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Investors bank on New Center revival

Louis Aguilar
The Detroit News

A rush to buy empty storefronts, half-used skyscrapers and run-down apartment buildings is taking place in New Center, an area struggling to find a niche ever since General Motors moved its headquarters downtown 19 years ago.

The Albert Kahn-designed Fisher Building in New Center is a National Historic Landmark. It was sold earlier this year, and there are plans to refurbish it.

The neighborhood north of Wayne State University will see plenty of new life as housing demand outgrows Midtown, downtown and Corktown and moves north along Woodward, investors contend. A study commissioned by the Downtown Detroit Partnership says there is a need for 10,500 additional residential units a year in the greater downtown for the next several years. Further, the M-1 Rail scheduled to open in 2017 will be a game-changer, especially for Woodward, many believe.

“It’s one of the logical places for growth,” said Susan Mosey, executive director of Midtown Detroit Inc., which has shaped much development in the Wayne State University area. “There is just a lot more room in New Center than the (Wayne State) area.”

In April, Midtown Detroit bought 11 properties, mainly empty storefronts, near the corner of Woodward and West Grand Boulevard. The nonprofit development agency is just one of the influential investors along with new entrepreneurs who aim to spend millions in New Center.

For nearly seven decades, General Motors used the area as a business campus that showcased big, beautiful buildings lining West Grand Boulevard. Many of the structures, just west of Woodward, were designed by superstar architect Albert Kahn. That includes GM’s former headquarters on West Grand; across the street is Kahn’s Art Deco masterpiece Fisher Building and nearby is the Argonaut at 485 W. Milwaukee.

“Any city would be grateful to have such truly outstanding buildings,” said Rebecca Binno Savage, historical preservationist for Kraemer Design Group in Detroit. The Fisher, Kahn and former GM buildings have achieved National Historic Landmark status, the highest level of recognition of a building’s importance in the U.S.

When GM began to relocate to the Renaissance Center in 1996, the once-vibrant New Center had become just another embattled part of the Motor City. The neighborhood is now dominated by the Henry Ford Health System complex created in the early 20th century.

Detroit Public Schools is headquartered in the Fisher Building, which is also home to the Fisher Theatre. And more than 2,000 state employees are in the former GM headquarters, now called Cadillac Place. The College for Creative Studies has set up shop in the Argonaut, which had been empty for years, and renamed the building the A. Alfred Taubman Center.

But when workers leave, West Grand and nearby streets can be eerily empty. There are pockets of solid residential streets and stable small businesses, but too much nothingness. In August, a restaurant called Zenith in the Fisher Building announced it was closing. It lasted a little more than a year. The location simply doesn’t draw enough people, said restaurant owners Robert and Melissa Jasper.

Earlier this year, the landmark Fisher was sold in an online auction because the owners defaulted on its $27 million mortgage. The Fisher was part of a package deal along with the nearby Albert Kahn building, which once housed a Saks Fifth Avenue. The Kahn building is 49 percent vacant. The two landmark buildings, along with 3,000 parking spaces, sold for $12.2 million in the auction.

“Whatever New Center is supposed to be, it’s not quite there,” said John LaTessa, senior managing director of CBRE, a commercial real estate firm. “Maybe the critical mass of investment is finally arriving.”

Some key New Center developments:

■Henry Ford Health System’s half-billion dollar, 300-acre mixed-used development it plans to create at the Midtown/New Center border. A 10-year plan has been launched to redevelop the blocks between I-94, the Lodge Freeway, Rosa Parks Boulevard and Grand Boulevard with expanded Henry Ford Health facilities, residential space and retail.

In May, a new medical distribution facility by Cardinal Health Inc. opened at 6000 Rosa Parks Boulevard. Hundreds of blighted, contaminated and obsolete properties south of the hospital campus are expected to be overhauled. Blocks of vacant homes have already been cleared, and some blighted retail buildings on West Grand near the hospital have been purchased

Peter Allen, left, Clarke Lewis, Douglas Lane Allen, Dang Duong and Myles Hamby are part of an investment group that owns 6408 Woodward and hope to close soon on 6402 Woodward.

■ The Fisher and Albert Kahn buildings could get residential units in at least one of the classic office buildings. The group behind the online auction purchase this year is a mix of solid development veterans, including Peter Cummings, who played a key role in bringing Whole Foods to Midtown, and John Rhea of Redico LLC. New York-based HFZ Capital Group is another partner.

Only broad strokes of their plans have been revealed, including spending up to $70 million to spruce up the buildings, which are full of stunning detail. Converting some of the floors into residential is being explored, especially for the Albert Kahn at 7430 Second Ave. The vacant sixth floor of the Kahn looks straight out of “Mad Men.” The floor, like the former television show, is a beautiful homage to mid-20th century office decor. The elevator has ornate brass doors, the lobby is marble. The views are commanding.

But the national landmark status of the buildings may present challenges in being converted into residential, said preservationist Binno Savage. The landmark status is meant to help preserve the original character of the structures.

■The Hotel St. Regis and St. Regis House at 3071 W. Grand Blvd. are in transition again. The hotel, once frequented by the wealthy and celebrities playing at the nearby Fisher Theatre or Masonic Temple, is another national historic landmark on West Grand that’s gone through ownership changes in recent years.

Last year, the building connected to the hotel was bought by Wireless Toyz CEO Joe Barbat, who is converting the building into 60 residential units. Crain’s Detroit Business is reporting the hotel is once again about to change hands.

■ Midtown Detroit Inc. bought half the 6500 block Woodward near West Grand. Then it encouraged a trio of University of Michigan graduate students to invest in two empty storefronts on the 6400 block of Woodward near the corner of West Baltimore.

“The buildings were uninhabitable,” said Dang Duong, one of the investors. They own 6408 Woodward and hope to close soon on 6402 Woodward.

Duong is one of the UM grad students behind the project. They also recruited their professor, developer Peter Allen. The group wants to revive the buildings into a mix of residential and retail. They are seeking $30 million in investment.

■Other small investors are jumping in. Greg Parks, owner of the recently opened Layers salon at 6529 Woodward, says he is willing to stick out the construction of M-1 Rail in front of his shop. “This strip can be great again,” he said. Parks is worried, too, that Midtown Detroit Inc., which now owns his building, may not renew his lease in a few years. “All black businesses worry about not being able to stick around for the payoff,” he said.

The Casamira Apartments at 680 Delaware as seen on Thursday September 17, 2015 as the complex is about to undergo a $10 million overhaul. (Max Ortiz/The Detroit News) 2015

■ Central Detroit Christian Community Development Corp. aims to revive the fire-damaged Casamira Apartments, a four-story building at 680 Delaware.

The building was donated to the group, which almost turned it down. “The problem was parking,” said Lisa Johanon, executive director of the nonprofit. That situation was resolved when it acquired nearby lots from Detroit Public Schools.

“The street and the neighborhood is just one of those gorgeous Detroit areas. It was too beautiful to pass up,” Johanon said. The group plans a $10 million redo of the Casamira, built in 1925, that will include 44 apartments, including 15 units marked for affordable housing.


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