If Palace falls, land could be hot for redevelopment

Mike Martindale
The Detroit News

Auburn Hills — While they were celebrating in Detroit over the news the Detroit Pistons will move back downtown next season, reaction was subdued in Oakland County.

“That is a valuable piece of property and we think there is a lot of opportunity to do some exciting things up there that would be very good for Oakland County,” Tom Gores said.

While no one wanted the team to leave The Palace of Auburn Hills for downtown, several responded as if Detroit’s gain wasn’t necessarily the suburb’s loss.

Oakland County Executive L. Brooks Patterson — normally not short of words — prepared a brief, but respectful 10-word quote for reporters:

“We wish the Pistons well. Thanks for all the memories.”

And while there are plenty of highlights gathered over more than three decades at The Palace, along M-24 north of Interstate 75, that doesn’t necessarily mark an end to them, officials and experts note. Some suggest even more prosperous times may be on the horizon for the city — with The Palace, or without it.

“Of course we are disappointed they have decided to move,” said Auburn Hills Mayor Ken McDaniel, who noted earlier this month in anticipation of Tuesday’s announcement “the sky isn’t falling” in the suburb of 23,000 residents or in its $56 million annual budget.

“But it (Palace) is a privately-owned operation and there are no contracts or agreements with the city or any restrictions for them doing whatever they want.”

“We look forward to working with Mr. (Tom) Gores in whatever direction he decides: continuing as The Palace without the Pistons; selling the operation to someone else; or razing it for sale and redevelopment.”

Gores appeared at the Tuesday announcement in Detroit where he said the move was “the right call and it was time.” Gores also contributed to a group press release in which he said it would be “premature to discuss the future of The Palace, but expects there will be a lot of attractive options.

“That is a valuable piece of property and we think there is a lot of opportunity to do some exciting things up there that would be very good for Oakland County,” the billionaire said.

McDaniel said there have been no private or public discussion with Palace operators and he has no idea what Gores has in mind. He noted while The Palace has “always been a model corporate citizen” and they have enjoyed bragging rights as home of the Pistons — the city only realized about $175,000 annually in tax revenue from all operations at the Palace.

That could change, according to Anthony Sanna, senior managing director of Integra Realty Resources-Detroit, one of the largest valuation/appraisers of commercial real estate in Michigan. Sanna said The Palace property remains valuable and attractive for redevelopment.

“I don’t think you will see any retail — Great Lakes Crossing (Mall) is only a couple miles away,” Sanna said. “But an industrial park or some high tech businesses would work well at the location.”

Usable vacant land in Oakland County goes for as high as $350,000 an acre. The Palace is surrounded by 108 acres of land, primarily paved parking lot.

Sanna couldn’t estimate what the property is worth because “that would require a study” of existing structures and the cost to demolish them.

He said demolition of stadiums and arenas nationally have varied, including Texas Stadium ($6 million), the Seattle Kingdome ($10 million) and the RCA Dome in Indianapolis ($13 million).

“Demolition on the Palace property, including preparing the land for new development, perhaps streets, would like run around $10 million,” Sanna said. “Even at that, because of where it is, the cost would not be prohibitive to redevelopment.”

“They could keep it as it is,” he said. “Even without basketball 40-plus nights a year, it could translate as a big chunk of revenue.”

Officials suspect that if The Palace was purchased, demolition and rebuilding would take place quickly, unlike the Pontiac Silverdome which has sat vacant for years since the Lions left to play downtown at Ford Field in 2002.

Opened in 1975, the Silverdome was once home to the Pistons (1978-88) and Detroit Lions (1975-2001). After both teams left, the Silverdome never recovered.

Amid Pontiac’s financial emergency it was sold at auction in 2009 to a Canadian investment group which made a few attempts at staging events, but in 2014 finally auctioned off parts of its interior, including seats, and shuttered it for a planned demolition in 2016, which has not taken place. It reportedly will be cleared to make way for some form of mixed-used development.

Gores offered to sell the property to Oakland County under a $384-million agreement in which The Palace would be leased back to the Pistons. The county declined, stating it was something better left in private hands.

Patterson, when asked to elaborate on his thoughts, said Tuesday the move was rumored for some time and it was likely spurred by the desire to have all the professional sports teams in downtown Detroit.

As for The Palace property, Patterson — a former Pistons season-ticket holder — suspects concerts alone won’t be enough to keep it in operation and it will likely be destined for reuse “hopefully as a high-quality, high-tech business, after all its neighbor is Guardian Industries.”

When asked what he would like to see surface at The Palace site, Patterson cracked: “Hey, how about the Detroit Lions?”


(248) 338-0319