Somerset Collection owner buys former Kmart headquarters

[sg9018]

Somerset Collection owner buys former Kmart headquarters

Story here,

http://www.freep.com/apps/pbcs.dll/a...te=fullarticle

The owner of Somerset Collection in Troy has purchased the former Kmart headquarters complex for an undisclosed price.
The deal closed Dec. 29 after a 10-day negotiation, said Nate Forbes, managing partner for the Southfield-based Forbes Co., the owner of Somerset. The 40-acre Kmart property will have a retail component but planning is in the early stages, Forbes said.


It will be owned by Forbes/Frankel Troy Ventures, he said.

Grand Sakwa Properties of Farmington Hills had planned to buy the property for approximately $15 million, according to reports last fall.

Forbes had been interested in the Kmart property – which is just north of Somerset Collection at Big Beaver and Coolidge roads – for several years.

The deal with Grand Sakwa apparently fell through. Grand Sakwa officials did not return phone calls seeking comment.

Forbes said he got a call from the broker at CB Richard Ellis last month asking if he was still interested in the parcel.

“It all happened so quickly,� Forbes said. “Obviously, we will have a big stake in the city of Troy and that corner. We will undertake a study of the corridor. That process will begin shortly.�

The Kmart site is in the heart of Troy’s business district and is considered one of the most desirable commercial properties in Michigan. Its proximity to Somerset Collection, an upscale mall with 180 stores including Louis Vuitton, Tiffany and Saks Fifth Avenue, could draw similar retailers to a new development.

Forbes said he wasn’t ready to discuss elements of the proposed development.

“We’ll see what the market bears, but retail will be part of it,� he said.

Jim Bieri, president and CEO of Bieri in Detroit, said the sale to Forbes opens the door for retailers, restaurants and entertainment venues who need larger space than they can get in an enclosed mall.

“I’ve said for years that the highest and best use owners of that property was Forbes. They can make it into an added experience for the city of Troy and their customers,� Bieri said.

Troy City Attorney Lori Grigg Bluhm said the city hasn’t yet been officially notified of the purchase, but said officials are “looking forward to working with any developers of that property.�

Bluhm said the property is a planned unit development, which is a zoning tool that allows more flexibility for developers. The zoning, she said, allows for greater density closer to Big Beaver and requires some residential development.

Officials at Grand Sakwa, Bluhm said, told the city they wanted to create “a complimentary development to Somerset.�

If Forbes decides to develop the property, the existing structures on the site would have to be torn down — something Grand Sakwa had planned to do, city officials have said.

If not, she said, the property would still have to be maintained. But city officials are hopeful the property won’t sit vacant.
“It’s a great property. It’s in a great location,� Bluhm said. “There’s a lot of great things about that site and we are optimistic that there will be something there."

[ghettopalmetto]

If Nate Forbes were smart, he'd demolish the Kmart Headquarters and construct a temporary park, so the customers at his mall don't have to look at such *blight* across the street.

We all know that's the only way to be successful.

[RickBeall]

Make it a parking lot. Put a stadium there ... if you need advice, ask the the leaders in Detroit because they would probably have a lot of great ideas, like for instance putting K-Mart World headquarters there.

[MichMatters]

ghettopalmetto, the article says that the developer is planning to tear down the property.

Really, this is about as good a developer as one can hope to find in these trying times. I honestly don't see how anyone could make anything acceptable and fitting happen on that site for the forseeable future, but that they are looking to tie this into Somerset in some way sounds about as likely a plan as one could hope for.

[fastcarsandfreedom]

It's good news for the City of Troy going forward--as it appears that the property will some day be a revenue generator again. What happens and when is anyone's guess--but this is a serious developer and one which takes it's reputation seriously. Somerset's continuing success in light of the economic climate is a testament to that. I would think they'd be looking at something mixed-use with a strong retail component--maybe a lifestyle-type set-up with retail, dining and entertainment.

[R8RBOB]

Some bean-counter in Pontiac is pulling his hair out this morning. The former K-Mart Headquarters which sit on 40 acres of land sold for 17.5 million yet the Pontiac Silverdome which included 127 acres of land was sold for $583,000. Now I know the Silverdome sale was done via auction but someone feelings got to be hurting knowing that an empty building in Troy with less acres can go for nearly 17 million dollars more.

[ghettopalmetto]

It's good news for the City of Troy going forward--as it appears that the property will some day be a revenue generator again. What happens and when is anyone's guess--but this is a serious developer and one which takes it's reputation seriously. Somerset's continuing success in light of the economic climate is a testament to that. I would think they'd be looking at something mixed-use with a strong retail component--maybe a lifestyle-type set-up with retail, dining and entertainment.

In other words, there's a high likelihood that the Kmart site will be redeveloped into something resembling a pedstrian-friendly urban form...

...while the City of Detroit continues to build more parking lots and strip malls.

[Danny]

We might look at the Somerset Mall 3. If this new supermall was built, it would be the Michigan's first largest mall and possibly the 3rd largest mall in the world.

[Hermod]

Some bean-counter in Pontiac is pulling his hair out this morning. The former K-Mart Headquarters which sit on 40 acres of land sold for 17.5 million yet the Pontiac Silverdome which included 127 acres of land was sold for $583,000. Now I know the Silverdome sale was done via auction but someone feelings got to be hurting knowing that an empty building in Troy with less acres can go for nearly 17 million dollars more.

1. Location, location, location. Bloomfield Hills will go to the Somerset area. They do not necessarily want to go to Pontiac.

2. The K-Mart building is less of a White Elephant than the Silver Dome. If you have to let it sit for a while till the economy turns around, the K-Mart building needs one hell of a lot less upkeep.

[bailey]

In other words, there's a high likelihood that the Kmart site will be redeveloped into something resembling a pedstrian-friendly urban form...

...while the City of Detroit continues to build more parking lots and strip malls.

In other words, there is someone out there with $15mill +costs willing to invest that in Troy ....while there is no one willing to in the City of Detroit without the heavy lifting being done by the city and state government.

[R8RBOB]

We might look at the Somerset Mall 3. If this new supermall was built, it would be the Michigan's first largest mall and possibly the 3rd largest mall in the world.

Great, another mall. Like isn't Oakland County saturated with malls? Get a piece of property, build a mall with goods made in China.

[hybridy]

Answer-------Mixed-use TEXAS DOUGHNUT-who's with me?

[bibs]

Property tax revenue is falling in Troy so I'm sure city officials are pleased and eager to tax the property. Will they propose building a mixed use project like the last developer or build another mall? Office space is plentiful in Troy right now so perhaps a retail focus in the beginning with office space being built several years later.

[Detroitnerd]

Troy has a glut of office space. If I remember right, as far as cities in Michigan, it has the third most office space, behind Detroit and Southfield, something like 15 million square feet of commercial space, after booms in the 1970s, 1980s and 1990s. Basically, the way the freeway corkscrews through there, they knew in the 1970s they'd get all the development they wanted.

Unfortunately, some bills are coming due. In a lot of ways, tax revenues were predicated on growth, and by the early 2000s, Troy's commercially zoned land was mostly built out. Also, Troy never really had a downtown, which is a liability these days. And though they didn't accept every blueprint developers proffered, there was really no overarching plan. Plus, it was all really designed to be car-centric. They're grappling with those things now. I guess we'll see how well they do as sites like this become available for redevelopment.

[Hermod]

Troy has a glut of office space. If I remember right, as far as cities in Michigan, it has the third most office space, behind Detroit and Southfield, something like 15 million square feet of commercial space, after booms in the 1970s, 1980s and 1990s. Basically, the way the freeway corkscrews through there, they knew in the 1970s they'd get all the development they wanted.

Unfortunately, some bills are coming due. In a lot of ways, tax revenues were predicated on growth, and by the early 2000s, Troy's commercially zoned land was mostly built out. Also, Troy never really had a downtown, which is a liability these days. And though they didn't accept every blueprint developers proffered, there was really no overarching plan. Plus, it was all really designed to be car-centric. They're grappling with those things now. I guess we'll see how well they do as sites like this become available for redevelopment.

I worked for the Engineering Department for the City of Troy back in the summer of 1959 when they had just incorporated the township as a city. The impetus for incorporation was that adjoining cities were cherry-picking high tax value land for annexation from the township. As a city, Troy was immune from annexation of its land.

At the time I worked for the city, city hall was located in what is now the historical museum up on Livernois and Wattles [[17 Mile). DPW had a quonset hut over on Crooks. They were just beginning to put in subdivisions and we did a lot of surveying in them for city sewers and city water as the subs had been built with wells and septic tanks. I was on the survey crew. At the time, I-75 was just on paper and every time we would show up to survey for sewer or water lines and set stakes in someone's front yard, they would call the city in a panic that we were going to run I-75 right through their new house.

Troy did have a "downtown" at that time. It was a little strip of stores on Rochester Road just north of Big Beaver [[16 mile) which had been the unincorporated village of Big Beaver.

Commercially, Troy was built beginning with strip shopping centers at the major road intersections.

[Detroitnerd]

Interesting insights, Hermod. Must have been quite a sight to see panicky homeowners.

Yeah, technically, Troy has had one or two spots over the last century or two that were sort of like downtowns, but they never took the way Birmingham did. [[Of course, Birmingham had a river running through it, giving its early mills power.) And then, of course, with the multimillion-dollar freeways being laid out with government money, they never had a chance after that.

I believe Troy incorporated in 1955, after some other communities annexed some of its industrial-zoned land in the south. [[I think it was Birmingham and Clawson.) What was the motto? "The City of Tomorrow ... Today!" And man did they build it all in the grand "Futurama" style. It's funny to look back and see how our idea of the future has changed.

[iheartthed]

Troy has a glut of office space. If I remember right, as far as cities in Michigan, it has the third most office space, behind Detroit and Southfield, something like 15 million square feet of commercial space, after booms in the 1970s, 1980s and 1990s. Basically, the way the freeway corkscrews through there, they knew in the 1970s they'd get all the development they wanted.

Unfortunately, some bills are coming due. In a lot of ways, tax revenues were predicated on growth, and by the early 2000s, Troy's commercially zoned land was mostly built out. Also, Troy never really had a downtown, which is a liability these days. And though they didn't accept every blueprint developers proffered, there was really no overarching plan. Plus, it was all really designed to be car-centric. They're grappling with those things now. I guess we'll see how well they do as sites like this become available for redevelopment.

I believe Troy also has the highest office vacancy rates in Michigan.

[Detroitnerd]

I believe Troy also has the highest office vacancy rates in Michigan.

Are you sure? If so, that'd surprise me. Anybody have a link to a handy site that has statistics?

[iheartthed]

Are you sure? If so, that'd surprise me. Anybody have a link to a handy site that has statistics?

Yeah, surprised me too. Here is a link to a Grubb-Ellis report from 2Q09 about Metro Detroit vacancy rates:

http://www.grubb-ellis.com/PDF/metro...fice2Q2009.pdf

This shows that Troy is a close second to the CBD in terms of vacancy rates. But I think I remember a later report saying that Troy had surpassed the CBD in terms of vacancies.

[bailey]

Yeah, surprised me too. Here is a link to a Grubb-Ellis report from 2Q09 about Metro Detroit vacancy rates:

http://www.grubb-ellis.com/PDF/metro...fice2Q2009.pdf

This shows that Troy is a close second to the CBD in terms of vacancy rates. But I think I remember a later report saying that Troy had surpassed the CBD in terms of vacancies.

Charts are fun. eh boy...look at southfield.

Another scary issue is that the VACANT space in the suburbs is larger than the TOTAL office space in the CBD. lovely.

[Detroitnerd]

Yeah, if you're comparing CBD to Troy, I could see it being a more even match.

[casscorridor]

In other words, there is someone out there with $15mill +costs willing to invest that in Troy ....while there is no one willing to in the City of Detroit without the heavy lifting being done by the city and state government.

I don't think that is true. Yes, there has been an incredible amount of state and local government assistance, as well as foundations. But there still has been private development w/o aid.

Plus, remember, Troy like all the suburbs, was only possible through massive federal and state spending... the G.I. Bill, freeways, HUD... they allowed for the suburbs. Even City of Detroit through building water and sewage lines. Without that, we would have seen very little private investment.

Obviously private investment follows public investment, so its good to hear the trend of public money prioritizing suburbs over city is being reversed!

Watch, if not already, within the next 5 years the top 3 zip codes for development will be: 48201, 48226, 48020 [[Midtown, Downtown, New Center).

Maybe troy will build a lifestyle center, but dont expect it to be anything more than a glorified strip mall.

[davewindsor]

Yeah, surprised me too. Here is a link to a Grubb-Ellis report from 2Q09 about Metro Detroit vacancy rates:

http://www.grubb-ellis.com/PDF/metro...fice2Q2009.pdf

This shows that Troy is a close second to the CBD in terms of vacancy rates. But I think I remember a later report saying that Troy had surpassed the CBD in terms of vacancies.

This survey sounds hard to believe as the last time I drove to Troy it didn't look like it has a 29.5% office vacancy compared to CBD's 31.4%; whereas, driving around CBD, I could believe those vacancy rates. I look further down in the report and it says, "Inventory: Office inventory includes all multi-tenant and
single tenant buildings at least 20,000 square feet. Owner-occupied,
government and medical buildings are not included.."

Owner-occupied, government and medical buildings can account for a marked difference between Troy's and CBD's vacancy rate. The RenCentre is owner-occupied. Compuware is owner-occupied. The Guardian is a gov't building. I don't think Troy's office market is anywhere near as bad as CBD.

[iheartthed]

This survey sounds hard to believe as the last time I drove to Troy it didn't look like it has a 29.5% office vacancy compared to CBD's 31.4%; whereas, driving around CBD, I could believe those vacancy rates. I look further down in the report and it says, "Inventory: Office inventory includes all multi-tenant and
single tenant buildings at least 20,000 square feet. Owner-occupied,
government and medical buildings are not included.."

Owner-occupied, government and medical buildings can account for a marked difference between Troy's and CBD's vacancy rate. The RenCentre is owner-occupied. Compuware is owner-occupied. The Guardian is a gov't building. I don't think Troy's office market is anywhere near as bad as CBD.

I think you provided an extremely faulty piece of anecdotal evidence to refute the statistics. I don't know how one sees vacancy rates of office buildings from driving around in his car. But okay.

And keep in mind that abandoned buildings are not included in the calculation of vacancy rates, because abandoned buildings typically don't have immediately usable office space.

[sirrealone]

This survey sounds hard to believe as the last time I drove to Troy it didn't look like it has a 29.5% office vacancy compared to CBD's 31.4%; whereas, driving around CBD, I could believe those vacancy rates. I don't think Troy's office market is anywhere near as bad as CBD.

I am just speculating I think a lot of the vacant space may be more up at the I-75 and Crooks area, whereas the Big Beaver corridor seems to be holding it together more well. If you drive through some of those bigger office parks near the freeways, there are buildings with parking lots empty or partially full, and a couple of buildings that look like they're probably in foreclosure.

EDS had many, many hundreds of thousands of square feet leased in the city of Troy. Some along Big Beaver, some at Maple & John R, and at least four entire buildings in the Tower / Enterprise Drive area [[at I-75 and Crooks). I know that over the years, they've greatly reduced their presence starting when they moved a lot of people down to the RenCen, continuing through their multiple downsizings, and now continuing with the acquisition of EDS by HP.