Book Cadillac brings promise

Condo buyers say they will create work in downtown

Louis Aguilar / The Detroit News
May 27, 2008

The Westin Book Cadillac Detroit not only brings some old-fashioned style back to downtown when it opens, but many buyers of the hotel's upscale condos say they'll bring the city jobs, too.

At least half of the 55 buyers of the housing units at The Book own small- to midsize businesses and many are looking to set up shop or expand their business presence in Detroit, said Jon Grabowski, president of Esquire Properties, the company handling the sale of the Book Cadillac condominiums.

"It's one of the main motivations for many of them to relocate to the city," Grabowski said. Two other real estate brokers in the city said they are helping condo buyers from The Book find office and warehouse space for their companies, which include firms working in media, information technology and health care.

Many of the condo owners say it's too soon to talk publicly, since no deals are sealed yet, but the moves have the potential to create several hundred jobs in the city.

What's clear, though, is that The Book is drawing business executives who now see Detroit as a viable place to live and consider setting up shop here.

Take the Achatz Handmade Pie Co., a 15-year-old Chesterfield firm that sold $3.8 million in pies last year, distributed in suburban Detroit and through Chicago's Whole Foods, but with minimal presence in the city of Detroit.

"You really want to be in the state's major city and for us, it's always been kind of tough for us to figure out where and when to do that," said owner Dave Achatz.

But when his brother, Steven Achatz, moves to his 28th-floor Book Cadillac condo in October, they plan to open a store that will serve both pies and soup in downtown, possibly just down the street from The Book's location at Washington Boulevard and Michigan Avenue. The shop, which will also do some catering, will employ about 20 people full-time, Dave Achatz said.

Steven Achatz runs Achatz Soup from Scratzch in Casco. The 49-year-old bachelor lives in a former garage next to his soup shop.

"I was never sure if it was worth living in Detroit until I learned about The Book," he said. "Enough things are happening down here to give it a try."

Wes Wyatt, chairman and CEO of Cintron Beverage Group in Philadelphia who bought one of The Book's $1 million-plus penthouses, says he too thinks the Book was too good to pass up. Compared with Philadelphia real estate prices, Wyatt called the seven-figure price tag for his three-story penthouse "a bargain."

Once he moves in he may bring jobs to Detroit. "It's something that we're exploring, so it may be some marketing staff or some distribution," Wyatt said.

"I'm just a big fan of the city," added Wyatt, who has described Detroit's downtown revival as "raising the Titanic."

Cintron energy drink has sponsored events in town, including the Comerica Cityfest and a fashion show. "We have a great relationship with General Motors and Detroit is a good market for us," Wyatt said.

The 67 condo units are on the top eight floors of the 32-story hotel, and range from Wyatt's panoramic penthouse to more modest units priced in the mid-$200,000s.

Another penthouse buyer, Bob Bartlett, doesn't intend to move ReviewWorks, the insurance cost-containment firm he co-founded, from Farmington Hills to Detroit. "But so many people now want us to have meetings at The Book, I can see us benefiting the city," Bartlett said.

Bartlett lives in Birmingham, and when he mentioned that he was moving to Detroit, "A few people told me I was crazy," he said. "But as more details come out about The Book, some people now think I'm brilliant."

The Westin Book Cadillac Detroit opens Oct. 1 after a two-year, $200 million renovation.

When it was built in 1923, The Book was the tallest building in Detroit and the tallest hotel in the world. It was the city's premier hotel for decades, but closed in the 1980s and became a towering symbol of the city's blight.

Detroit condo project puts discarded containers to use

BY JOHN GALLAGHER • FREE PRESS BUSINESS WRITER • May 13, 2008

The idea of putting people in empty shipping containers hardly evokes images of stylish urban living.

But a Detroit-based group hopes to use empty shipping containers to build one of the most unusual -- and certainly one of the most innovative -- residential projects in southeast Michigan.

The project would stack empty containers four high, cut in windows and doors, install plumbing, stairways and heating, and add amenities such as balconies and landscaped patios.

If it wins city approvals, the 17-unit condominium project could break ground this fall and open near Wayne State University in 2009. Steven Flum, a Detroit-based architect who designed the project, said it solves several problems at once, including the need to build environmentally sensitive buildings cheaply. The project is going to cost about $1.8 million, about 25% less than a normal condo project of similar quality would run.

"It's like building blocks," he said. "From the architect's point of view, the containers allow for creative urban design. They are innovative and modern, but also affordable."

The partners plan to build their prototype on the southeast corner of Rosa Parks and Warren, on lots now vacant or containing burned-out homes. They call their project "Exceptional Green Living on Rosa Parks."

The project will offer condominium units measuring 960 to 1,920 square feet. Prices will range from about $100,000 to around $190,000.

Any doubts might be dispelled by Flum's renderings of the project.

"People think they're going to be cubbyholes," Flum said. "They're going to be quite large and open."

The developer, Leslie Horn, chief executive of the Detroit-based Power of Green Housing organization, said using empty shipping containers is not a new idea.

"It's been done in Europe and, to a limited extent, in this country. But no one has looked at organizing the process on a larger scale incorporating a range of recycled materials and efficiencies that could save a homeowner as much as 60% annually in energy costs," she said.

Horn and Flum said they would use special insulating paint inside and out, high-efficiency water heaters and other energy-saving methods. But by far, the most environmentally friendly aspect of the project is the use of discarded shipping containers.

They estimate there are 700,000 empty shipping containers piling up near U.S. ports around the country, including at a yard near Fort and I-75 in Detroit. The containers tend to be cheaper to build new than to return to their country of origin, so once delivered here and emptied, they pile up by the thousands.

If successful, the prototype project could lead to widespread other uses of empty containers, Horn said, including student or emergency housing, temporary construction offices and infill houses in urban neighborhoods.

Want a preview? To see some of the innovative uses to which containers have been put in Europe, visit www.containercity.com.

Meanwhile, a small version of one converted shipping container is featured in the exhibit Considering Architecture: Sustainable Designs from Detroit, running through July 28 at the Museum of Contemporary Art Detroit in Detroit.

Detroit condo project puts discarded containers to use

BY JOHN GALLAGHER • FREE PRESS BUSINESS WRITER • May 13, 2008

The idea of putting people in empty shipping containers hardly evokes images of stylish urban living.

But a Detroit-based group hopes to use empty shipping containers to build one of the most unusual -- and certainly one of the most innovative -- residential projects in southeast Michigan.

The project would stack empty containers four high, cut in windows and doors, install plumbing, stairways and heating, and add amenities such as balconies and landscaped patios.

If it wins city approvals, the 17-unit condominium project could break ground this fall and open near Wayne State University in 2009. Steven Flum, a Detroit-based architect who designed the project, said it solves several problems at once, including the need to build environmentally sensitive buildings cheaply. The project is going to cost about $1.8 million, about 25% less than a normal condo project of similar quality would run.

"It's like building blocks," he said. "From the architect's point of view, the containers allow for creative urban design. They are innovative and modern, but also affordable."

The partners plan to build their prototype on the southeast corner of Rosa Parks and Warren, on lots now vacant or containing burned-out homes. They call their project "Exceptional Green Living on Rosa Parks."

The project will offer condominium units measuring 960 to 1,920 square feet. Prices will range from about $100,000 to around $190,000.

Any doubts might be dispelled by Flum's renderings of the project.

"People think they're going to be cubbyholes," Flum said. "They're going to be quite large and open."

The developer, Leslie Horn, chief executive of the Detroit-based Power of Green Housing organization, said using empty shipping containers is not a new idea.

"It's been done in Europe and, to a limited extent, in this country. But no one has looked at organizing the process on a larger scale incorporating a range of recycled materials and efficiencies that could save a homeowner as much as 60% annually in energy costs," she said.

Horn and Flum said they would use special insulating paint inside and out, high-efficiency water heaters and other energy-saving methods. But by far, the most environmentally friendly aspect of the project is the use of discarded shipping containers.

They estimate there are 700,000 empty shipping containers piling up near U.S. ports around the country, including at a yard near Fort and I-75 in Detroit. The containers tend to be cheaper to build new than to return to their country of origin, so once delivered here and emptied, they pile up by the thousands.

If successful, the prototype project could lead to widespread other uses of empty containers, Horn said, including student or emergency housing, temporary construction offices and infill houses in urban neighborhoods.

Want a preview? To see some of the innovative uses to which containers have been put in Europe, visit www.containercity.com.

Meanwhile, a small version of one converted shipping container is featured in the exhibit Considering Architecture: Sustainable Designs from Detroit, running through July 28 at the Museum of Contemporary Art Detroit in Detroit.

Bing gets loan to keep the Watermark afloat

BY JOHN GALLAGHER • FREE PRESS BUSINESS WRITER • May 1, 2008

The Detroit Economic Development Corp., a quasi-public arm of the city, approved a $700,000 loan Wednesday for the Watermark, the east riverfront condominium project being built by civic and business leader Dave Bing.

Like most proposed residential projects in Detroit and elsewhere, Bing's project, announced in 2006, has been stymied by poor market conditions. The loan is meant to help him carry the project's costs through this year until the market recovers enough for Bing to break ground.

"We believe this is a good use of our funds to keep this project moving forward," Brian Holdwick, vice president of the Detroit Economic Growth Corp., told the DEDC board.

Ed Tinsley, Bing's top development aide, said Wednesday that the Watermark's senior lenders are requiring that Bing sell about 65% of his 112 units before releasing construction money. As of this week, the Watermark has sold 22 units and has another 12 sales "in flow," Tinsley said.

Bing and his partners, who include a roster of Detroit sports and civic leaders, have invested more than $3 million in the project and face another $3.9 million in costs this year for design, engineering and marketing.

Detroit group to woo workers in creative jobs

It plans Web site, aid for small firms

BY JOHN GALLAGHER • FREE PRESS BUSINESS WRITER • May 4, 2008

In their efforts to attract more workers to the so-called creative economy, metro Detroit's business leaders are getting, well, creative.

The corporate leadership group Detroit Renaissance expects to launch a Web site in early June devoted to the region's creative economy. A marketing campaign to highlight the region's creative assets should go public at the same time.

And, looking ahead, Detroit Renaissance hopes to open a creative incubator in a downtown building on Woodward Avenue in a year to nurture small but promising creative businesses.

"This is really a very important initiative for the community," said Doug Rothwell, president of Detroit Renaissance. "It really builds off of the desire to retain talent, to attract a younger work force. This is a way to enable us to achieve those goals that other people have been talking about."

The term creative economy refers to those industries whose output is deemed to require some special talent or creativity, including advertising, software design, film production and architecture.

Such industries are considered attractive today by economic development officials. An analysis done for Detroit Renaissance by Angelou Economics, an Austin, Texas-based consultant firm, noted that creative industries are estimated to account for more than 7% of the world's total economic output, and that the annual growth of creative industries is twice that of service industries and four times that of manufacturing industries.

Moreover, salaries in creative industries tend to run above the national average. And creatives, as some people call workers in such fields, are more likely to cluster in urban areas, bringing a trendy vitality to downtown centers.

For all those reasons, the goal of establishing a creative corridor in metro Detroit makes sense, Rothwell said.

"It really is a chance to rebrand the image of the region," he said. "What better sector of the economy to gravitate to than this one, which would really have us viewed in a whole different light than we are today?"

Creative industries' impact

This attempt to boost the region's creative assets grew out of the Road to Renaissance plan, a multi-pronged effort by Detroit Renaissance to rebuild and reenergize the local economy as the region's automotive base declines.

Angelou Economics studied six creative industries for their possible impact on southeast Michigan's economy. The six industries were advertising, marketing and public relations; architecture and design; film production and distribution; digital and traditional media; music, and performing and visual arts.

Three of those industries stood out as recommended areas of concentration because of their large current employment base in metro Detroit and their likely growth rates. Those three were advertising, marketing and public relations; digital and traditional media, and architecture and design.

Taking advantage of Woodward

With the new Web site and marketing campaign coming in June, establishing the creative incubator will take a bit longer. Among other things, Rothwell said, Detroit Renaissance needs to get commitments from foundations to help bankroll the concept.

Then, an existing building must be identified on Woodward Avenue downtown to provide up to 50,000 square feet for the incubator. The incubator would offer office space, conference rooms and other facilities designed to nurture small creative firms.

Rothwell said locating the incubator on Woodward in the heart of downtown makes sense.

It's "a way to use Woodward Avenue to connect the dots in Detroit in a way we haven't done before," he said. "Woodward is the main street in Detroit, and the more we can build up Woodward Avenue to really be the connection between downtown, Midtown, New Center, the medical facilities, the educational center up at Wayne State, the more we can do that, that's a good thing, and this creative corridor might be the first time we've had a plan to really do that."

Westin Book Cadillac returning to elegance

Once a ruin, Detroit landmark set to open this fall is already generating buzz, lots of business

BY JOHN GALLAGHER • FREE PRESS BUSINESS WRITER • April 22, 2008

Six months and counting.

Nearly a quarter-century after Detroit's famed Book-Cadillac Hotel closed, workers were busy Monday getting it ready for a fall reopening as the Westin Book Cadillac Detroit, and the team that saved it prepared to announce grand-opening details today.

Celebrity chef Michael Symon is to be introduced at a news conference today as the creator of the hotel's new signature restaurant, tentatively to be called Roast.

Other details: The hotel will hold grand-opening festivities Oct. 24 and 25, and begin taking room reservations Nov. 1 for stays starting Nov. 15.

For months, the hotel has been booking special events for late this year and beyond, and bookings are running ahead of expectations, Scott Stinebaugh, director of sales for the hotel, said Monday.

"Of course, we sold out for the auto show. Of course, we sold out for the Final Four," Stinebaugh said, referring to the 2009 North American International Auto Show and the college basketball championships being played at Ford Field in 2009.

"But we are really getting booked up for the holiday season and for the spring and summer wedding season, as well."

At an afternoon news conference today, Cleveland-based developer John Ferchill, the new owner who is doing the renovation, is to introduce Symon and present other details. George Jackson, Detroit's chief development officer who helped negotiate the complex $180-million financial deal, is also scheduled to speak.

Opened in 1924 with an Italian Renaissance-inspired design by architect Louis Kamper, the Book-Cadillac operated for six decades under various owners as Detroit's leading hotel. John F. Kennedy spoke there, and the hotel was famed for hosting movie starts and sports greats, not to mention generations of weddings, bar mitzvahs, graduations and retirements.

The hotel's fortunes declined with those of Detroit at large, and it closed in 1984. It languished in bankruptcy for many years, with windows broken and plaster dissolving under rain and snowmelt, until the interior became a dank ruin.

The Ferchill Group, which specializes in urban redevelopment projects, spent two years putting together a complex financial package to raise the money needed to reopen the hotel, and another two years on reconstruction work.

The deal includes the creation of about 67 condominiums on the upper floors, more than 50 of which have been presold, Ferchill said.

On Monday, work crews were still busy throughout the structure, but the job site was at least beginning to take on the semblance of recognizable rooms. In the Venetian, a fourth-floor ballroom, the ornate ceiling with a wealth of classical and Renaissance-inspired ornamentation was mostly done. The same was true in the Italian Garden room, also on the fourth floor.

"There is nothing like this in the city -- not even close," Stinebaugh said during a tour.

On the north side of the hotel, a new facility has been added that will include the Woodward, a 600-seat ballroom, as well as a fitness center and pool, business center, spa and various shops and restaurants.

The Westin will have the capacity to handle three weddings at the same time, Stinebaugh said.

Different city, similar story

Pittsburgh rebirth proof that Michigan's industry may not define it forever

BY KATHERINE YUNG • FREE PRESS BUSINESS WRITER • April 14, 2008

PITTSBURGH -- Few cities in America understand Detroit's economic pain better than the former steel town of Pittsburgh. But empathy isn't all it has to offer.

Pittsburgh knows what it takes to survive a massive loss of manufacturing jobs. Two decades after most of its steel mills shut down, the city has transformed itself into a diversified, service-oriented economy, albeit with a smaller population.

Its efforts to remake itself provide plenty of lessons for southeast Michigan and other areas grappling with these issues.

"The Pittsburgh economy is a healthy place," said Frank Giarratani, an economics professor at the University of Pittsburgh. "If Detroit can somehow find itself in the same place, it will be OK."

The two metropolitan areas share striking similarities.

Both long relied heavily on one industry for economic growth and ignored warnings to diversify. Both are home to strong research universities and foundations and a multitude of research and development centers. And both see their populations getting smaller and grayer.

But Pittsburgh was forced to cope with a severe economic crisis much earlier than Detroit. The outcome provides a glimpse of what may be in store for Michigan.

Today, along 2 miles of the Monongahela River, just east of downtown, former steelworkers dine and shop at the $300-million Waterfront retail, residential and office development, where U.S. Steel's flagship Homestead Works mill once stood.

Across the river to the west sit the offices and laboratories of the Pittsburgh Life Sciences Greenhouse. It's playing a key role in the growth of start-up companies in fields such as medical devices, therapeutics and biotechnology tools.

And in what might be the biggest sign of change, the University of Pittsburgh Medical Center, the city's largest employer, is preparing to move its headquarters to the prominent U.S. Steel Tower this spring.

Thanks to expansions in health care and higher education, Pittsburgh now boasts more jobs than before the steel industry collapsed in the mid-1980s, said Chris Briem, a regional economist at the University of Pittsburgh's Center for Social & Urban Research.

"We have diversified," he said. "We feel your pain. We've been there."

Last year, venture capital investment in the Pittsburgh region was almost double the amount in Michigan, according to the PwC/NVCA MoneyTree Report. The city's technology association, the Pittsburgh Technology Council, has 1,400 members compared with 887 for Troy-based Automation Alley.

Troubles along the way

To be sure, not everything has turned out rosy.

When thousands of laid off steelworkers fled the area in search of jobs, they took their children with them. The city's population, now just more than 310,000 compared with more than 420,000 in 1980, never has recovered from the blow, and job growth has slowed in recent years.

Pittsburgh's finances also took a hit. After years of chronic budget deficits, the city has been under state oversight since the middle of 2004.

And many of the former mill workers who stayed in the area, such as Jay Weinberg, are earning less money than they would have made had the mills never gone under.

To survive, thousands of them opened their own businesses. Others juggled multiple low-paying jobs. Many of their wives went to work for the first time.

Weinberg, whose father and uncles worked in the mills, is one of the luckier ones. The ex-Homestead worker and former United Steelworkers officer serves as vice president of Maglev Inc., which is trying to bring magnetically levitated high-speed trains to the Pittsburgh area.

"I almost feel guilty for having survived so well," said the 59-year-old Pittsburgh native, who grimly recalls the suicides and mental breakdowns that followed the mill layoffs.

But the steel industry hasn't completely disappeared from Pittsburgh.

U.S. Steel still calls the city home and operates a research and development center and three manufacturing facilities in the area. The region also contains a number of thriving specialty steelmakers and steel service firms.

But the industry's share of the metropolitan area's total employment has sunk to just 1.3% from 14.5% in 1970. And Pittsburgh's steelmaking capacity now accounts for less than 4% of the country's total capacity compared with nearly 12% in 1980, Giarratani said.

"Detroit in a lot of ways has a leg up on Pittsburgh," said James Epolito, a Pittsburgh native and the chief executive of the Michigan Economic Development Corp. "We are still going to be the auto capital of the world.

"We've got to turn our present attitudes around in Michigan. We will come back, but it's not going to be overnight, and there are no quick fixes," he added.

Lessons learned

In Pittsburgh, economic and workforce development officials have gained some hard-won perspective on mistakes made and things done right in their struggle to find new sources of growth.

Some of the key lessons:

• More attention should have been paid to the importance of entrepreneurism. The Pittsburgh region lags in the rate of new businesses formed, according to Pittsburgh TODAY, an online report card about the region.

Business leaders tried to lure big companies to the area rather than creating an entrepreneurial culture, despite having universities and corporate research and development in the area, said Harold Miller, a local consultant and a former president of the Allegheny Conference on Community Development.

• Pittsburgh should have acted quicker to develop other industries that steelworkers could transition into rather than initially trying to bring the steel mills back, said Barry Maciak, director of the Center for Competitive Workforce Development at Duquesne University.

"We spent a lot of time trying to save what couldn't be saved," he said. "When it's over, sometimes it's over."

• It's worth investing in organizations that help start-up companies get off the ground.

Since 2002, the state-funded Pittsburgh Life Sciences Greenhouse has directly invested nearly $10 million in more than 45 fledgling companies involved in medical devices, therapeutics and other life science specialties. More than a dozen start-up firms also are leasing lab space at the Greenhouse at discount rates.

In addition, six senior-level life sciences executives recruited by the organization are helping 220 local life sciences companies grow their businesses.

"These former CEOs have experience these companies can't get anywhere, and if they could get it, they couldn't afford it," said John Manzetti, the Greenhouse's chief executive and president.

Since late 1999, another local organization, Innovation Works, has directly invested $37 million in 104 start-up companies in areas such as advanced materials, consumer products and electronics. A team of business advisers also works with these companies.

"You can never have too much of this really early-stage capital," said Michael Stubler, president of the Pittsburgh Venture Capital Association and managing director and cofounder of Draper Triangle Ventures.

• Vacant industrial sites and deteriorating neighborhoods can be transformed into assets.

When it became clear the steel mills weren't coming back, the city teamed up with the Allegheny Conference on Community Development, an economic development group, to buy properties, demolish the facilities and clean things up for development.

"Once you have the sites ready, you would be surprised at how much it makes a difference," said Mulugetta Birru, director of the Wayne County Economic Development Department and a former executive director of the Urban Redevelopment Authority in Pittsburgh.

Nowhere is the city's achievement more visible than at the Waterfront development located in the nearby suburb of Homestead, which is to Pittsburgh and the steel industry much like Highland Park is to Detroit and the auto industry. It reminds visitors that shuttered steel mills don't have to become permanent eyesores.

The 260-acre retail and dining destination opened in 2000 after several years of planning and development that included new roads and sewers and changing zoning rules involving three communities.

And revitalization efforts weren't limited to mill sites.

The Lawrenceville neighborhood has reinvented a lengthy portion of its once rundown main drag, Butler Street, into a thriving arts and design district with one-of-a-kind boutiques, art studios and restaurants.

To market the district, a community development group called Lawrenceville Corp. distributed more than 100,000 copies of a guidebook for shoppers. The zone now features more than 70 design-related businesses. Every April, it holds a 24-hour art show, called Art All Night, that attracts thousands.

• Don't underestimate the power of community spirit and pride.

More than anything else, Pittsburghers' devotion to their city seems to have kept it from becoming a wasteland. Those who didn't leave town when the mills closed have formed an emotional attachment to the area on par with the fierce loyalty exhibited by Pittsburgh Steelers fans across the nation.

"People love this city like no other city in the world," said Michael Madison, a University of Pittsburgh law professor who writes Pittsblog, a blog about the area.

Pittsburgh's devotees even include people such as Mike Stout, who says the city has gone downhill because of the loss of manufacturing jobs.

Like many others, Stout, 58, has learned that life doesn't stop because Big Steel leaves town. He now runs a small printing shop on Eighth Avenue in Homestead, near where the mill he once worked stood.

The former United Steelworkers grievance chairman also spends time on his singing career. He's part of a group that performs at union conventions around the world. He writes his own songs and has compiled them into CDs with titles such as "Break the Chains" and "Soldiers of Solidarity."

"Manufacturing work is what made this country what it is," he said during lunch at a seafood restaurant at the Waterfront.

Asked how it feels to be dining on the site of his former mill, he pauses and ruefully admits, "It's weird."

Then he continues eating.

Detroit's housing slump is attractive to investors

Some buyers look to get 100 or more

BY GRETA GUEST • FREE PRESS BUSINESS WRITER • March 31, 2008

Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.

"This is a millionaire's market," said Jeremy Burgess, a 28-year-old investor from Washington state who has been living in Detroit for the past year. "I feel like I'm driving through the city and stopping to shovel diamonds in the back of my truck."

His wife, Jeanna Kiehle, and partner Jared Pomranky formed Urban Detroit Wholesalers to scour the city for houses they can fix and rent. The idea is to generate cash flow until the market improves, and they then can sell the houses. They own 38 houses now and close on 15 more before the end of the month.

Some buyers are looking to buy larger numbers of homes, perhaps 100 or more at a time.

People tuned in to the Detroit area's distressed housing market say the majority of sales now are to investors, often in bulk deals.

Sales were up dramatically in Detroit in February, rising 49% from a year before, and realty watchers say foreclosure properties played a key role in the increase.

Some see significant risk to investors who could get low-end properties without being familiar with pitfalls of the market.

"Real estate is not a commodity. You have to know what you are buying," said Mark Nagy, a broker and consultant for RE Investments Inc. in Southfield. "What typically ends up in bulk sales is stuff that has sat on the market for more than six months."

Banks see Detroit as a sore spot, Nagy said, because they cannot move the properties and there are so many.

"Bulk buying will become more commonplace by the end of the summer," Nagy said. "Right now, so many properties in Detroit are like a hot potato. Whoever ends up with it will be crushed."

Burgess and others say there are plenty of good properties.

Smith Kitporka, 28, an investor in San Jose, Calif., said he has been buying Detroit foreclosures for two years, often paying as little as $10,000.

"No war-zone houses or anything like that. Just good houses in good neighborhoods," he said.

Burgess said he can pick up an $85,000 house in Detroit for $20,000 to $30,000 these days. Listings on Fannie Mae's Web site show many Detroit foreclosures for less than $25,000.

Last year, metro Detroit led the nation in foreclosures. Of the 10,342 homes on the market in Detroit as of Wednesday, 3,355 were bank-owned foreclosures, according to Realcomp Inc. And in the tri-county area, 7,104 bank-owned foreclosures were listed out of 47,095 homes on the market.

Eddie Peters, 44, an asset manager for 15 years at various banks who left GMAC's Homecomings Financial office in Berkley last month in a wave of layoffs, said bulk sales are picking up.

When banks were getting 10-20 foreclosures a month, they would list them with local agents and recover what they could. But now, as foreclosure volume has risen, banks must sell in bulk so they don't get overwhelmed with property, Peters said.

"The bulk sale is an acceleration of what is normally done," he said. "About 80% of the houses sold now are being bought by investors."

Banks contacted for this article either declined comment or did not respond.

Peters said lenders don't want to be identified with the subprime loan collapse that hit last year and rippled through the U.S. economy as lenders tightened all forms of credit.

The prices in metro Detroit -- mainly within the city limits and nearby suburbs -- are so low that investors from more expensive markets such as California, Nevada and Florida feel certain they can grab bargains here.

"Right now, people are buying for the thrill because prices keep going down," said John Graham, a real estate agent with Keller Williams in St. Clair Shores who works primarily with investors. "The rental market is going to be crazy good. That's what these out-of-state people are seeing."

Burgess and his partner started out by buying foreclosed houses, fixing them up and then selling for a profit, a practice known as flipping.

But after the subprime loan crash last year, potential buyers had trouble obtaining loans and flipping essentially ended.

The new trend is to buy properties cheap from banks in bulk and then sell the properties to investors who hope to collect rent until the market improves.

Burgess said homes in Detroit's better neighborhoods are renting for $850 a month. His company manages the properties for the out-of-state investors.

The investors are banking on a Detroit recovery in the next 5-10 years.

Drew Sygit, vice president of the Lending Edge in Bloomfield Hills, said that most of the investors he talks to in Michigan are trying to be wholesalers and sell property to other investors.

"The Michigan people are scared of Detroit," Sygit said. "It's not a sure thing. They have to worry about inspections, copper stealing, equity stripping. It's challenging, but there is a big reward."

Tarik Dinha II, 30, of Clarkston is the owner of Urban Development Solutions Group LLC and Deeds4Cash.com. He buys 20-40 houses at a time from banks for "pennies on the dollar" and then sells them as fast as possible.

But making those connections with the right people at the banks is not easy.

None of the investors interviewed for this story would divulge which banks they work with.

But Dinha said he has made the right connections and has contacted banks with a list of properties for which he can pay cash within 72 hours.

"I usually buy 40 at once, but anything over 10, 15 is a bulk deal. The key thing is to be able to not get stuck with a bunch of junk," he said.

More bulk sales are combining hard-to-move property in several states that have been hit hard by foreclosures, said Marshall Mandell, a realty agent and foreclosure expert who deals only in bank-owned properties in metro Detroit.

Nagy, the Southfield broker, said he saw a bulk listing for 256 properties valued at nearly $30 million in five states, with 105 of the properties in Michigan. The deals can be difficult to close, as investor Travis McKee, 35, of Pontiac found. He made an offer recently for clients on 195 houses owned by a bank, but the deal fell apart.

"I haven't completed any bulk deals yet. I'm still interested," he said.

Letitia Patterson, a realty agent and foreclosure specialist at RCH Brokerage in Southfield who also runs DetroitCashDeals.com, said banks must prove to auditors that they are getting a reasonable return for each property, she said.

"It is very few brokers who deal with the banks," Patterson said. "It is really sexy and exciting to say we are buying 100 houses for pennies on the dollar. The deals often don't close."

Nagy said that in many cases, there's still a disparity between what banks want to get for foreclosed properties and what investors are willing to pay.

In many cases, a bank today wants 55-65 cents on the dollar for a suburban property, yet investors want to pay 40-45 cents on the dollar, he said.

In Detroit, the bank may want 30-35 cents on the dollar, and investors want it at 20-25 cents on the dollar.

"Those two points have not met in the middle yet," Nagy said. "It's an evolution process. It's going to evolve that bulk sales will increase."

Book-Cadillac owner sees new deals

Proprietor to invest in downtown housing

Tuesday, March 18, 2008
Louis Aguilar and Eric Morath / The Detroit News

The owner of the Westin Book Cadillac Detroit says he is looking to seal two major development deals that would bring more upscale housing downtown now that the $180 million renovation of the historic hotel is in its final stretch.

Cleveland-based developer John Ferchill also expressed confidence that downtown Detroit will continue to grow despite the mayoral scandal and the tough national economy -- a sentiment echoed by other business leaders Monday as they announced plans to step up efforts to promote the city's restaurants, entertainment and other attractions.

"I'm still high on Detroit," Ferchill said during a Monday interview. He visits the city frequently to keep tabs on the progress of the building that had been shuttered since 1984.

Ferchill's ability to get funding for the Book is widely regarded as one of the major accomplishments in downtown Detroit this decade. Renovations began two years ago, capping decades of effort by city officials to revive the building that had been the city's pre-eminent hotel for 60 years.

"I don't think it will have any business impact at all," Ferchill said of the controversy facing Mayor Kwame Kilpatrick. "To be honest, we've never been able to attract national investment to help us with any of our Detroit projects. But those that do remain bullish on Detroit continue to be bullish."

Ferchill said the renovations at the Westin Book Cadillac are on track for its Oct. 1 opening, when the public will be able to get a look at the restored 1924 building. Reservations for weddings and other events are coming in, and soon the public will be able to make reservations for the 455 hotel rooms that will be available starting Nov. 1, Westin officials said.

Marketing to target suburbs

On the same day Ferchill provided an update of the Book Cadillac progress, the Downtown Detroit Partnership announced it will spend $750,000 over three years on marketing the heart of the city, including Eastern Market and Midtown, which is home to the city's museums. The message will be aimed at suburbanites and those outside the Metro area, said Partnership Chairman Roger Penske.

"The Detroit we've talked about is here today and we've got to let people know," Penske said as he highlighted efforts to clean downtown, bring in events such as the Grand Prix and build new hotels and casinos, during the partnership's annual meeting Monday at the Renaissance Marriott hotel.

The marketing campaign will feature new maps and city guides, with updated information about entertainment venues and hotels, and a strong focus on online, social networking. The social media is aimed at attracting younger people to visit, and live, downtown, Partnership President and CEO Ann Lang said. "Once people come to live and work downtown, they become ambassadors to attract others," she said.

More deals may be near

Ferchill said he hopes to close on two deals that would bring more rental units downtown. He declined to name the buildings, but hopes the transactions will be completed by late spring or early summer.

"I'm disappointed that more housing hasn't come online downtown, but, I know some deals fell through and the housing situation, clearly, is tough all over," Ferchill said. "But I think downtown Detroit has two opportunities: rental housing and entertainment-type developments."

The renovation of the Book Cadillac has been brushed by the Kilpatrick scandal. A company owned by his longtime friend Bobby Ferguson has been accused of using his connections to get city contracts, including the one for the interior demolition of the Book Cadillac. According to a Detroit Free Press story published earlier this month, Kilpatrick's former chief of staff, Christine Beatty, exchanged text message information with Ferguson about contracts and how to get paid for completed work -- often a challenge for city contractors. One of the exchanges involved the work Ferguson won at the Book-Cadillac.

At the time, Beatty and Ferguson were members of the Downtown Development Authority, a branch of the Detroit Economic Growth Corp., which was deciding to spend money on the Book-Cadillac. Ferchill said his company had little involvement in choosing Ferguson as a subcontractor.

"But he did a good job," Ferchill said.

GM backs riverfront condos

Automaker gives Houston-based developer six acres east of Renaissance Center for housing project.

Monday, February 25, 2008

Sharon Terlep / The Detroit News

Another batch of Detroit riverfront condos is slated to go on sale this fall, according to General Motors Corp., which is orchestrating the development as part of its efforts to help rebuild the long-neglected stretch of land east of the Renaissance Center.

The automaker, along with the development company that manages the Renaissance Center, is looking to build about 600 luxury condominiums that would sell for roughly $300,000 to $1 million apiece.

Matthew Cullen, head of GM's Economic Development and Enterprise Services, said recently that model condos should be available for viewing by late summer or early fall, with the units going on sale shortly afterward.

"Soon, we'll be able to give people a good sense of what the property will look like," Cullen said.

It's a bit of good news for the burgeoning redevelopment of Detroit's downtown core, which has suffered a number of setbacks amid a nationwide mortgage crisis and a credit crunch that has made it more difficult for developers to build.

GM last year gave Houston-based Hines real estate firm six acres of land just east of the automaker's world headquarters in the Renaissance Center in exchange for a cut of the future profits from the development. Hines will head up the development project, though GM will weigh in on any plans.

Hines plans to build the project in phases, starting with a high-rise condo tower on a one-acre plot next to the RenCen. If that's successful, more will follow on three more adjacent parcels.

The development will be largely residential, designed to take advantage of the waterfront property and the amenities offered in the RenCen, which houses retail stores, a movie theater, and restaurants.

Progress on the GM undertaking comes as other high-profile Detroit developments face significant hurdles.

Just as Detroit was getting some traction in building up its downtown core, developers found themselves mired in a sluggish economy and a national mortgage crisis. Bankers hit by the global lending crisis are suddenly asking for tougher terms.

One effort, a $60 million luxury residential development called Watermark Detroit, was slated to include apartments, town homes and condos priced from $400,000 to $1.2 million. It's been delayed because the banks now insist that more than 60 percent of the 112 residential units be pre-sold before the project continues. Ex-Detroit Piston Dave Bing is heading up that project.

Another project, the @water, pronounced "Atwater," was slated to break ground last summer and bring $1.6 million penthouses to the riverfront.

But now, developers are seeking more investors after banks increased the required level of pre-sales to more than 60 percent.

The massive new projects, if they become reality, would stand in contrast to a riverfront that at the beginning of the decade featured struggling businesses, dilapidated buildings and acres of land scarred by heavy industry.

Hines, one of the world's largest real estate firms, has experience in Detroit. GM hired the company to oversee the RenCen makeover. It built the Comerica tower downtown and manages the City-County Building and Compuware headquarters, both downtown.

Condo, loft sales surge in Detroit as prices fall

December purchases up 33.9% on previous year

Wednesday, January 30, 2008

Louis Aguilar / The Detroit News

DETROIT -- Tumbling prices for once-pricey downtown lofts and condos are bringing in a flurry of buyers, providing a surge in December sales not seen since the bygone era of easy mortgage financing.

"I tell most of my clients there is $100,000 wiggle room on certain units right now," said Sabra Sanzotta, owner of the Loft Warehouse realty agency, which specializes in downtown properties. With that bargaining leverage, Sanzotta sold six high-end units in the past month, including a downtown penthouse for $200,000. Original price: $511,000. It was her best month of sales since 2003, Sanzotta said.

Seven downtown Realtors say they enjoyed one of their best months in December and see that trend continuing into the new year. Data suggests downtown is one of the few places in Metro Detroit where buyers are jumping on bargain real estate created by the national housing meltdown.

Sales of houses and condominiums in Detroit jumped by a 33.9 percent in December, compared with the same month in 2006. No other market in the Metro Detroit area came close to that kind of increase, according to RealComp II Ltd., a real estate data company. It was the biggest month-to-month increase in Metro Detroit all year.

Detroit's condo-building rush -- driven by industrial loft conversions, apartment renovations and new construction -- began in 1999, when 34 building permits for attached condos were issued in the city. In 2003, 223 such permits were issued, the most of any year on record with the Southeast Michigan Council of Governments. Last year more than 100 condo permits were issued.

Now, more than a few condo projects have been delayed and several have died. Faced with the credit crunch sparked by the subprime mortgage crisis and the sluggish local and national economy, the financial backers of some deals are clamping down on projects, by toughening the terms of their lending deals. That's pushing developers to close more sales just to keep their projects alive. Meanwhile, Realtors and developers said, banks are taking a loss on some units to avoid foreclosure costs.

These kinds of tough times make for hard bargaining.

"It's buyers who can now get in to units for less than $200,000 when just a few months ago those asking prices were often much, much higher," Sanzotta said.

'From dead to wow'

Take the Wayne State University-area loft being bought by Valerio della Porta and Monique Horton, a couple now renting downtown. They're buying the stylish 1,300-square-foot unit with huge windows, hardwood floors and granite countertops for $163,000, reduced from a starting price of $230,000. Besides the $67,000 discount, the seller also agreed to pay the couple's closing costs and a portion of the down payment.

"Why wouldn't we buy at this price?" said della Porta, a software engineer. "The only question we had was that should we wait and get a better price. But I can't see it getting much lower."

Austin Black, a Realtor with Max Brock Consulting Group, said the number of people interested in buying downtown "went from dead to wow" last month.

"The number of inquiries doubled last month, and it keeps picking up," said Black, who sold two units in December. "There is now as much interest in downtown, Midtown, Brush Park and Riverfront area property than there has ever been."

Sign of desperation

But not everyone is happy with the sales surge. Developers say the trend shows how desperate the situation has become. They have little hope prices will rebound soon.

"Lots of projects are just teetering right there," said Colin Hubbell, manager of the Hubbell Group, which is responsible for four Midtown developments. "It's an indication that some projects are willing to take a loss on some units just to create some buzz. Some projects are just limping along and paying the maintenance costs of a nearly empty building. I think this trend on prices will last until spring. Or some developers may decide not to make any profit at all."

Hubbell says he's facing "strategic" choices at his 55 West Canfield Lofts. The building debuted with a party in December 2006 attended by hundreds, including Mayor Kwame Kilpatrick. But more than half of the units remain unsold.

"The last closing was last summer. Beyond dropping prices on the units, we now are considering rentals. We have Avalon Bakery moving in on the ground floor, and that should help significantly," Hubbell said referring to the Midtown organic bakery relocating to the building.

Not all Detroit units are at discount prices, said Ryan Cooley of O'Connor Realty in Corktown. "We're actually seeing revived interest this month in the units that haven't been drastically reduced," Cooley said. "There is a finite pool of those kind, but we're starting to see a general overall interest go up."

The other reason downtown property is beginning to move is that some properties already have gone into foreclosure, says Kevin Wobbe, a Realtor at PLM Group, who also saw his business start to increase last month.

"I know that these pretty amazing deals are happening for not-so-great reasons. But it's still great to say downtown Detroit is one of those places proving itself to be a great destination where people want to be," Wobbe said. "I wish it didn't have to come as such a loss for some people, but we've got to move forward.

Bleak Prospects Delay Shopping-Center Project

By MAURA WEBBER SADOVI
January 30, 2008; Wall Street Journal

In Detroit, a city starved for retail options, plans for the first department-store-anchored shopping center since the 1990s look a little shaky.

Chicago-based General Growth Properties Inc., one of the country's largest mall owners and developers, says it had hoped to start construction last year on a 370,000-square-foot center on the Detroit side of Eight Mile Road, which separates the city from its wealthier suburbs. Now General Growth has pushed the planned construction start to the summer, citing the need for time to obtain the right mix of tenants.

Construction on a 370,000-square-foot shopping center in Detroit was supposed to begin last year.
The delay isn't surprising. There are few places where things look bleaker for retailers than in the Motor City, which was struggling to show signs of prosperity even during the recent period of national economic expansion.

By almost any economic yardstick that retailers use to decide where to open stores, the Detroit area's prospects don't measure up. The city's population has fallen roughly by half since 1950 to about 900,000. Despite pockets of wealth, the area continues to bleed jobs and people and its November unemployment rate of 7.2% was the highest of the 49 largest U.S. metropolitan areas, according to the Bureau of Labor Statistics. Additionally, home-foreclosure rates are sky-high. Average area office, retail and apartment rents are in decline or stagnant, according to Property & Portfolio Research Inc., a Boston-based real-estate research firm.

It also doesn't help that even previously fast-growing retailers like Starbucks Corp. are expected to be more discriminating about expanding nationwide this year, according to Michael Dee, national director of retail in Dallas for Grubb & Ellis, a real-estate services firm. The Detroit area's dwindling population, which stands now at about 4.6 million, is also a worry for retailers who typically chase locations with growing populations, he says. "Detroit is not going to be on top of the radar screen," says Mr. Dee, noting that leasing the Shoppes at Gateway Park will be challenging.

To be sure, Detroit has had some mixed success in its efforts to shore up a core that has been marred in past decades by empty storefronts and office buildings. The MGM Grand Detroit opened last year, the first casino in the city's central business district, and Quicken Loans announced late last year that it would move its headquarters and about 4,000 workers from suburban Livonia to downtown Detroit. At the same time, efforts to develop a museum to commemorate the city's Motown ties fizzled after the proponents were unable to raise the funds, says George Jackson, Detroit's chief development officer.

For its part, General Growth says it is up to the challenge of delivering Detroit's newest center. Lyneir Richardson, vice president of urban retail for General Growth, says it is working to persuade retailers to locate in the center. The 170,000 residents in a three-mile radius around the center have an average income of about $55,000, he says. Mr. Richardson says he has a letter of intent from J.C. Penney Co. to locate a store in the site, which would be the first department store for the city since the 1990s. "We have to overcome perceptions, misperceptions and bad information and show the opportunities," says Mr. Richardson. "There clearly is a void."

Can city withstand scandal's fallout?

Monday, January 28, 2008
Daniel Howes
The Detroti News

Whatever foibles emerged during his six years in office, Kwame Kilpatrick became a driving force behind Detroit's economic redevelopment efforts. His lobbying of would-be investors and strong-arming of city bureaucrats to move deals forward quickened momentum despite a chronically sick state economy.

But is the city's fledgling economic foundation, mostly focused in its downtown core, strong enough to move forward without the mayor in office? Yes and no, business and development insiders tell me privately.

As the scandal intensifies around text messages suggesting Kilpatrick and his chief of staff, Christine Beatty, lied about their affair in testimony for a whistleblower lawsuit brought by two Detroit Police officers, savvy business and community leaders already are mulling a future without Kilpatrick in the Manoogian Mansion because contingency planning is part of their jobs.

Kilpatrick "is the heavy for getting things done," a ranking business leader familiar with deal-making in Detroit tells me. "The problem you have in the city is that unless you can call hard balls and strikes with the unions and get things through the bureaucracy, you can't get things done. If not him, who?"

And how? Only in the past year or so has downtown Detroit begun to reap benefits from the aftershocks of Major League Baseball's All-Star Game and Super Bowl XL, with investor and city deal-makers capitalizing on the combination of positive momentum, clear direction and confidence in Kilpatrick & Co. to deliver as promised.

Reinvestment fragile
Until the sub-prime mortgage crisis essentially killed new-home construction, Detroit led the state in housing starts. MGM Grand and MotorCity Casino finished their permanent casinos in just the past few months. Renovations of the Pick-Fort Shelby and Book-Cadillac hotels got under way. Quicken Loans Inc. said it will move its headquarters from the suburbs.

Private foundations are funding new initiatives in Detroit. Business groups like the Detroit Regional Chamber and Detroit Renaissance are focusing more intensely on economic development, structural change in government and bridging regional barriers to cooperation.

They are partners in the kind of change Kilpatrick had been pushing before a mortal threat to his political viability emerged in the trove of text messages tapped out by him and Beatty on city-owned pagers. But Kilpatrick's career is not the only thing endangered by "Textgate."

The re-engagement in Detroit by foundations, business groups and investors is fragile, limited and dependent on the personalities of a relative few focused along the riverfront, the lower Woodward corridor, the entertainment district and midtown near Wayne State.

Lose a charismatic leader like Kilpatrick -- especially amid a housing recession of historic proportions, as well as chronic problems with schools, public services and population flight -- and the legitimate fear is that Detroit could lose what little momentum it has for projects already not well under way.

Mayor imperils momentum
Maybe. Most of the big projects that are the cornerstones of a "new" downtown Detroit didn't begin with his administration. From General Motors Corp.'s RenCen makeover and the casinos to new stadiums and Compuware Corp.'s headquarters, all were begun under his predecessor, Dennis Archer.

Kilpatrick's first term, until last week more scandal-ridden than his second, was marked by big promises and little delivery. A new police headquarters in the Central Train Depot? Never happened. Several big-ticket rehabs of Cobo Center? Too expensive. A winnowed city payroll? Not until he won re-election without the city's powerful unions.

Outwardly, his second term was marked more by accomplishment on redevelopment, government restructuring and even neighborhood initiatives -- all now endangered because the mayor conducted an illicit affair with a subordinate and lied about it under oath.

A City Hall without Kilpatrick may come sooner than scheduled, should he resign, be recalled or indicted. But it won't come without a cost to the redevelopment of Detroit that depends as much on personality as it does on business to succeed.

City growth should go on, leaders say

Metro business, political officials look past scandal

January 25, 2008

By JOHN GALLAGHER and KATHLEEN GRAY
FREE PRESS STAFF WRITERS

The scandal involving Mayor Kwame Kilpatrick shouldn't blunt the city's revitalization efforts or ability to make deals happen, a cross-section of business, political and academic leaders said Thursday.

Dan Gilbert, founder and chairman of Quicken Loans, said the mayor's trouble did not in any way deter Quicken from proceeding "full steam ahead" with its plans to build a headquarters in downtown Detroit and relocate thousands of employees there.

"Our commitment is long term, and transcends any short-term event or challenge," Gilbert said in a statement. "This is a new era in Detroit history. We believe the leadership in business, government and the community will continue to spend their valuable time and energy on the mission at hand."

Wayne County Executive Robert Ficano wouldn't comment specifically on the mayor's troubles, but his office issued a statement saying ongoing projects, such as the expansion of Cobo Center, would be unaffected.

"We don't anticipate our working relationship to be hindered at all by this," said Ficano spokeswoman Vanessa Denha-Garmo. "We still have to run the county and the city still has to operate."

Robin Boyle, a professor of urban planning at Wayne State University, said many other cities have seen mayors in trouble even as redevelopment efforts continued.

"The biggest limiter is the state of the economy," he said.

William Crouchman, chairman of the Macomb County Board of Commissioners, said: "Our relationship with the City of Detroit is based on mutual things we have in common. It's not personal. No matter who the personalities are, if they were gone tomorrow, the issues remain the same."

But Oakland County Executive L. Brooks Patterson, who arrived home Thursday from a trade mission in India, said the last thing potential investors need to see on the front pages is a scandal.

"I don't believe it will have a direct impact on economic development," he said. "But Michigan certainly doesn't need another black eye. We're still in a long-term recession here."

Doug Rothwell, president of the corporate leadership group Detroit Renaissance, said economic development in Detroit has gained momentum in recent years under Kilpatrick's leadership despite economic headwinds.

"The charges leveled against the mayor are serious and the legal system will ultimately decide how they are to be resolved. But they should not be allowed to slow the economic progress we are making and I don't believe they will," Rothwell said in a statement.

In the past few years, downtown Detroit has enjoyed a resurgence that included the creation of permanent casinos, Comerica Park and Ford Field, Campus Martius, the Detroit RiverWalk, the new Compuware headquarters and many other projects in various stages of planning or construction.

One reason to think the scandal won't blunt Detroit's momentum is the depth of the team working on revitalization efforts.

The effort encompasses Detroit Renaissance, the civic group Downtown Detroit Partnership, the nonprofit Detroit Riverfront Conservancy and the quasi-public development arm of the city, the Detroit Economic Growth Corp.

Struggling housing market has Detroit's gems slashing prices

BIG-TIME BARGAINS

January 19, 2008

BY ZACHARY GORCHOW
FREE PRESS STAFF WRITER

How can you own a house worthy of a millionaire, at a price typical of your standard three-bedroom, two-bath bungalow?

It sounds too good to be true. But in fact, buyers can find scores of historic, large homes available for astonishing bargains -- some under $200,000 -- in beautiful Detroit neighborhoods, deals that real estate agents say haven't been this good in decades.

The listings are eye-popping, like the stunning six-bedroom, four-bath, 5,500-square-foot, 1923 colonial in the Boston-Edison neighborhood for $249,500 -- about $45 a square foot. Or the five-bedroom, three-bath, 2,700-square-foot colonial in the University District for $149,900.

If it's a Cape Cod you're eyeing, there's the seven-bedroom, three-and-a-half-bath, 4,650-square-foot home in Indian Village for $314,999.

But what frustrates real estate agents and owners is the struggle to sell such historic gems -- even at these prices. And some have slashed their asking prices by tens of thousands of dollars.

Like the 1916 Boston-Edison colonial of Jerry Berry's 91-year-old mother. He and his siblings grew up in the house.

With six bedrooms, three full bathrooms, two half bathrooms, 3,400 square feet and features such as beveled-glass French doors and crown molding, Berry said it's hard to believe it has been on the market more than a year. And he reduced the price from $190,000 to $175,000.

"All of us thought the house would just go right out easy," Berry said. "Seeing as how well maintained the house is, we thought someone would just jump on it."

The real estate market is sluggish everywhere in metro Detroit, and prices have plummeted.

But it's in Detroit where prices have dropped the most, said Ron Simpson, the outgoing president of the Detroit Association of Realtors and broker-owner of Southfield-based Century 21 Elegant Homes.

Buyers have long been able to get more house for their money in Detroit than most suburbs, but today's deals in the city are at "a whole new level," Simpson said.

"I've been doing this 30-some years," he said. "And the prices now are back to where they were 20-some years ago."

There are trade-offs, though.

While the homes are in some of Detroit's best neighborhoods, the areas have seen a spike in the number of foreclosed and abandoned homes, threatening the values of other houses.

"It's scary, yes it is," said Maxine Jackson, 70, a Boston-Edison resident who lives down the street from Berry's mother. "It's like a giveaway. Something that you've had all your life."

And then there are the issues of property taxes and insurance, which typically are higher in Detroit than in the suburbs. There also is the cost of heating a large, older home, and the issues of struggling schools and a higher crime rate.

Jeff Packer, the real estate agent for Berry's mother's house, said trying to sell the property is an "uphill battle."

Put that house in Royal Oak, he said, and the home would sell for more than $300,000. He has yet to receive an offer.

"There's a lot of buyers out there who are too timid to buy in Detroit," he said. "If people can overcome that perception and see the reality of the area, it's a very nice area to live in."

One buyer considering the city is Dan Klinkert, 31, of Dearborn, who has looked closely at the Boston-Edison neighborhood, which runs along Chicago Boulevard on either side of the Lodge Freeway.

"The character is unparalleled of the homes," he said. "3,500-square-foot homes -- you're looking at half to a million dollars a lot of other places."

Bernadine Davis and Judith Womble are the agents trying to sell another stately home in Boston-Edison.

It needs some updating, particularly in the kitchen, they said. And the owner told them it cost $800 to heat the house during the coldest month last winter.

It has five bedrooms, four bathrooms and 4,500 square feet. The surrounding homes are striking, except for one critical problem -- a boarded-up residence two doors down.

After a year, the house still is sitting, despite a listing price of $214,900, down from $270,000.

Put that mansion in Birmingham or Farmington Hills, they said, and they would ask from $800,000 to $1 million for it.

"There is character in these houses you can't find anywhere else," Womble said.

Some neighborhoods have begun aggressively marketing themselves to potential buyers.

In the West Village on the city's east side, when residents learn of someone interested in buying a house in Detroit, they recruit them to their neighborhood by taking them on a one-on-one tour and introducing them to the neighbors, said Bill Swanson, 33, a West Village resident who has conducted some of the tours.

Four people have bought homes in the neighborhood in the last year thanks to this effort, Swanson said.

"Once you meet people and realize it's a great neighborhood, it makes buying in the neighborhood really easy," he said.

Indian Village is another prized area in Detroit. There, a seven-bedroom, six-bath, 7,187-square-foot colonial is listed for $349,995.

"A comparable house somewhere else would be millions," said Joy Santiago, the house's real estate agent. "It definitely should have gone by now. These are really good prices."

But the house has been on the market for more than six months and has been cut from its original $450,000 price tag.

"In Detroit, what's happened, anyone who has an interest in those homes has to appreciate the history behind them," said agent Cheryl Kachaturoff. "There's a lot of hidden treasures in our city."

Greektown mogul buys 1001 Woodward

Greektown's Papas lands troubled Campus Martius skyscraper, parking garage.

Wednesday, January 16, 2008
Robert Snell / The Detroit News

DETROIT -- Greektown mogul Dimitrios "Jim" Papas is buying the troubled 1001 Woodward skyscraper near Campus Martius Park and has purchased an attached 12-story parking garage.

Papas, who owns Pegasus Taverna restaurant and co-owns the Atheneum Suite Hotel, paid $5.4 million for the skyscraper Tuesday in a move that could revive a building seen as key to downtown redevelopment.

"I feel very strongly about downtown and have for the last 30 years," Papas said. "Hopefully after this little blip with the financial markets, Detroit will come back stronger."

The skyscraper became one of the most visible failures along the resurgent Woodward financial district last year after a company defaulted on a deal to turn the building into luxury condominiums. The Detroit News reported in October that a company headed by Warren-based developer Lorenzo Cavaliere and a related group owed more than $23 million in land contract payments and loans for the skyscraper and garage.

A Cavaliere company bought the skyscraper and owed more than $5.3 million to the Operating Engineers' Local 324 pension fund, according to court records.

On Tuesday, Papas said he paid the balance of the land contract and expects to own the skyscraper in a day or two.

A pension fund lawyer declined comment Tuesday.

"We want to see this and other buildings downtown redeveloped, and we hope that this is a step towards that," said Brian Holdwick, vice president of business and financial services for the Detroit Economic Growth Corp. "We look forward to seeing how it progresses."

The developments follow last week's unveiling of the $150 million Cadillac Centre project nearby. It is slated to fill an empty block east of Campus Martius with two 24-story towers that will feature 84 apartments or condominiums, a green "living" roof, a multiplex cinema, sports bar and 800 parking spaces.

Downtown real estate expert Mark Talley said a viable development at 1001 Woodward would help complete a circle of development around Campus Martius Park. "That potentially is a big deal," said Talley, a vice president with the commercial real estate firm Grubb & Ellis. "It's a big piece of what's happening downtown."

Papas is leaning toward developing office space in the 25-story building.

Papas said he purchased the mortgage on the 750-space parking garage Dec. 20 from Charter One Bank but declined to disclose the purchase price. Papas said the property could be transferred to another one of his companies soon.

Exclusive show gets high-end buyers in city, wows guests

January 14, 2008

BY KIMBERLY LIFTON
FREE PRESS SPECIAL WRITER

As cocktail waitresses passed lobster corn dogs and mini Kobe burgers around the MGM Grand's Ignite lounge before an exclusive showing of the Detroit auto show's Luxury Row, West Bloomfield Ferrari/Maserati dealer Jeffrey Cauley contemplated what it all meant for Detroit.

"This is very cool, unique," said Cauley, who brought some of his best customers downtown for the event called the Gallery, the first-ever preview of its kind at the North American International Auto Show.

"This will leave a postitive impression about Detroit," he said.

The idea for a luxury pre-showing -- featuring a strolling dinner and cocktail party, an art walk, wine and spirits -- and, of course, high-end vehicles -- came from Detroit Auto Dealers Association Executive Director Rod Alberts. DADA wanted to create a new type of excitement for the show.

Each of the six luxury groups -- Bentley, Lamborghini, Maserati, Maybach, Ferrari and Rolls-Royce -- were asked to submit 25 names to DADA, which sent out invitations in etched glass to luxury car owners and prospective owners. Some invitations also were mailed out to American Express customers who charged more than $250,000 last year.

Classic car collector Troy Breidenach, 38, who owns a contract packaging company south of Toledo, Ohio, drove to Detroit for the day as a guest of American Express. He hadn't been to the city for awhile and said he liked what he saw at the MGM and at Cobo Center.

"I love cars, and this is fantastic," he said. "I'm really glad Detroit is host to this event. It seems like the city is coming back."

By the time doors to Ignite opened a little after 6 p.m., the guest list had grown from an anticipated 300 people to nearly 550. And event planners from Clear!Blue in Birmingham and Motivational Marketing Inc. of Southfield rushed to accommodate the overflow.

"The invitation just blew me away," said Ferrari owner Kim Woody, a Detroit-area prototype stamping auto supplier who was invited by Cauley. "I am a huge Detroit fan, and I am glad to see everything coming together here."

Raymond and Joan Antos of Orchard Lake, who purchased a Bentley convertible last month, were impressed by the event and the rebirth they saw in the City of Detroit.

"If I were 40, I'd buy a condo downtown because in 20 years, it will be turned around and will be the most dynamic city in America," said Richard Antos, a retired auto parts manufacturer.

While no national celebrities were spotted in the crowd at the MGM -- though some anticipated late arrivals -- Detroit notables such as designer Dominique Pangborn, Compuware Chief Executive Officer Peter Karmanos and former Tower Automotive Chief Executive Officer Kathleen Ligocki mixed with the out-of-town car lovers.

Meanwhile, MGM Executive Chef William McIlroy made sure the menu offered something for everyone's palate.

"This is a decadent evening," he said.

The menu included slow-roasted Kobe rib eye, shaved black winter truffles, seared foie gras with a cognac demi as well as Alaskan king crab, jumbo shrimp and scallops, mussels and lobster.

At 8 p.m., the guests started their journeys via coach to a back entrance at Cobo, where they walked through Luxury Row. Some snapped photos using cell phones. Others chatted with executives of the various companies.

Red Wings favorite Chris Chelios was in the crowd, along with Lions linebacker Paris Lenon, who was excited that he got to meet retired boxer Tommy Hearns.

Robert Porcher, retired Detroit Lions defensive end and now a partner in Seldom Blues restaurant and nightclub, already has his dream car: a 2003 Aston Martin. But he did not rule out a future purchase and enjoyed the special treatment.

"Detroit is back," he said. "I don't want to hear any more talk about Detroit coming back. Detroit is back."

Detroit reaches for the skyscraper

$150M Cadillac Centre envisions shops, residences

Thursday, January 10, 2008
Louis Aguilar / The Detroit News

DETROIT -- The decades-long quest to bring major retailers back downtown received an encouraging boost Wednesday with the formal launch of a $150 million skyscraper project planned for the heart of the city.

Cadillac Centre, intended to fill an empty city-owned block east of Campus Martius Park, aims to be a new downtown architectural icon, according to the developers and city officials.

The center is a sleek, modernistic vision -- two 24-story towers of sculpted glass and metal that will hold 84 apartments or condominiums, a green "living" roof, a multiplex cinema, sports bar and 800 parking spaces.

Perhaps the center's most audacious goal is the space reserved for major retail: 130,000 square feet, along with another 25,000 square feet for boutiques and specialty shops.

During the official unveiling Wednesday at Detroit Mayor Kwame Kilpatrick's office, developer Alex Dembitzer talked as if luring national retail chains to Detroit was commonplace.

"We are talking to a number of national retailers and . a number have approached us," said Dembitzer, principal and managing partner of Northern Group Inc., the New York group behind the project. "We have no concern."

While it was far too soon to name names, Dembitzer said the project will attract "a combination of what people want and need" in Detroit. The retailers they are talking to include "multi-state operations, global-type companies. The kind of things you see in the suburbs, or some you don't see in the suburbs but want to see."

Dembitzer added: "We believe in the future of Detroit."

Downtown a retail desert

The current Detroit is a city famous for being a "have not" when it comes to retail. Until late 2006, there were more Starbucks coffee shops at Detroit Metro Airport than within the entire city, which still boasts a population of 918,000, according to U.S. Census estimates.

The city is home to only two multi-screen movie theaters and only one big-box retailer -- a Home Depot perched on the edge of the town at Seven Mile Road. The number of national grocery stores is so far below average that it's become a major political issue.

But city officials and downtown real estate analysts contend Detroit's urban core finally is ready to lure national retailers.

"For the last five or six years, Detroit's downtown has had the most remarkable turnaround in the country," said Christopher Leinberger, who directs the University of Michigan's real estate graduate studies program and is a visiting fellow at the Brookings Institution think tank in Washington.

He added that several research surveys show there is enough population and density downtown to attract big-box retailers. "There is pent-up demand for it. Yes, this can work."

Detroit's 'Rockefeller Center'

The Cadillac Centre project got its official start Wednesday morning, when the board of the Downtown Development Authority approved the development agreement with Northern Group.

The agreement gives the developer a year and a half to determine whether it's feasible to build the project on a city-owned block known as the Monroe Block. Groundbreaking would take place in September 2009 and the project would open late 2011.

With passage of the development agreement, the city agreed to sell the 1.95-acre parcel to Northern Group for $1 once the group secures financing. Northern Group intends to invest up to $25 million of its own money, according to city economic development officials. The rest will come from private financers.

At a news conference later in the day, Mayor Kilpatrick hailed the project as the next step in the "revolutionary transformation of the next Detroit." The project's architect, Anthony Caradonna, said the Cadillac Centre will be Detroit's "Rockefeller Center," referring to the famed New York building and public space.

In another move to attract national retailers, Kilpatrick noted that a Wayne County Renaissance Zone program is being created to provide tax breaks for new stores.

While the news conference was upbeat, Mayor Kilpatrick acknowledged the difficulties of revitalizing downtown retail. "Everything that we do in the city of Detroit presents challenges. We just overcome them. We have never had a wide open paved road."

State's economy diversifies, forecaster says

January 9, 2008

By KATHERINE YUNG
FREE PRESS BUSINESS WRITER

If the national economy gets the flu, it's no longer the case that Michigan's economy will automatically catch pneumonia.

That's the prognosis from Dana Johnson, Comerica Inc.'s chief economist.

The state's economy is diversifying and becoming less cyclical, which means it won't suffer from national recessions as much as it did in previous decades, he said Tuesday during a forecast meeting held by the Howell Chamber of Commerce at the Crystal Gardens-Livingston in Howell.

"Michigan's economy is less cyclically sensitive," Johnson said. "We are developing a more diversified economy, but it's obviously an incredibly painful process to get there."

The uncertain direction of the national economy has emerged as one of the clouds hanging over Michigan's economic prospects this year. If the country enters a recession, the lack of economic growth could hinder the state's ability to emerge from its four-year recession.

Johnson said a national downturn could send Michigan's already sky-high unemployment rate even higher. But the increase will be less than during previous recessions because the state's economy is not as dependent on the auto industry as in the past.

Only 4% of the state's labor force works directly for automakers or their suppliers, he noted. That's down from 7% many years ago.

But Johnson warned that 2008 could be another tough year for Michigan.

Comerica relocated its headquarters from Detroit to Dallas last year, but remains Michigan's second-largest bank measured by deposits.

Detroit's automakers continue to lose domestic market share, accounting for 50.9% of U.S. light-vehicle sales in 2007, compared with 53.6% in 2006.

The woes in the auto industry resulted last year in a 1.7% decline in jobs statewide, the sharpest drop since 2003. The situation led more than 90,000 residents to flee in 2007.

Nationally, the outlook is more positive. But falling home prices and rising crude oil prices will hurt consumer spending, the main driver of the economy, Johnson said.

On the positive side, the trade deficit has dropped by 10% over the past 12 months, thanks to a cheaper U.S. dollar. The shrinking deficit has offset 95% of the drag from the slowdown in homebuilding over the past four quarters, he said.

For now, Johnson predicts sluggish national growth in the range of 1% to 1.5%.

But he admits, "It's almost a coin toss whether we have slow growth or no growth at all."

As Detroit project arises, others falter

Tuesday, January 8, 2008

Louis Aguilar / The Detroit News

As Detroit Mayor Kwame Kilpatrick prepares to unveil plans for a new $150 million downtown skyscraper complex Wednesday, several high-profile downtown projects already face substantial setbacks.

Faced with the ongoing credit crunch sparked by the subprime mortgage crisis and the sluggish local and national economy, backers of some downtown deals are clamping down on projects, amping up the terms for their money.

In one case, developers have turned to the city for more than $6 million in bonds to keep their project moving ahead.

Many downtown real estate analysts say the proposed Cadillac Centre project to be announced Wednesday can be built -- as long as the developers can convince national retailers to set up shop in downtown Detroit. According to city officials, the necessary retailers haven't been lined up yet.

"That is the question I have -- who are the national retailers that will come in?" said Mark Talley, a vice president in the downtown office of commercial real estate firm Grubb & Ellis. "That's how I see them getting the financing."

The ambitious project by New York-based Northern Group Inc. is planned for a location east of Campus Martius Park. It could include 84 rental apartments, a six-screen movie complex, 25,000 square feet of space for smaller boutique retail and a 100,000-square-foot space for a larger retailer, according to the developer. Plans also call for a public park. Groundbreaking could occur in fall 2009.

Northern Group officials were not available Monday, but a press conference is planned for Wednesday. The Northern Group has announced that financing is in place, but only said the money will come from private sources. Many Detroit real estate experts say they believe the money will come only after the developers secure national retailers for the project.

Some projects thrive

Several ambitious downtown projects are thriving, including the renovation of the historic Book-Cadillac Hotel, the long-shuttered Fort Shelby Hotel and a complete makeover for the former Pontchartrain Hotel. Those are in addition to the visible and expensive new hotels, restaurants, parking and other amenities that have opened or are in the works for the MGM Grand Casino, the MotorCity Casino and additions to the Greektown Casino.

But just as these hotel projects, long on the books, are debuting, several high-profile downtown condo projects are faltering. Bankers hit by the global lending crisis are suddenly asking for tougher terms.

Take the Watermark Detroit, one of three major condominium developments city boosters hope will transform the once-blighted Detroit riverfront into another jewel in downtown's revival.

The $60 million project on the city's east riverfront is slated for a 2.2-acre site between the St. Aubin Marina and the Chene Park amphitheater that once housed concrete silos. Plans for the Watermark include apartments, town homes and condos priced from $400,000 to $1.2 million. It's been delayed because the banks now insist that more than 60 percent of the 112 residential units be pre-sold before the project continues, Detroit Economic Growth Corp. (DEGC) officials said. Originally, the banks were asking for 25 percent of the units to be sold.

"It's a very different world from a year ago," said George Jackson, president of the DEGC, the quasi-public city agency that promotes city development. "It's tougher and tougher to satisfy the banks on getting projects done. They keep changing the level to unprecedented highs."

The Watermark is led by former Pistons star and Detroit business leader Dave Bing but it has city and state backing, including millions in tax abatements. In response to the bank's new demands, the city approved at least $6.1 million in bonds for the Watermark, which will be issued once the project is completed, said Art Papapanos, a DEGC vice president.

"The national housing situation is impacting many projects both private and public," Papapanos said. "It's not a Detroit issue. We don't see a threat for the project."

Another east riverfront project is the @water from developer Dwight Belyue, featuring $1.5 million penthouses. Pronounced "Atwater," the first phase of the $250 million project was supposed to break ground last summer. Instead, developers are seeking more investors after banks increased the required level of pre-sales to more than 60 percent, Belyue said.

Also along the water, plans by General Motors Corp. to build luxury riverfront condos on six acres east of the automaker's Renaissance Center headquarters also have been delayed as it deals with the national credit crunch.

Cadillac plan's pluses

Still, the proposed Cadillac Centre project has several advantages, real estate experts said.

"The major one is it is not attempting to sell condominiums, so it will not be as directly impacted by the subprime fallout," said Frank Fountain, a Chrysler LLC senior vice president of external affairs involved in major downtown projects.

"You have to step back and say this is another example where national investors see a long-term investment in Detroit, regardless of the short-term economic situation," he said. "The national phenomenon of the credit crunch doesn't erase the solid work we've done in the city."

Another factor in the Cadillac Centre's favor is that developers Northern Group are "extremely sound financially," said the DEGC's Jackson. The Northern Group also owns the Penobscot, First National and Cadillac Tower building in Detroit and is refurbishing the Alden Park Towers on the riverfront.

Still, the builders will have to lure retailers downtown despite Michigan's sinking economy and high unemployment, and as some economists forecast a good chance the U.S. will slide into a recession, weakening the retail outlook.

"It is a tough situation out there," Jackson said, "but it doesn't mean we lack the resources and skills to know how to deal with it."

The Cadillac Centre will be a test to see if downtown Detroit is ready to grab a national retailer, said Talley of Grubb & Ellis.

"That's been a longtime goal and it's going to be very interesting," Talley said. "The national economy is slowing and that poses yet another challenge. But you've got a lot of very good talented people who want it to happen. I'm excited to see it and I'm not even part of the deal."

Mayor focuses on revitalization

Concentrated effort brings projects to life

January 6, 2008

By JOHN GALLAGHER
FREE PRESS BUSINESS WRITER

High atop the Book-Cadillac Hotel, Mayor Kwame Kilpatrick took in the sweeping vistas of the Detroit cityscape Friday and reflected on his hopes for his city.

"People have been telling us to die for 50 years," he said. "And we just won't die. And I think it's a group of mayors, political leaders, business leaders, philanthropic leaders who came together and did something extraordinary by saying, 'We're here to stay, we're sticking our flag in the ground, and let's keep moving together.' "

This day, Kilpatrick could feel good about the future. He and private developers were close to announcing the new $150-million Cadillac Centre project on the Monroe Block parcel downtown. Besides providing a financial boost for downtown, the project boasts an innovative architectural design that could provide Detroit with a new postcard image to rival the Renaissance Center.

Michigan's weak economy and the national housing slump have blunted some of Detroit's revitalization efforts. The delays pain Kilpatrick, but he says he is determined not to let setbacks defeat him.

"Whatever we're doing, our mind-set is we have to keep the momentum going," he said. "If it's not going 60 miles an hour like it was at one point, then we can't idle down to zero, we have to go back to 40. That's my mind-set. It's us against the world, and let's get it done, let's keep it moving."

The city's revitalization effort has benefited from many things, from a national trend toward urban living to the creation of special tax credits in recent years that help finance many projects.

Then, too, Detroit's 300th anniversary in 2001 and hosting Super Bowl XL in 2006 led to renewed cooperation among civic and corporate leaders.

Robin Boyle, a professor of urban planning at Wayne State University, called the progress "the culmination of concentrated resources, concentrated political investment, concentrated skill, concentrated attention."

The deal team

At the heart of the effort is Kilpatrick and what's called his deal team, headed by George Jackson, president of the Detroit Economic Growth Corp., the quasi-public agency that handles day-to-day negotiations on many deals, including the Cadillac Centre project.

In this complex web of deal-making and negotiation, the mayor serves as a sort of heavy artillery, brought in at key moments, Jackson said.

"He lets us do our job, but when we need him, he's there to step in a very decisive way," Jackson said. "We love for him to get involved because he's a damn good salesman, and he does it with a lot of enthusiasm and vigor."

One such moment came during the final stages of negotiations for the $185-million deal to renovate the Book-Cadillac Hotel, expected to reopen this fall. John Ferchill, the Cleveland-based developer heading the project, said some of financing required state and federal officials to approve them. When those officials balked, Kilpatrick stepped in to lobby them.

"The mayor was willing to go to the wall with the various people he needed to," Ferchill said last week. "The unprecedented cooperation, really led by the mayor, is the reason that deal got done, as much as anything else."

Dan Gilbert, founder and chairman of Quicken Loans, is another fan. After lengthy negotiations with the mayor and his team, Gilbert announced in November he will move his headquarters from the suburbs to a downtown site in a few years.

"Mayor Kilpatrick simply gets it," Gilbert said last week. "Unlike a typical politician, he is about the what, not the who. He is a man committed to reviving the city, and through his own hands-on hard work, passion and interaction with key people in the business world, he and his staff are creating an environment and culture that will turn our city into a special place that only very few people are willing and daring to visualize today."

$150-million complex planned for downtown

Cadillac Centre to include residential, retail and entertainment space

January 6, 2008

By JOHN GALLAGHER
FREE PRESS BUSINESS WRITER

Mayor Kwame Kilpatrick and private developers are days away from announcing a blockbuster new residential, retail and entertainment center in the heart of Detroit, a project aimed at pumping up downtown's 24-hour buzz and international interest in the city.

The $150-million Cadillac Centre, plans for which were disclosed exclusively to the Free Press, would rise on a parcel known as the Monroe Block, a surface parking lot just east of Woodward Avenue and Campus Martius Park near the Compuware headquarters.

Financing is lined up, and the schedule calls for breaking ground in fall 2009, with tenants moving in late 2011.

The announcement follows by just weeks a decision by Quicken Loans to relocate its headquarters and 4,000 employees from Livonia to downtown Detroit, a move that could be completed at about the same time as Cadillac Centre.

With a striking design that could become a new architectural icon for the city, Cadillac Centre would include two, 24-story apartment towers connected by a 12-story link that would house a six-screen movie theater, health club and spa, restaurants and stores.

Northern Group Inc., a New York-based real estate company that already owns the Penobscot, First National and Cadillac Tower skyscrapers, would build and own the project. Alex Dembitzer, principal and managing partner of the Northern Group, said the ambitious development would help create the lively downtown that city planners have been trying to promote for years.

"We believe in the future of Detroit," Dembitzer said. "We are creating a unique complex that will not only revitalize downtown Detroit living, shopping and entertainment, but will also stir the imagination and excitement about Detroit's future and what we believe it will become in the 21st Century."

Kilpatrick echoed that.

"Detroit is in the midst of the most revolutionary transformation in its history, and Cadillac Centre will help to continue our city's resurgence by bringing a new level of exciting living, shopping and entertainment options to the heart of downtown," he said.

Kilpatrick and Dembitzer have scheduled a news conference for 11 a.m. Wednesday at the Coleman A. Young Municipal Center to discuss the project.

A resident of New York, Dembitzer buys and develops real estate throughout the United States. He also builds in Israel, Europe and Africa through development subsidiaries.

Dembitzer began buying and renovating real estate in 1985 in the New York garment district. His portfolio holds more than 10 million square feet of commercial real estate and includes approximately 5,000 apartment units.

He received his bachelor's of science degree from New York University. Prior to his real estate career, he operated a chain of more than 20 high-fashion and discount clothing stores.

Aiming for a landmark

Architect Anthony Caradonna, a professor at Pratt Institute in New York who spends roughly half of each year teaching and designing in Italy, crafted the curvy modernistic design, which would be among the most daring built in Detroit since the Renaissance Center in the mid-1970s.

Caradonna said in a telephone interview that he took inspiration from both the Renaissance Center and from landmark urban destinations, including Rockefeller Center in New York. He spent several days in Detroit researching the city to map out his design.

"Detroit had these amazing tall buildings with these amazingly beautifully designed and ornamented and three-dimensionally vibrant interior spaces," he said. "It's really about raising this piece that fits into this really important puzzle of downtown, linking the spaces around it."

Unlike many other recent projects, Cadillac Centre will ask for no city tax abatements, Dembitzer said. A Wayne County Renaissance Zone program likely will be used to attract national retailers. Northern Group will pay for the project out of its own private sources, he added, and full financing has already been arranged.

The project is the latest in a string of new developments built or announced downtown in recent years. Those include the three permanent casino-hotels and the redevelopment of the long-dormant Book-Cadillac and Fort Shelby hotels. In November, Dan Gilbert, founder and chairman of Quicken Loans, announced he would move his company's headquarters and about 4,000 employees from the suburbs to a yet-to-be-determined downtown site.

Changing the cityscape

If fully realized, Cadillac Centre could rival any of the other recent projects for its impact on the city. Among other advantages, it would complete the circle of buildings around Campus Martius Park in a way city planners have desired for many years.

The project would include 84 apartments, plus a 30,000-square-foot market, more than 100,000 square feet of major retail space, a 14,400-square-foot health club and spa, a 40,000-square-foot public park with water features, more than 25,000 square feet of boutiques and specialty shops, and 800 parking spaces.

Cadillac Centre would be topped off with a 22,000-square-foot so-called living roof that would collect and filter rain water and help control energy consumption.

Although tenants still have to be found for all of the space, city officials are confident that Northern Group has the experience and financial power to make it happen.

Founded more than 20 years ago in New York, Northern Group acquires and transforms obsolete buildings and neighborhoods in undervalued markets. Besides New York and Detroit, the firm owns properties in Louisville, Ky., Los Angeles, Pittsburgh, Philadelphia and Memphis, Tenn. It also is a major investor in an Israel-based construction company that builds projects internationally.

Northern Group also owns and is refurbishing the historic 400-unit Alden Park Towers residential apartments on East Jefferson near Belle Isle.

In Detroit's history, the 2-acre Monroe Block site was best known for a row of Civil War-era commercial buildings that were demolished by the city in early 1990. The parcel has been used mostly for parking since then.