David Stott Bldg downtown asking $1,8 Million

**esp1986** · August-25-10, 08:15 AM

Kudos to Packman on the breakdown. I think it would be safe to say that a few of those numbers are on the 'safe' side... that said, however, I think it is also possible that there would be a good amount of tax credits and perhaps some historic preservation funds involved. A case could [almost] be made for this building without public funds, but like any building in Detroit that is being renovated these days, it won't happen without them. Once you throw in tax credits and any other state and federal funds, I think some developer should be able to make it a go. I mean, John Ferchill was looking at the Book Tower, with a cost of $12M just to buy the building [[granted, that included the adjoining building, but still), and the Stott is less than a sixth of that price. It will certainly take a little creativity to finance right now, but considering the condition of the building not being open to the elements, relative to others downtown, certainly makes it more doable.

**staticstate** · August-25-10, 11:56 AM

she must be in pretty rough shape to have an asking price that low. unless the price tag on the book is excessively high. most of the interior shots of the book tower show it's quite a mess. I like the idea of someone buying it as a single residence, but I don't know how you'd go about keeping people out of the other 33 floors.

**esp1986** · August-25-10, 12:34 PM

Originally Posted by staticstate

she must be in pretty rough shape to have an asking price that low. unless the price tag on the book is excessively high. most of the interior shots of the book tower show it's quite a mess. I like the idea of someone buying it as a single residence, but I don't know how you'd go about keeping people out of the other 33 floors.

I have a feeling that the price on the Book is absorbitantly high. $1.8M actually seems to be on par for buildings downtown, especially one that hasn't been ravaged by twenty years of abandonment.

**Packman41** · August-25-10, 02:11 PM

This article in today's Crain's Detroit Business may put the value of commercial real estate in perspective:
http://www.crainsdetroit.com/article...FREE/100829958#

The Hyatt was built in 1976, has 14 floors and has 772 rooms.

Replacement cost is estimated to be $150 million
Purchase in 2007 was $40 million -- equity of $8 million and a [[now defaulted0 loan of $32 million
Now under contract for $12.5 million

But the broker explains: "Chicago-based hotel broker Richard George, who listed the hotel, said the building is under contract as a $20 million sale, but the final price will be $12.5 due to a concession because of a structural issue with the hotel. He would not disclose the structural issue."

So let's call the value of an operating Hyatt hotel to be $20 million after repairs. As a sale comparable, that means hotels of this caliber are worth about $26,000 per room.

**LeannaM** · August-25-10, 02:18 PM

I'm somewhat familiar with St. Louis and they saw a loft boom from 1999 until a couple of years. Construction is going on, but at a much slower pace. Anyway, a lot of the most recent developments became apartments instead of condos. Detroit might be different, but, considering the housing downturn, I can't help but wonder if apartments might be more stable, if not as profitable, as condos. With apartments it might take longer to recoup the investment, but I would think having apartments, especially more affordable ones, would fill the building up better than condos would, at least in this market.

The Stott is a beautiful building. I hope they do something with it.

One thing I noticed with the St. Louis lofts is that the tallest residential buildings in Downtown St. Louis are around 16 stories, with most of them being under 12 or so. They were more often used as warehouses and stores, rather than office space, as well. Office buildings tend to have smaller floor plans. Of course, that can be rectified. But it might make the renovation costs higher.

Of course, the building having both apartments and condos might work. I'm just not convinced that any development outside of a few select cities would be able to make any money just selling condos.

**fryar** · August-25-10, 02:39 PM

Originally Posted by staticstate

I like the idea of someone buying it as a single residence, but I don't know how you'd go about keeping people out of the other 33 floors.

In my mind, that's why you continue to rent out the existing office space, which is presumably in a decent enough state, and use that income to pay the operating expenses associated with a ground floor concierge and doorman, elevator maintenance, and so on. Because what are you going to do if the elevator breaks, take 35 flights of stairs for the rest of your life?

**esp1986** · August-25-10, 02:43 PM

Originally Posted by fryar

In my mind, that's why you continue to rent out the existing office space, which is presumably in a decent enough state, and use that income to pay the operating expenses associated with a ground floor concierge and doorman, elevator maintenance, and so on. Because what are you going to do if the elevator breaks, take 35 flights of stairs for the rest of your life?

If they are single floor units, you walk out of the elevator, and there is one door... been in a couple in New York and Chicago. Single floors in such buildings are 3,000 square feet and are set up to be a single family residence in the city.

**fryar** · August-25-10, 02:45 PM

Originally Posted by LeannaM

I'm somewhat familiar with St. Louis and they saw a loft boom from 1999 until a couple of years. Construction is going on, but at a much slower pace. Anyway, a lot of the most recent developments became apartments instead of condos. Detroit might be different, but, considering the housing downturn, I can't help but wonder if apartments might be more stable, if not as profitable, as condos. With apartments it might take longer to recoup the investment, but I would think having apartments, especially more affordable ones, would fill the building up better than condos would, at least in this market.

The Stott is a beautiful building. I hope they do something with it.

One thing I noticed with the St. Louis lofts is that the tallest residential buildings in Downtown St. Louis are around 16 stories, with most of them being under 12 or so. They were more often used as warehouses and stores, rather than office space, as well. Office buildings tend to have smaller floor plans. Of course, that can be rectified. But it might make the renovation costs higher.

Of course, the building having both apartments and condos might work. I'm just not convinced that any development outside of a few select cities would be able to make any money just selling condos.

Not to single you out, Leanna, and not to put too fine a point on it either, but why always lofts? Are those still "hot" or something? I realize there's a bunch of fairly new ones in Detroit, so they were the thing for developers to do at one point, but they're always on the market, it seems.

Also, I would think they would put relatively standard apartments in there, since it's configured as an office building and not a warehouse.

**LeannaM** · August-25-10, 03:01 PM

If you are referring to when I said "loft boom" in St. Louis, I meant that they started out mostly as lofts and condos [[some became "loft apartments"). After that a lot of them became apartments. One of the major developers collapsed, so some of the projects were stopped completely. A few have been resumed. The projects going on right now are a luxury condo building [[Roberts Tower) that has just been built [[not sure how the sales are going yet), a dead mall being turned into a parking garage [[to appease the occupiers of the office building the mall surrounds), and the old Dillards becoming an Embassy Suites. There are also always rumors of projects starting up, but I think those are the only three going on now. Of St. Louis did have three buildings renovated as hotels and a few others renovated as offices, so not all of the new development is residential. But you do notice over the last few years how many of the buildings are apartments instead of condos [[or lofts or whatever you call a home in a building that you buy rather than rent).

I guess how you configure it would depend on how large the apartments [[or whatever residences you make) are.

**esp1986** · August-25-10, 03:41 PM

Originally Posted by fryar

Not to single you out, Leanna, and not to put too fine a point on it either, but why always lofts? Are those still "hot" or something? I realize there's a bunch of fairly new ones in Detroit, so they were the thing for developers to do at one point, but they're always on the market, it seems.

Also, I would think they would put relatively standard apartments in there, since it's configured as an office building and not a warehouse.

Lofts are the developers way of saving on costs... so many redevelopments in Detroit are tight financially, so the developers do lofts to save a few bucks and for quite a while there was quite the surplus of lofts. There is becoming such a shortage of downtown space now though, that even the lofts are pretty well filled up, even with people who are simply renting.

Right now, downtown could use affordable apartments and perhaps some affordable condos... the condos at the Book Cadillac are too expensive for many who would actually be looking.