N.Y., unknown local firm buy Fisher and Kahn buildings
Detroit — A New York firm and an unknown local real estate developer won the online auction for the landmark Fisher and Albert Kahn buildings with a bid of $12.2 million, according to a real estate source.
The firm HFZ Capital Group is a real estate investment and development company that manages more than 5 million square feet of Manhattan real estate, according to its website. The local developer has not been identified. Calls and emails to the Manhattan-based HFZ Capital were not returned Wednesday.
Crain's Detroit Business is reporting HFZ intends $70 million to $80 million in upgrades in the buildings and would convert some of the top floors of the 30-story Fisher into residential.
Many potential bidders explored converting part of the Fisher Building into residential, said Anne Galbraith Kohn, a senior vice president with CBRE, a commerial real estate service firm. Galbraith Kohn said various potential bidders had contacted her about the sale of the buildings.
The two buildings, along with more than 2,000 parking spaces in two garages and three surface lots, were a package deal. Bidding started at $3.5 million. The buildings sold for $31 million in 2001.
The Fisher and Kahn buildings are opulent art deco examples of how much money flowed through Detroit when the area was the unrivaled auto manufacturing center of the world.
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 the Wayne State University campus along Woodward.
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. 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. 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.
With the construction of the M-1 Rail and growth of Midtown, many analysts say the New Center area is ready for a rebound.
The Fisher Building, which opened in 1928, is at 3011 W. Grand Boulevard in the heart of New Center. The original cost to build the Fisher was $10 million, according to the Detroit Historical Society. That's the equivalent of $135 million in 2014 dollars, according to the website Calculator.net.
The Fisher's golden tower is one of the best known images in the city's skyline. The lobby of the ornate, 30-story building is finished with mosaics, frescoes and marble. The building is home to the Fisher Theatre.
In addition to the theater, the building is also home to WJR. Other major tenants include the Girl Scouts of Southeastern Michigan and New Detroit Inc. The Fisher is about 57 percent occupied, said analyst Galbraith Kohn.
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 30 percent occupied, according to analyst Galbraith Kohn. The building's namesake is the famed architect; the firm he established, Albert Kahn Associates, remains one of its key tenants.
Both 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, CEO of the real estate firm Farbman Group in Southfield. After the default, a Miami firm, LNR Property Inc, took the title of the buildings.