Detroit’s Core City Project Breathes New Life Into Buildings and Land

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The Core City neighborhood, located west of Woodbridge and about 2 miles from downtown, is one of the most unique real estate projects in the city and the state. It currently spreads across six existing commercial buildings, 10 recently built Quonset hut apartments, plus one large Quonset hut split into eight live-work space. It will be expanding early next year to include more housing. The old commercial buildings are filled with office and retail tenants. The buildings surround a new public space park filled with shade trees and artwork. The Core City project is the brain child of developer Philip Kafka and his real estate company, Prince Concepts.

 

Landmark Office Real Estate Up For Grabs

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Nearly 800,000 square feet of prime office space across four landmark properties in Troy and Pontiac are up for grabs. They join the Fisher Building and the former UAW-GM Center for Human Resources in Detroit. That totals 1.8 million square feet between the six buildings that has come available in the last 30 days! The sale of these buildings has implications for the upside down office market. According to a second-quarter report, Detroit’s office market vacancy rate increased to 16.8%. That’s an increase of 2 percentage points from a year ago.

Renowned Detroit Hotel Sale and Renovations Pending

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The Westin Book Cadillac hotel in downtown Detroit is under a pending deal. Chicago-based Oxford Capital Group, the same company that broke ground on a new Godfrey Hotel in Corktown,  is buying the 453-room hotel. Downtown Detroit hotels took a hit during the COVID-19 pandemic, and the Book Cadillac has been delinquent on its mortgage since spring 2020. With the sale, Oxford Capital will assume $77 million in debt to prevent the hotel from going into foreclosure. The company will spend at least $16.5 million on renovations and maintenance. It’s seeking a 12-year Commercial Redevelopment tax break that’s valued at over $26 million.

Corktown Parking Deck Sold for $15.6 Million

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The Ford Motor Company sold a 1,250+ space parking deck for an estimated $15.6 million. Howard Luckoff, Jim Ketai and the Rakolta family who make up the Corktown Mobility Hub LLC purchased the property. Devon Industrial Group is currently constructing the deck. It should be finished by the second quarter next year. Ford will hold the master lease for the garage, and Luckoff and Ketai’s Vokal Ventures will operate it. According to Richard Bardelli, Ford’s construction manager in Corktown, the sale is in keeping with Ford’s plan to bring on development partners. The deck includes an autonomous vehicle testing area, e-bike and e-scooter stations, charging stations for electric vehicles and automated payment technology and smart guidance systems.

Detroit’s Revitalization Could Have A New Focus

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The global pandemic has turned many things upside down. The office markets around the U.S. are one of those things. Congress may offer developers incentives to repurpose old office buildings into residential, institutional, hotel or mixed-use spaces. While Mayor Mike Duggan has come out in support of the Revitalizing Downtowns Act, area developers do not have active plans to utilize it should the law be passed. The number of Detroit’s residential units lags behind other downtown areas. The legislation isn’t limited to downtown redevelopments but could be used to convert old office properties in the suburban locations into new uses as well.

 

Duggan Predicts Office to Residential Shift

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According to Detroit mayor, Mike Duggan, downtown Detroit is in for a dramatic shift in the next 2-3 years. He predicts that Detroit’s office buildings will be repurposed from offices into housing. He believes that this shift will be a national trend. He points to a 16-story apartment building near Greektown as an example. With more construction going on than in the last 50 years, the majority of it is residential, manufacturing and distribution.

 

 

New York Company Steps Up for Dearborn Hotel

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An unidentified New York-based company is under contract to buy the former Dearborn Hyatt Regency hotel from the U.S. Marshals Service. Previously, the property was under a $27 million deal that envisioned top-floor condominiums and a hotel on the bottom floors. That deal fell through with the buyer backing out at the end of the inspection period. The current deal is for $17 million. A broker for the sale disputes that figure. The company intends to redevelop the hotel into a mix of 375 market-rate apartments and a small hotel.

Detroit Area Hotel Business Travel Takes a Hit

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Detroit area hotels’ business travel revenue is taking a hit. It’s expected to be 2/3 lower than pre-pandemic levels. According to the American Hotel & Lodging Association, the region’s hotels are expected to generate $187 million this year. That’s a 67.4% drop. Michigan hotels are expected to lose 59.8% of their business travel revenue this year. Nationally, hotels could be down by more than $59 billion by the end of the year in business travel. A rebound isn’t projected until 2024.

COVID Emergency Rental Assistance Staves Off An Eviction Tsunami

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With the ending of the federal eviction moratorium on August 26, local legal aid funds are still being sorted out. Since the initial eviction moratorium, the U.S. Treasury has paid $25 billion to states and local governments for COVID Emergency Rental Assistance. From May to August, a total of $181,821,906 has been paid out to Michigan residents. The pace of the disbursements will continue to accelerate into September, according to the MSHDA communications director. The Director of Litigation at the Legal Aid of Western Michigan estimates that applicants are waiting 1 to 2 months before receiving a check. The processing rate varies by county and ranges from 26-72%.

 

 

Detroit’s Roosevelt Park Plans Affect Vernor Highway

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Detroit has plans for improvements to Roosevelt Park that involve permanently closing a section of Vernor Highway. The plans will make the park safer and uninterrupted by vehicle traffic. Currently, the highway cuts through the park and a section of 15th Street in the Corktown neighborhood.  A temporary closure of the highway at 17th and Newark streets will begin Tuesday. Construction will be completed in 2 phases and is expected to be complete in February 2022. Resident input is welcomed by the city, via a survey that closes on October 31.