition to the back of the One Campus Martius building, formerly known as the Compuware Building

Meanwhile, another pre-pandemic Bedrock project, the Monroe Blocks off Campus Martius, appears to be on indefinite hold.

The development is expected to “create or support” 1,007 new, full-time office jobs in Detroit and 626 new full-time retail, restaurant and event space jobs. And the majority of those jobs are anticipated to be net new jobs to Detroit, not simply relocated jobs from elsewhere in the metro area

[313WX]

The Chicago comparison is going to really trigger some folks...

[401don]

Really don't know how more hotels, not just in Detroit but everywhere, haven't gone bankrupt. There were several articles about how the Hilton Garden Inn downtown was struggling the past several years. They always say how tight the margins are for these properties. I guess the low interest rates have allowed a lot of mortgage refinancing. I wonder how many are keeping their taxes up?

[stasu1213]

I think that the shorter structure on the Hudson block could had been sufficient for that site without the tall tower. It still could hold retail on the first floor, second floor and lower level and office space on the third found fifth floor. It could had been open late 2022 with retail ready to move in.

[Gistok]

^ Too little too late to complain about Detroit having another tall tower. It's one thing to debate the height of the tower... been doing that for 2 years. But to complain that there is a tower at all goes against all that we've strived for on DYES for 20 years....

We should be thankful that the new complex will add to the streetwall of all the existing buildings along lower Woodward, and yet also allows for a much needed "pass thru" between Woodward and Farmer. Just be thankful we didn't end up with this middling group of smaller buildings, all with carport roofs...

[401don]

I think that the shorter structure on the Hudson block could had been sufficient for that site without the tall tower. It still could hold retail on the first floor, second floor and lower level and office space on the third found fifth floor. It could had been open late 2022 with retail ready to move in.

The narrow tower, being mostly hotel and residential, should do fine provided it's not overpriced for this market. I'm more concerned about the square footage of the block, which appears to have a lot of event and retail space, which I don't see a demand for.

[Gistok]

^ don401... the amount of retail space has been greatly diminished from the original design. I totally agree with you about the "event" space. Just what kind of events do they see happening in that significant percentage of the block? Detroit already has a large amount of event space spread between TCF Center and all the historic theatres, which have a lot of non-concert events taking place there, such as weddings and business meetings.

[ShadowSoarer]

Add the amount of events space from the Ren Cen as well.

In terms of retail I can only imagine it would have to be a national retailer that has been fairly successful throughout the pandemic [[can't imagine that it would be cheap to lease). Would imagine something like a Trader Joe's or Kroger [[like the one in Downtown Cincinnati). Can't imagine Target, Whole Foods, or Meijer opening up another location so close.

Would like to think of an Apple store since there were rumors in the early days of the Hudson Site planning and that there is an Apple Academy in Detroit. Would be kind of weird to have an Apple Academy in the city limits, but no Apple stores. Would be like if Ford had their campus in the city but not a single Ford dealership.

[JonWylie]

The narrow tower, being mostly hotel and residential, should do fine provided it's not overpriced for this market. I'm more concerned about the square footage of the block, which appears to have a lot of event and retail space, which I don't see a demand for.

I'm sure Dan Gilbert will use this space for as many FOC functions as possible, which will practically justify its construction by itself. They've used various venues around downtown for work events, parties, etc. and I'm sure this space will be on the top of their list once it's done.

[Satiricalivory]

The narrow tower, being mostly hotel and residential, should do fine provided it's not overpriced for this market. I'm more concerned about the square footage of the block, which appears to have a lot of event and retail space, which I don't see a demand for.

They obviously intend for the event space to be used by Rocket, they have lots of company events. Much of the block will probably be occupied by Rocket too.

[Satiricalivory]

I'm sure Dan Gilbert will use this space for as many FOC functions as possible, which will practically justify its construction by itself. They've used various venues around downtown for work events, parties, etc. and I'm sure this space will be on the top of their list once it's done.

Yeah I don't know why people are acting like this is a totally speculative project. As if there isn't a giant rapidly growing corporation attached to this whole thing.

Also, Edition hotels? It looks like we have our hotel operator. Why else would they be talking about the Hudson tower?

[angry_fred]

Yeah I don't know why people are acting like this is a totally speculative project. As if there isn't a giant rapidly growing corporation attached to this whole thing.

Also, Edition hotels? It looks like we have our hotel operator. Why else would they be talking about the Hudson tower?

Because they are/were likely in talks, but not a done deal. Could also just be a friend of Dan who was talking up his work in the city.

Given the pace of the tower core rising lately, I'd imagine they're pretty confident, but at the end of the day we don't really know until we know.

That said, last year they said they would announce a hotel operator "by the end of 2021". Someone ought to send them an email and ask if they're still on track to name an operator by that date.

[royce]

I'm sure Dan Gilbert will use this space for as many FOC functions as possible, which will practically justify its construction by itself. They've used various venues around downtown for work events, parties, etc. and I'm sure this space will be on the top of their list once it's done.

What is FOC?

[JonWylie]

What is FOC?

Family of Companies ie. Rocket Mortgage, Bedrock, Rock Central, Rocket Auto, I think technically StockX, Fathead, Xenith are all part of it too. Pretty much anything that Gilbert owns.

[Atticus]

When the Hudson site finally opens, it won’t take long until almost all of the newly constructed office space is fully utilized. The way the tax structure was set up, Bedrock gets more $ based on how much income is being generated by the occupants of that office space. Thus it is in Bedrock’s interest to make sure that space is being used. It may involve relocating office workers from other facilities to achieve it, but that space will get filled.

The event space will get used as well. Unlike office space, which has entered a paradigm shift, and will likely see a drop in demand as people want to work from home… the demand for event space will return. At some point in the not too distant future, society will learn to live with the virus. Young children will be able to get vaccinated, better treatments will be available, hospitals won’t be overcrowded, etc. And once that happens, the majority of the population will not object to attending public gatherings. And demand will return, and the space will be utilized.

The other paradigm shift I haven’t seen much discussion on is that of the residential apartment/condo layout. I think going forward, there is going to be a much higher demand for apartment space with multiple bedrooms [[allowing a dedicated office room), as more people work from home. I know several coworkers who have swapped units for that reason, as they needed a dedicated office room and a studio apartment doesn’t cut it.

My point is, there is a certain portion of the population that loves urban living, and will choose to live in Detroit [[and other cities)… but just because they live downtown doesn’t mean they don’t want to work from home also. And if they have a roommate or pet, they will likely need that separate quiet room they can use for work. And yes, everyone’s situation is different, but working from home and living downtown are not mutually exclusive.

[401don]

Crain's is reporting Dan Gilbert has bought Cadillac Tower. He must have driven by and wondered how he missed it.

[K-slice]

Crain's is reporting Dan Gilbert has bought Cadillac Tower. He must have driven by and wondered how he missed it.

About time someone did something with it...

[Gistok]

Crain's is reporting Dan Gilbert has bought Cadillac Tower. He must have driven by and wondered how he missed it.

It is the last parcel in the 2 Monroe Blocks that Gilbert doesn't own. Maybe the previous owner offered to sell.... or maybe he offered to buy it. Now it can be incorporated into the Monroe development, rather than be excluded. I view this as a positive.

[Danny]

About time someone did something with it...

Gilberttown grows as he brought the Cadillac Tower. What's next? Kick out those who don't have more money. Look what happen to the Griswold Building.

[ShadowSoarer]

Kind of what wonder what his plan is instead of allocating resources to start building the smaller phase of the Monroe Blocks or the Brewster Douglass Development.

Also wonder when he plans to break ground on the Brewster Douglass Development. Maybe once the City Modern Development finishes? Don't recall when City Modern broke ground, maybe some time in 2016 so coming up on 5/6 years?

Well the World Economic Forum event in Detroit is coming up on Dec. 6 - 8th. Hopefully we'll get some announcements on at least the Gratiot site.

[Gistok]

^With the retirement of a lot of Baby Boomers, the skilled trade situation has gotten worse, not better, since the onset of the pandemic.

[401don]

It is the last parcel in the 2 Monroe Blocks that Gilbert doesn't own. Maybe the previous owner offered to sell.... or maybe he offered to buy it. Now it can be incorporated into the Monroe development, rather than be excluded. I view this as a positive.

I was just kidding of course. The News article says it's been on the market since 2019, so obviously Gilbert has had his eye on it and been negotiating since then.