Iconic Fisher and Kahn buildings on auction block
Detroit — Over 200 potential buyers have checked out the New Center area's landmark Fisher and Albert Kahn Buildings in advance of next week's online auction. The starting bid: $3.5 million.
The Fisher and Kahn buildings, along with more than 2,000 parking spaces in two garages and three surface lots, are a package deal in a three-day sale starting Monday at auction.com, which is essentially the eBay of commercial real estate.
"I can't wait to see who is getting them," said Rich Deptula, a senior vice president of Friedman Investment Group, who has been managing the tours of potential bidders, all of whom signed confidentiality agreements. The groups range from international investors to national and local firms. "Somebody's getting a treasure," Deptula said.
Indeed, the Fisher and Kahn buildings are opulent Art Deco examples of how much money flowed through Detroit when the area was the unrivaled manufacturing center of the world. That was last century.
Now, the $3.5 million starting bid for the Detroit icons is half the starting bid for a shopping center in Jupiter, Florida, which will also be sold next week on auction.com. The shopping center has a Chili's, Staples, McDonalds and a cineplex.
The financial struggles of the Detroit buildings that led to the auction in some ways reflect the struggles of the New Center neighborhood, just north of Wayne State University campus along Woodward Avenue.
New Center was a kind of corporate campus for General Motors for most of the 20th century. The company left in the 1990s, relocating to the Renaissance Center downtown. The old General Motors Building — now called Cadillac Place — is occupied by the state of Michigan.
The economy of the New Center area is dominated by the Henry Ford Health System, the Detroit Public School system, and state employees in Cadillac Place, which is the former GM headquarters. The College for Creative Studies has a large presence in the former Argonaut building.
But the area has not yet rivaled the steady investments that have transformed downtown Detroit and parts of Midtown in the past decade.
"Let's hope that auction is a big spark," for New Center said John LaTessa, senior managing director of CBRE, a commercial real estate firm. "It still has challenges," he said.
The Fisher Building, built in 1928, is at 3011 W. Grand Boulevard in the heart of New Center. Its golden tower is one of the best known images in the city's skyline. The ornate, 30-story building is designed in an Art Deco style, which is evident in its lobby finished with mosaics, frescoes, marble and a three-story atrium. The building is home to the Fisher Theatre, which has the designation of national historic landmark.
The Fisher Building has 635,000 square feet of space and is 82 percent occupied, according to CoStar, a commercial real estate database. In addition to the theater, the building is also home to the WJR radio station. Other major tenants include the Girl Scouts of Southeastern Michigan and New Detroit Inc. In 2002, the Detroit Public Schools bought five floors of office condo space and about 7,000 square feet of concourse space in the Fisher Building for $24.1 million. Any potential sale of the building will not affect that ownership.
The eight-story Albert Kahn Building, at 7430 Second, is 51 percent occupied, according to CoStar. The building's namesake is the famed architect and the firm he established, Albert Kahn Associates, remains one of its key tenants.
The two buildings are on the National Register of Historic Places.
The auction comes after the owner defaulted on a $27 million mortgage more than two years ago. The entity that defaulted on the mortgage was FK Acquisition LLC. The registered agent for FK Acquisition is Andy Farbman, who is CEO of real estate firm Farbman Group in Southfield.
After the default, a Miami firm, LNR Property Inc, took the title of the buildings.
With the construction of the M-1 Rail and growth of Midtown, many analysts say New Center area is ready for a rebound that could lure potential buyers.
In May, Dan Gilbert's Bedrock Real Estate Services LLC bought 1,800 parking spaces in two decks, located at 116 Lothrop near Albert Kahn Building and 6540 Cass near Cadillac Place.
Earlier this year, the influential Midtown Detroit Inc. bought 11 New Center properties, mainly fading retail storefronts on Woodward Avenue. The non-profit intends to find developers who will overhaul the buildings in a mixed use of new retail, residential and possibly a hotel.
While more than 200 groups of potential bidders have checked out the Fisher and Kahn buildings, it doesn't mean all those groups will end up participating in the auction, Deptula said.