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DTE Energy Pulls Out of Downtown Ann Arbor

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DTE Energy is seeking a buyer for its office building on 414 S. Main Street in downtown Ann Arbor. DTE is accepting offers for the property but has yet to set an asking price. In April 2020, the utility company pulled 400 workers out of the Ashley Mews office. Those employees began to work from home amidst the pandemic. DTE has over 5,000 employees who are working from home. The 400 employees from the Ashley Mews office will either continue to work from home or relocate to the Detroit headquarters. The utility company is protecting the arrangements they have with other tenants in the building, so the remaining occupancy in the building will remain unfazed.

shipping container

Shipping Container Homes Coming to Ypsilanti Township

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Darius Smith, a local developer and founder of ASJ Homes and the “What’s Up Detroit” show, has plans for at least two luxury homes built out of shipping containers, in Ypsilanti Township. He plans to have one of the homes built by this summer, which will start at $250,000. Incorporating the shipping containers, which he gets from California, keeps building costs down. The unit he’s building this year will use 6 containers to create a 1,600 square foot 3-bedroom, 2-bath home. Smith has also designed a container micro-hotel, along with a cryptocurrency utility token.

Weekly Brief – March 29

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Michigan’s two largest metro areas are exceptionally different.

I had the opportunity to spend time in the Grand Rapids metro area in the past week. Metro Grand Rapids development is reminiscent of the sprawl in metro Detroit in the 1990s through the early 2000s. New subdivisions and neighborhood shopping centers are under construction in many areas of metro Grand Rapids. Grand Rapids remains in a growth and sprawl mode.

The Detroit metro area, on the other hand, has matured in its development. Development in metro Detroit (excluding, perhaps, northern Macomb County and the far western edges of Oakland and Wayne Counties) is infill or reuse. Redevelopment, rather than new development, is the primary project.

Grand Rapids still has plenty of greenfield development. Those developments have the potential to be less expensive to develop, as there is less assemblage to negotiate, and fewer legacy development issues to resolve (such as utility relocation).

Grand Rapids may, in a few decades, have to deal with the reuse and infill development issues that Detroit currently confronts. However, for the time being, development in metro Grand Rapids raises entirely different issues than development in metro Detroit.

J.C. Penney Updates Store Closure List

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J.C. Penney has updated its store closure list. The company was one of the largest retailers to apply for Chapter 11 bankruptcy protection during the pandemic. It announced that it was closing 242 of its stores in May 2020. Since then, the retailer has delayed the closing of 15 stores that were scheduled to be shuttered in March 2021, extending the closing date into May. In doing so, the company added 18 more stores to its closure list.

Weekly Brief – March 22

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For your consideration this week:
  1. The death of malls, which I have been discussing all year, has another casualty this week. A receiver will be taking over Partridge Creek Mall in Macomb County. A sale by its lender is likley. The Mall has no anchors and a rotating cast of dining tenants. As discussed previously (perhaps too much), malls are in a death spiral initially caused by online retail but accelerated by the COVID-19 pandemic.
  2. The pandemic claims a major hospitality casualty in Detroit. The Westin Book Cadillac, once the image of Detroit’s resurgence, is headed for foreclosure due to a lack of customers. I expect we may see more hotel failures as we continue the path to normalcy. We recently saw plans for a brand new hotel converting to senior living.
  3. The reinvigoration of Detroit’s neighborhoods continues with a plan for the East Warren/Cadieux area being unveiled. Like many plans in Detroit, investment from the public sector and quasi-public sector anchors the plan. We will know Detroit’s neighborhoods are truly back when private sector investment drives redevelopment.

Times are Changing for U.S. Malls

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U.S. malls are reeling as restaurant and retail tenants struggle to stay open for business.  Coresight Research data predicts that a quarter of U.S. malls could close over the next 3 to 5 years. Simon Property Group, America’s biggest mall owner, said that its 2020 fourth-quarter revenue dropped by 24%. However, experts think the Simon Property Group does not stand to be the biggest loser as its more distressed competitors will close their doors. Simon expects to see gains from its new additions of hotels and luxury residences.

Plans Resuscitated for Restoration Hardware Flagship Store

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The Birmingham planning board will meet on March 24 and review a proposal that revives plans to bring Restoration Hardware to downtown Birmingham.  A new 4-story building is proposed for the southwest corner of Old Woodward Avenue and Brown Street. The site is across the street from the new Daxton Hotel. The current buildings at the site would be demolished. After construction, the site would feature a new 54,000-square-foot building with Restoration Hardware as its anchor tenant. In addition, the development would have a top-floor restaurant and 24-space underground parking.

West Michigan Lakeshore Office Market Remains Stable

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Compared to larger cities like Chicago or Detroit,  the West Michigan lakeshore office market has remained stable through the pandemic. Still, commercial clients are conservative. Some are downsizing their office footprint or relocating to a smaller downtown area, like Holland,  so they can still offer a physical business site with nearby amenities when they need to conduct in-person business.  Medical office, insurance and financial sectors are particularly active in the lakeshore markets.

Group Halts Work on Historic Mill Site

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Rezoning of the historic Glen Arbor Mill faces opposition.  A group was able to successfully halt work on the site for 30 days while they collected signatures to add a referendum on the November ballot. The property owner intercepted an email in an effort to discredit the group. The rezoning of the historic property remain controversial.

Hudson’s Site Tower Takes Shape

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The Hudson’s site tower is finally showing above-ground signs of construction three years after the Bedrock Detroit real estate firm broke ground at the old J.L. Hudson building site at 1200 Woodward Avenue. The property will include 150 residential units, a 200-plus-hotel, 400,000 square feet of office space, a 1,200-person event space, and 18,000 square feet of retail space. The completion date has been pushed back to the 2nd quarter of 2024. The planned tower is now also much shorter than the original concept.