The vacant Statler Hotel site on Grand Circus Park may be home to Quicken's new headquarters. (Donna Terek / The Detroit News)
Quicken Loans Inc., one of Michigan's fastest-growing companies, will move its suburban headquarters to downtown Detroit, Chairman Dan Gilbert and Mayor Kwame Kilpatrick told The Detroit News on Monday.
The move, pending yearlong studies of the former Hudson's site on Woodward and vacant Statler Hotel site, would consolidate at least 4,000 employees in the new Quicken headquarters from sites in Livonia and other suburbs. It also would turbocharge a revival of downtown led by General Motors Corp., Compuware Corp., Ilitch Holdings Inc., new casinos and a vibrant entertainment district.
Kilpatrick and Gilbert, who is interested in pursuing redevelopment of downtown beyond the Quicken project, envision the national mortgage lender's headquarters as the centerpiece of a mega development combining retail, condominiums and a technology park -- the cornerstone of an initiative they're calling "Detroit 2.0."
"This is big," Kilpatrick said, describing a package of state and local incentives that could total as much as $200 million over the next 20 years. "This is a done deal. We've signed the development agreement. This is the largest package that we -- the city and state -- have put together to bring a company to downtown Detroit."
A news conference to announce the deal is scheduled for noon today at Rock Financial Park on East Larned in Detroit. The plan was expected for months but delayed by protracted negotiations and a spreading mortgage industry correction that appears to have largely missed Quicken and its Michigan unit, Rock Financial.
The development agreement is only the first step. After the one-year study period, set to expire Nov. 13, 2008, Quicken would have an 18-month "due diligence" period to finalize plans for either the city-owned Hudson's or the Statler site, controlled by the Detroit Economic Growth Corp.
It's hard to overstate the economic and political significance for Kilpatrick and Detroit of Quicken's planned move downtown, a process likely to take at least three years before the first shovels go into the ground. This is a proverbial shot in the arm for a region desperate for some good news amid an almost weekly barrage of plant closings, restructurings, jobs cuts and public budget woes.
Gilbert's 'Big Bang' in Detroit
Depending on the month, Michigan vies for national leadership in high unemployment, low job creation and rising home foreclosures even as it struggles with an enduring image as the epicenter of organized labor and Old Economy America.
Add Detroit's reputation, much of it historically deserved, for urban decay, residential blight, anti-business sentiment, failing schools and violent crime and the Quicken decision seems all the more encouraging. Why? Because it suggests real change is occurring amid brutal economic times and, second, that downtown Detroit has a momentum all its own.
That an Internet-driven lender touted as one of the country's best places to work, with operations in Cleveland and Arizona, with a business model spanning the entire country is choosing Detroit for its new headquarters says as much about the city as it says about Gilbert -- and it's all good.
"It's a Big Bang approach," said Gilbert, co-founder of Quicken and majority owner of the NBA's Cleveland Cavaliers. "You can't have jobs until you have the companies. You can't have retail until you have jobs. We need to locate more and more entrepreneurs in a centralized hub" where they "feed off each other."
Quicken's development agreement ties up for one year two prime downtown sites -- Hudson's and the demolished Statler site on Grand Circus Park. The idea: Planners would be free to consider designs and engineering and gauge the interests of entrepreneurs and other technology companies interested in joining the Quicken complex.
"Until we went public with this," said Gilbert, who notified Quicken employees of the company's decision by voice-mail late Monday, "it was very difficult to have discussions with other parties. This isn't about going out and raiding the suburban locations of companies."
But it will be perceived as such, no matter how often Gilbert, Kilpatrick and Gov. Jennifer Granholm say otherwise.
"I'm disappointed, but hardly surprised, given the governor and Mayor Kilpatrick's efforts to lure Quicken into Detroit," Livonia City Council Vice President Don Knapp said. "Both offered incentives to move them out of Livonia (that) Livonia couldn't offer."
Gilbert called Detroit "a great alternative now" and said a driver behind Quicken's downtown gambit is to jumpstart economic growth in a region that badly needs it. "This is much bigger than a headquarters."
Positive tipping point reached
Yes, it is, however much the move could be dismissed as a) simply a zero-sum move from a near western suburb to downtown and b) the city's embrace of a mortgage lender whose industry is in turmoil amid declining home prices and the subprime mortgage meltdown.
Such a cynical view would be shortsighted and overly simplistic. Quicken sells the vast majority of loans it writes, almost all of which are "non-recurring" and thus cannot end up back on Quicken's books. Think of it and its Rock Financial unit as loan marketers and originators, not loan holders and servicers, who may be affected less by a slowing housing than rivals.
"We've avoided 98 percent of the catastrophe that others have stepped into," Gilbert said. "As far as catastrophic incidents that just does not exist."
If it did, why would Quicken's founder choose now -- as equity markets continue their swoon over, among other things, massive write-downs on mortgage-backed securities by such financial giants as Citicorp, Merrill Lynch and others -- to confirm the most open secret in the Detroit economic development game?
"For them to do this, they feel very strongly they will be a strong, viable company in the future," said George Jackson, president of the Detroit Economic Development Growth Corp. and a key negotiator in the deal. "This shows confidence in Quicken Loans' future. This shows confidence in Detroit. This is a real, favorable tipping point for downtown Detroit."
Comings and goings
After a decades long exodus from downtown, Detroit snagged a number of large companies and developments in the past 10 years.
1999: Casinos: MGM Grand and Motor City open temporary casinos
2000: Comerica Park : New ballpark brings Detroit Tigers downtown
2000: Greektown Casino: Casino opens in former Trappers Alley
2002: Ford Field: Detroit Lions return to city from Pontiac
2002: Compuware Corp.: Technology company relocates headquarters from Farmington Hills
2003: Renaissance Center renovations: General Motors completes renovation of its new world headquarters
2004: Campus Martius: 1.6-acre park opens in front of Compuware Building
2006: One Kennedy Square building opens near Campus Martius, houses Ernst & Young accountants
2007: Hotel revival: Fort-Shelby and Book-Cadillac undergoing renovations for reopenings
2007: MGM Grand: Permanent casino and hotel opens; hotel construction underway at two other casinos
1998: Riverfront businesses: Woodbridge Tavern, Rivertown Saloon and the Franklin Street Brewery close in area expected to become home to permanent casinos
2005: Detroit Public Television: Moves to Wixom
2007: Comerica Bank: Relocates headquarters to Dallas
2007: Riverview Hospital: St. John Health System closes site