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Amazon eyes major distribution center at Michigan State Fairgrounds

Detroit — Amazon is looking at the former Michigan State Fairgrounds as a potential location for a major distribution center that the city says would create 1,200 jobs.

Mayor Mike Duggan announced Tuesday the potential sale of 142 acres of the former fairgrounds at Eight Mile and Woodward. Real estate developers and investors Hillwood Investment Properties, along with the Sterling Group, plan to purchase the land for $9 million, the appraised value. 

A rendering of the proposed Amazon distribution center at the Michigan State Fairgrounds at Eight Mile and Woodward.

The group plans to invest more than $400 million into the entire project and also plan to redevelop the remaining 70 acres with auto part suppliers or other employers.

If Detroit City Council approves the plan by mid-September, Amazon plans to have shovels in the ground by the end of October to create a facility with nearly 4 million square of space, according to Detroit officials. The deal requires workers to be paid a minimum of $15 an hour with benefits.

The project will be privately financed, without the use of tax breaks or other financial incentives, Duggan said.

"This is groundbreaking," the mayor said. "This city has never had a new building built for $400 million without tax breaks and incentives. But I believe that the proximity to Eight Mile, Woodward and I-75 minutes away is so attractive, that we were able to land Amazon without having to do any tax abatements or incentives at all."

An Amazon site in Detroit would join nine other Amazon sites in Metro Detroit that are operating, under construction or planned.

Last month, Amazon announced a new delivery station in Sterling Heights to open  in September. The development will bring hundreds of full- and part-time jobs and speed up deliveries in Metro Detroit, officials said. Amazon has three other delivery stations in the Metro Detroit area: Romulus, Wixom and Hazel Park.

The company has fulfillment and sortation centers in Livonia, Shelby Charter Township, Romulus and Brownstown Township.

Construction is underway for an Amazon fulfillment and distribution centers on the site of the former Pontiac Silverdome. The centers, expected to create 1,500 jobs, will launch in 2021, according to Amazon.

According to a map showing Amazon’s economic impact, the company has invested $2.5 billion in Michigan. The state falls in the top three in the Midwest in terms of full- and part-time job creation, and in the middle in terms of sites including fulfillment centers, delivery stations and Amazon Hub Locker+ locations.

As part of the agreement to build at the former fairgrounds, the development team will pay an additional $7 million for a new Detroit Department of Transportation indoor transit center at Woodward near Eight Mile.

More than 30,000 riders a week from nine bus routes transfer to DDOT or SMART buses on Woodward near the fairgrounds. Riders currently wait either on the street or in a series of outdoor bus shelters. As part of the agreement, developers will reinvest in creating a new transit center to increase worker mobility, which will include a bus operator break room, bathrooms and free Wi-Fi. 

Detroit Mayor Mike Duggan addresses the news media about negotiations with Amazon, which may be building a distribution center on the site of the former State Fairgrounds in Detroit.  There are also plans to add a transit center on the grounds.

From 1905 through 2009, the site hosted the Michigan State Fair. But after former Gov. Jennifer Granholm vetoed legislation to fund the fair during the Great Recession, the fairgrounds property has been largely vacant and cost taxpayers $1 million a year to maintain. The property was transferred to the Michigan Land Bank in 2012.

Existing buildings at the fairgrounds like Hertel Coliseum will probably be demolished, Detroit Mayor Mike Duggan said.

Last year, the Michigan Land Bank sold a 16-acre piece of the property to a development company led by basketball legend Earvin "Magic" Johnson for $472,464. The company, Magic Plus, proposed building housing, retail, restaurants, transit and parks at the site.

MoreState fairgrounds sale to Magic Johnson's company complete

A couple of weeks later, the state land bank sold 142 acres of the property to the city of Detroit for $7 million.

MoreState fairgrounds sale to Detroit completed

If the deal is not approved by the city in the next two months, Amazon would lose a year of work, Duggan said. There will be a series of community meetings held by Zoom calls with neighborhood groups.

Amazon is constantly exploring new locations and weighing many factors when deciding where to develop future sites, said Amazon spokesman Owen Torres.

"Since 2010, Amazon is proud to call Michigan home and has created more than 13,500 full-time jobs and invested more than $2.5 billion in our infrastructure and compensation to our employees," Torres said in a statement. "We look forward to continuing to work with the City of Detroit, and, if the project is approved, our plan is to create over a thousand new jobs."

Texas-based Hillwood Investment Properties has built Amazon fulfillment sites across the country. Developers said they were attracted to the site because it would make a difference in the community.

“We see this as an opportunity to team up with Sterling Group again to showcase our company’s ability to transform the site into a new hub for e-commerce innovation and excellence," said Ross Perot Jr., chairman of Hillwood and the Perot Group. He is the son of Ross Perot, the late businessman who ran unsuccessfully for U.S. president in 1992 as an independent.

Developers will pay the cost for any needed demolition and environmental remediation to prepare the land for redevelopment. The historical buildings on the fairgrounds will likely be demolished and the COVID-19 testing sites will be relocated indoors for the winter, Duggan said.

"The reality is, they'll be demolished," he said. "When I was a kid, we watched the circus at the State Fairgrounds, we've all got emotional attachments. But for the last 10 years, not a single person has been able to figure out how to use these old agriculture buildings in a way that follows a business plan."

The project was endorsed Tuesday by three council members including Roy McCalister, whose district includes the fairgrounds property.

“The potential for 1,200 Amazon jobs at this new facility," he said, "represents an opportunity to diversify our economy while employing residents of our city."

srahal@detroitnews.com

Twitter: @SarahRahal_