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Historic Redevelopment Is Sparking New Life In Detroit

Detroit

Detroit has struggled more than other large U.S. cities, but its history is being leveraged to bring residents and businesses back into Downtown and Midtown.

These districts are being revitalized with major adaptive reuse and redevelopment, and most importantly, a broad view of community needs. 

Historic Redevelopment Is Sparking New Life In Detroit
Gensler Detroit Managing Director John Waller, The Platform CEO Dietrich Knoer, Arte Express CEO Fernando Palazuelo, Bedrock Vice President of Finance R.J. Wolney, Benzinga founder Jason Raznick and Colliers Executive Vice President Randall Book discussing the redevelopment of Downtown Detroit at Bisnow's Detroit State of the Market 2017 event.

While real estate execs in other cities ponder when the current cycle will wind down, speakers at Bisnow’s first Detroit State of the Market event last week agreed that the cycle is far from being over in Detroit, and there are still plenty of opportunities to go around. "The game has just begun. I don’t think we’re past the third inning, and there’s nothing out there that makes me think we’re about to collapse,” The Platform LLC President and CEO Dietrich Knoer said.

The Platform, a partnership of Knoer and Peter Cumings, was established in 2016 on a mutual passion for iconic buildings, beginning with the acquisition of the 1928 Fisher Building, an ornate, 28-story Art Deco skyscraper, a few years ago.

“We are building in a city with an extraordinary foundation, structurally and architecturally,” Knoer said.

Historic Redevelopment Is Sparking New Life In Detroit
Arte Express CEO Fernando Palazuelo

Arte Express Detroit CEO Fernando Palazuelo is also working on revamping the historical. His company went bankrupt eight years ago and got a restart in Detroit with an $800 investment. Now Arte Express, which is known for redeveloping historic structures in Peru, is turning the former Packard Automotive headquarters on Detroit’s eastside into a mixed-use development.

This sprawling 1903 property, which closed in the 1950s and has been used as a dumping ground for scrap metal and an apocalyptic movie set, serves as a poster child for Detroit’s troubles and its potential.

Historic Redevelopment Is Sparking New Life In Detroit
The ornamental design on Downtown Detroit's Book Building, which was part of $2.1B in Downtown acquisitions by Bedrock.

Bedrock is creating transformative projects, often on the sites of defunct major buildings. It recently announced plans for four large-scale projects totaling $2.1B that will add 3.2M SF and 2,000 parking spaces to downtown, transforming the skyline and creating up to 15,000 construction jobs and 9,000 permanent jobs.

Bedrock Vice President of Finance R.J. Wolney laid out the pipeline, which includes development of a $900M, 1M SF tower — the tallest building in Detroit — with a mix of retail and office space on the former Hudson department store site on Woodward; an $830M overhaul of the mostly vacant Monroe Blocks between Greektown and Campus Martius with a 35-story, 814K SF office tower that includes 482 residential units; the $313M revival of the long-vacant Book Building and Tower on Washington Boulevard to create 95 residential units, 180K SF of retail and a hotel; and a $95M, 310K SF expansion of the former Compuware building at One Campus Martius.

Historic Redevelopment Is Sparking New Life In Detroit
The Platform LLC's Third & Market

But our panelists said developers need to start looking beyond individual buildings and specific hot submarkets.

While Detroit encompasses 139 square miles, Knoer said the vast majority of capital investment has gone into the 7.2-square-mile urban core area that encompasses the CBD and Midtown districts. Growth in office occupancy and residential neighborhoods has given rise to a 50-block area of hip restaurants, trendy shops, bars and entertainments between downtown and Midtown known as The District Detroit. Olympia Entertainment recently opened the $863M Little Caesars Arena, home of the Detroit Red Wings and Detroit Pistons, there. While exciting, that is not enough.

“To be sustainable, the rest of the city needs to come along with it,” he said.

Going forward, his company will invest in mixed-use redevelopment projects. It is focusing adjacent to (but not in) the New Center area, including Milwaukee Junction and along the Woodward transit corridor, which are poised to capitalize on growth radiating from downtown.

The Platform’s approach involves revitalization of whole neighborhoods, preserving existing architecture when possible to retain a neighborhood’s unique, authentic character.

“We’re not looking to build one asset, we’re building communities with the same passion we have for Detroit’s incredible icons,” Knoer said.

Historic Redevelopment Is Sparking New Life In Detroit
The Kresge Foundation's Aaron Seyber and Henry Ford Health System CEO Wright Lassier III discuss their organizations's role in redeveloping Downtown Detroit at Bisnow's Detroit State of the Market 2017

The Henry Ford Health System has supported redevelopment of the New Center area since it began, CEO Wright Lassier III said. It offered employees at the Detroit Medical Center financial incentives to move to the Midtown district until available apartments and for-sale housing dried up.

The organization is expanding the Detroit Medical Center campus across Grand Boulevard, building a top-five tier cancer care center and partnering with the Detroit Pistons to build a practice facility and sports medicine facility on a parking lot the hospital owns.

“We’re hoping that adding value will stimulate redevelopment projects and revitalization of surrounding neighborhoods,” he said.

Historic Redevelopment Is Sparking New Life In Detroit
Bisnow's first event in Detroit drew a large audience.

That often means jobs. The Detroit Medical Center partnered with Focus: Hope to create a apprentice care program. There are 250 local residents enrolled, and the medical center will hire all of them when they complete the program. It also partnered with a landscaping company, giving it an exclusive contract to maintain the more than 200 properties owned by the Henry Ford Health System in exchange for hiring and training local residents to do the work.

Another nonprofit, The Kresge Foundation, is providing grants for small-scale community development projects aimed at preserving the character of neighborhoods. Social investment head Aaron Seyber said that might involve entrepreneurial programs that build up the fabric of the community and encourage the inflow of development money to Detroit to fulfill the needs of Downtown and Midtown neighborhoods.

“We’re focusing a lot of capital resources on community development organizations in the city that are doing things that drive larger real estate development,” Seyber said.