Detroit News: Detroit land deals spark speculation in lower midtown

[davewindsor]

Did anyone else catch this article in this morning's Detroit News about 18 parcels bought up in lower midtown since Sept. 2008 and paying top prices for it? It says the biggest deal took place last month where an investment firm in Palo Alto, Calif., supplied a $2 million mortgage on the blighted former Eddystone Hotel and two adjacent empty parcels in a neighborhood. Is there money and market demand to build a Red Wings arena or anything else here? Thoughts?

From The Detroit News: http://www.detnews.com/article/20100...#ixzz0ie0O290e
Detroit land deals spark speculation

Louis Aguilar / The Detroit News

A series of high-priced land acquisitions in a forlorn stretch of Detroit's lower Midtown area is fueling speculation a major development project could be in the works.
Eighteen parcels, mostly blighted and empty, have been quietly bought or optioned since September 2008 in the area just north of the Fox Theatre and close to Woodward Avenue. These properties are near four empty blocks of Woodward Avenue owned by the city. The area of activity is bordered by Woodward and Cass avenues from east to west and Temple and Sibley streets from north to south.
In at least two cases, the sellers have been asked to sign confidentiality agreements not to divulge the identity of the buyers.



]The secrecy surrounding the deals has sparked speculation among commercial real estate sources about a major commercial development, such as a hotel or a new casino site.

But the most frequent speculation centers on the area being a prospective site for a sports arena that could become the new home for the Detroit Red Wings and possibly the Detroit Pistons, if that team can be lured from Auburn Hills.
Plans for light-rail transit along Woodward from Hart Plaza to Eight Mile also could be fueling the land speculation.
The biggest deal took place last month: An investment firm in Palo Alto, Calif., supplied a $2 million mortgage on the blighted former Eddystone Hotel and two adjacent empty parcels in a neighborhood where the annual median household income is $8,317. Most of the deals, though, don't list the transaction price, according to public records, but at least two have been in the $650,000 range.
"Who pays $650,000 for anything in the Cass Corridor? You don't unless there is a bigger plan by someone who wants to be next to the city's entertainment district," said Jeffrey Bell, first vice president of the Southfield office of CB Richard Ellis, a global real estate advisory firm. "I'm thinking either a hotel, casino or new sports stadium."
A new hotel seems unlikely given the recent opening of casino hotels and others downtown, including the Westin Book Cadillac, and the weak downtown hotel market.
Plans for a casino are a long shot. The city's casinos lost revenue last year. Although a state ballot initiative effort led by Benton Harbor's mayor would try to amend the state constitution and allow the opening of up to eight casinos, including one in Detroit, backers of the initiative still must collect enough signatures to get it placed on the November ballot and approved by voters.
And in June, Ilitch Holdings of Detroit must tell city officials whether it will keep the Red Wings in the city-owned Joe Louis Arena. There has been speculation for years about whether the team will build a new arena in the city.
Ilitch Holdings e-mailed a one-sentence reply for this story: "Whether we are involved or not in these particular business opportunities -- or any others, for that matter -- is not something that we would comment on publicly."
Nearby stop planned for rail

There also are private plans to build a light-rail system along the Woodward Avenue corridor. The route for such a transit system has a stop near the area of land acquisitions.
The city-owned empty Woodward property is a few blocks away from the Fox Theatre, headquarters of Ilitch Holdings and Comerica Park, home of Mike Ilitch's Detroit Tigers. The Ilitch-operated Masonic Temple is a block away from the buildings bought in the past year. And MotorCity Casino, owned by Marian Ilitch and other partners, is within several city blocks of the Masonic and the Fox.
Detroit officials declined comment on what plans the city may have for the big swath of land it controls. Much of the city's land is controlled by the Detroit Economic Growth Corp., the quasi-public agency that handles development, which declined comment. The city also owns many other parcels near the area of private deal-making.
Prices seem high

"There is nothing in the market now that would suggest why anyone would pay those kind of prices," said Steven Chaben, managing director of the Detroit office of Marcus & Millichap, a national real estate investment service. "You're describing a power play; someone coordinating an overall plan for the area and using different agents to get the properties."
The $2 million mortgage for the former Eddystone Hotel and two adjacent properties was granted in February by Better Planet Investments LLC.
The properties are owned by Harper Woods-based Eddystone Development LLC, and state records show one person is identified with the firm, Raif Harik. The only person connected to Better Planet Investments is George Harik, who once lived at the same Grosse Pointe address as Raif Harik, public records show. Neither Raif nor George Harik returned telephone calls. Raif Harik lives in Grosse Pointe Shores and Georges lives in Palo Alto, Calif., according to public records.
Temple Street, which appears tough and forgotten, is the main source of the buying. Two houses, at 52 Temple and 56 Temple, are empty and boarded up.
Last May, the properties sold for $670,000 to Victorian Rentals LLC. State records show the only person identified with Victorian Rentals is a real estate paralegal who works in the Grand Rapids office of Miller, Canfield. The paralegal, David Jarvis, did not return phone calls.
The next biggest deal is a $650,000 purchase for an empty building at 131 Temple. Local developer Joel Landy sold it in January 2009.
"I've signed a confidentiality agreement that I will honor by not saying another word," Landy said. The buyer was TSD Solutions LLC, an East Lansing firm controlled by CSC-Lawyers Incorporated Services Co. It's unclear who currently runs TSD Solutions or CSC-Lawyers.
Other deals ongoing

There's at least one other potential deal in the works: the Temple Bar. Owner George Boukas said in the past few weeks he has rejected an offer from a representative who will not say whom he represents.
The Michigan Veterans Foundation has optioned four parcels in the area, but foundation Executive Director Tyrone Chatman says they have no immediate plans for the land, and no intention of moving.
Another property owner, Dennis Kefallinos, who owns the former American Hotel, said he hasn't had any offers.
"If someone wants to make me an offer, I'd be more than happy to listen," Kefallinos said. But the Detroit developer said he is wary of guessing what the Ilitches might do for a future arena.
"Who knows if they have it here? I think they have, especially with that Woodward space," he said. "But then again, [[what) someone told me last week is they want to put the new arena near the old Cass Tech" High School, Kefallinos said.
In fact, a few properties have been bought in the past year in the immediate vicinity of the former public high school. And there is not much public information about the sales.
laguilar@detnews.com [[313) 222-2760

[dtowncitylover]

This is very interesting indeed. Eddystone and Park Ave Hotel are on the National Register of Historical Places. Does this matter in terms of tearing them down? I don't know how that works.

[mbshan]

I am really beginning to believe that these properties are being bought up by the illitches. Honestly, I live in the neighborhood and I would rather they build across from Motorcity Casino. But, I guess it could be worse for me. I could actually live in the Crosswinds Condos. That would really suck.

[emu steve]

Could we see:

1). New hockey Arena somewhere a few blocks north of the Fisher? [[this was a real topic of conversation the last several years - it was a favorite location of mine). I guess the Fox site is now all but dead.

2). Light rail stop hopefully coming.

3). Parking garages? Parking garages aren't beautiful but they'll look better then what is currently in that mid-town neighborhood.

Chance to really improve what I think is a critical area just outside of the CBD.

I've long thought that Woodward from the Fisher to WSU is an absolutely critical area in need of development/redevelopment.

Hopefully development moving north from the Fisher and south from WSU.

[iheartthed]

This is very interesting indeed. Eddystone and Park Ave Hotel are on the National Register of Historical Places. Does this matter in terms of tearing them down? I don't know how that works.

I may be wrong, but I doubt they are tearing it down if they got a $2M mortgage on it...

[emu steve]

I guess it means that Ilitches wants to control the redevelopment of those two buildings.

Makes sense to me.

If he is going to control land and buildings in the area, he might as well control all of them.

[artds]

I may be wrong, but I doubt they are tearing it down if they got a $2M mortgage on it...

Not necessarily. The mortgagee could have agreed to supply a mortgage that was secured by the land only and not by any structure on the land.

More likely, however, is that the buyer's plan is to have the mortgage paid off prior to any demo work being performed as soon as all the financing [[public, private, whatever) is in place.

[LeannaM]

This is very interesting indeed. Eddystone and Park Ave Hotel are on the National Register of Historical Places. Does this matter in terms of tearing them down? I don't know how that works.

I know in St. Louis it means that the Preservation Board has to approve the demolition [[unless it is an emergency demolition). Detroit may be different, though. Being on the Register of Historic Places also makes it eligible for certain state and federal tax credits.

Some more here: http://www.nps.gov/nr/faq.htm#benefits

You can tear down a building that is on the Register, the Register just provides more incentive to rehab it [[tax credits, for example). And, depending on the city and area, I think, approval to demolish Historic Register buildings may be harder to get.

Here's the Wayne County sites on the Historic Register, in case you are curious.
http://www.nationalregisterofhistori...yne/state.html

[Hypestyles]

I hope they build something significant, which will be a boon to the city...

[Waymooreland]

But, I guess it could be worse for me. I could actually live in the Crosswinds Condos. That would really suck.

As a resident of the Woodward Place at Brush Park development, I'm actually taken aback by this statement. First of all, I am very happy with where I live for a multitude of reasons, and I think that this potential development on the western side of Woodward, plus the construction of the light rail line will only make me happier with my place of residence.

Secondly, I don't think it's at all appropriate for posters to start bashing certain developments, as it is likely to offend fellow posters. I thought we were all on the same team here, no? When people from other cities bash Detroit, we get all up in arms about it, so why would it be acceptable to turn around and start saying that living in certain developments within the city "would really suck"? Hypothetically, even if I very strongly felt that living at Harbortown or the Lofts at Merchant's Row or the Lafayette Park Townhomes or whatever was not my cup of tea, I think that saying it "would suck" to live there would really be disrespectful and an act of poor judgment.

Care to explain yourself, mbshan?

[buildingsofdetroit]

Hockey arena.

[kraig]

I may be wrong, but I doubt they are tearing it down if they got a $2M mortgage on it...

Look for it to be part of some kind of complicated, tricky finance math that could exaggerate the amount of matching funds needed.

Also, don't be surprised if all of this is a fakeout. Originally, what's now known as Comerica Park was supposed to go on Grand River. While everyone was trying to buy land there, the Illitches and Dennis Archer Jr. were buying land over by Brush Park where Comerica Park is located.

[buildingsofdetroit]

I know in St. Louis it means that the Preservation Board has to approve the demolition [[unless it is an emergency demolition). Detroit may be different, though. Being on the Register of Historic Places also makes it eligible for certain state and federal tax credits.

Some more here: http://www.nps.gov/nr/faq.htm#benefits

You can tear down a building that is on the Register, the Register just provides more incentive to rehab it [[tax credits, for example). And, depending on the city and area, I think, approval to demolish Historic Register buildings may be harder to get.

Here's the Wayne County sites on the Historic Register, in case you are curious.
http://www.nationalregisterofhistori...yne/state.html

The only other protection the National Register provides is that you cannot use federal money to tear it down. This is why Cockrel's plan to raze Michigan Central Station with stimulus money was doomed before he even proposed it.
You CAN go before the NPS and get special approval for using federal money to raze a building on the register, but it's an uphill battle and since MCS wasn't a threat to anyone or anything ...

[mbshan]

I apologize if I insulted you. My statement had nothing to do with the actual ugly ass condos. All I was saying is if I lived there I would hate for a stadium go up across the street. As it is I already live in the area and do not want a new stadium there. Also, I guess that given a choice I would rather have a stadium then a casino. At least the stadium would close. And, traffice would dissipate somewhat.

[English]

As a resident of the Woodward Place at Brush Park development, I'm actually taken aback by this statement. First of all, I am very happy with where I live for a multitude of reasons, and I think that this potential development on the western side of Woodward, plus the construction of the light rail line will only make me happier with my place of residence.

Secondly, I don't think it's at all appropriate for posters to start bashing certain developments, as it is likely to offend fellow posters. I thought we were all on the same team here, no? When people from other cities bash Detroit, we get all up in arms about it, so why would it be acceptable to turn around and start saying that living in certain developments within the city "would really suck"? Hypothetically, even if I very strongly felt that living at Harbortown or the Lofts at Merchant's Row or the Lafayette Park Townhomes or whatever was not my cup of tea, I think that saying it "would suck" to live there would really be disrespectful and an act of poor judgment.

Care to explain yourself, mbshan?

Kudos to you! I'm hoping that the Woodward Place neighborhood thrives and expands as a result of the light rail and any new developments. I don't understand the crabs in a barrel mentality that exists in the D... the "where I live is purer than thou" mindset. We're all in this together.

As for the Woodward corridor between Mack and I-75, there were many plans to develop it in the early 00s, back when I was teaching at Cass Tech. If the light rail project is a success, I think there will be far more residential and retail demand in the neighborhood.

[Gistok]

I apologize if I insulted you. My statement had nothing to do with the actual ugly ass condos. All I was saying is if I lived there I would hate for a stadium go up across the street. As it is I already live in the area and do not want a new stadium there. Also, I guess that given a choice I would rather have a stadium then a casino. At least the stadium would close. And, traffice would dissipate somewhat.

Wow... that has to have been the worst appology I've ever seen in my 11 years on this forum... "ugly ass indeed"... apparently you haven't seen some of the rather bland [[by comparison) infill housing northwest of the DIA. The Crosswinds buildings are nice by comparison.

As for the comment about you hating to see a stadium going up across the street..... what do you call that big stadium south across the street [[Fisher Fwy.) from Crosswinds? That's Comerica Park.... What's the difference?

Now getting back to the subject... I think that the Ilitch's are indeed buying all that land. Since they cannot use Eminent Domain for a new hockey barn, they'll likely pit the west Foxtown holdouts against the Midtown area.

I still believe that they would prefer west Foxtown, but with the M1 transit system... maybe things have changed. The major holdouts in the west Foxtown area are the Frida Alibi heirs that own 5 parking lot parcels in the middle of the west Foxtown wasteland. If they don't want to sell.... I could see the Ilitch's vindictively [[and legally) walling them in with west Foxtown parking structures for a Midtown arena with pedestrian bridges above the freeway service drive connected to the arena.

[bragaboutme]

We were going to move into those condos. Nice layout. AFB is was my choice to move there. My girl thought otherwise. Lol.

[iheartthed]

Not necessarily. The mortgagee could have agreed to supply a mortgage that was secured by the land only and not by any structure on the land.

More likely, however, is that the buyer's plan is to have the mortgage paid off prior to any demo work being performed as soon as all the financing [[public, private, whatever) is in place.

Who owned the property before? I just don't see how a bank would finance that project for $2M if the intent is to demolish the structure.

[artds]

Who owned the property before? I just don't see how a bank would finance that project for $2M if the intent is to demolish the structure.

Why not? It's not unlikely that upwards of 90% of that that property's value is derived from the land itself, and not the structure that's on top of it.

In fact, it's easy to see why that particular structure might actually be a liability that would devalue the land.

That said, I concluded my previous post by suggesting that, if a stadium is in the works, then the plan is likely to pay off that mortgage [[and any others) and restructure the whole venture once the financing for the project is all in place, which would make the issue you raised a moot point.

[Waymooreland]

I apologize if I insulted you. My statement had nothing to do with the actual ugly ass condos. All I was saying is if I lived there I would hate for a stadium go up across the street. As it is I already live in the area and do not want a new stadium there. Also, I guess that given a choice I would rather have a stadium then a casino. At least the stadium would close. And, traffice would dissipate somewhat.

Okay, thanks, I guess.

Honestly, I find your gripes puzzling because if you do actually live in or near Brush Park, you are already accustomed to the activity associated with Comerica Park, Ford Field, the Fox, etc. Most of my neighbors and I actually enjoy the big event atmosphere and like attending sporting events and concerts -- that's part of why we chose to live here! If you don't like it, there are plenty of great, quieter neighborhoods that are also, incidentally, devoid of "ugly ass condos" that you could move to.

[Waymooreland]

We were going to move into those condos. Nice layout. AFB is was my choice to move there. My girl thought otherwise. Lol.

Aww, that's too bad! I love living here, not just for the bars, but that's one reason. So, where did you end up moving? Hopefully somewhere in Detroit proper...?

[emu steve]

Any new vibes or rumors?

I was in town and drove through the area.

The site I think is absolutely perfect for a hockey arena.

Without the Detnews article at hand, though, I couldn't determine if there were other key parcels of land which still need to be acquired.

Good that the city controls key parcels along Woodward.

I could really see parking garages being built in the area bounded by Woodward/Fisher/Sibley.

IF an arena happens there, it would be great for Detroit.

It just seemed perfect to me.

[GPCharles]

If the reporter had bothered to read the Eddystone mortgage, he would have discovered that it was only for $1.5 M. The mortgage was between related parties - who knows what is was for. I would say it is doubful that any money actually changed hands.

[esp1986]

Could we see:

1). New hockey Arena somewhere a few blocks north of the Fisher? [[this was a real topic of conversation the last several years - it was a favorite location of mine). I guess the Fox site is now all but dead.

2). Light rail stop hopefully coming.

3). Parking garages? Parking garages aren't beautiful but they'll look better then what is currently in that mid-town neighborhood.

Chance to really improve what I think is a critical area just outside of the CBD.

I've long thought that Woodward from the Fisher to WSU is an absolutely critical area in need of development/redevelopment.

Hopefully development moving north from the Fisher and south from WSU.

The only problem, is that there is no proof the Ilitches are actually buying it. And there is every possibility, that area will house parking garages with walkways crossing the freeway.

One thing we know for sure, is that the Ilitches actually own the property behind the Fox.

This story, in no way, means that the area south of I-75 is out of the question.

[esp1986]

I may be wrong, but I doubt they are tearing it down if they got a $2M mortgage on it...

I am with you... you dont pay 2 million plus another potential 1-2 million in interest on the mortgage to tear it down, especially when the buildings are still viable.