Detroit Clears way for Redevelopment of Book-Cadillac & Fort-Shelby Hotels

[detroitfan]

^^^

That and the hotel portion of BC got tax credits for it's job creation . The less projects depend on tax credits the better because it shows more strength in the the market.

Another reason reason why they might not want to use to certain historic tax credits is because they limit what you can do a building. For example in order to rehab the David Whitney Building you couldn't reconfigure the interior to ensure that no rooms faced the light court and qualify for some credits. But keeping layout would be risky because any room that faced the court would is less likely to sold or rented and you can bet banks aren't going to like that.

[RustTown]

Very true. I know the Arbaugh Department Store renovation, here in Lansing, used historic tax credits. The developer had originally wanted to build a 6th floor penthouse level atop the roof of the structure, but he had to kill those plans when he used the historic tax credits.

[Michi]

I'm not clear on all of it as well. I'm pretty sure that if a building is listed on the National Register of Historic Places (like the Book Cadillac) that it has to be preserved under certain guidelines regardless if historic tax credits are used or not. So, even if the developer (Ferchill) decided not to use the credits, I think he still has to abide by strict regulation due to the Historic Registry...though I don't know for sure.

Otherwise, for any historic building to be renovated, if you don't use historic tax credits, usually the project is too expensive. That is why most projects use them, and under their regulation, you DO have to lease for 5 years if you are to take advantage of the credits.

I wish I had more clarity myself, so if someone knows the quick answer that would be great.

[RustTown]

BTW, I found out that because of the poor state of the prominent machine/mechanical tower on the B-C, that they've completely deconstructed it, and will reconstruct it to a shorter height making the decorative crown ziggurats the tallest parts of the structure for the first time ever, so, the old girl is shrinking.

[tapezord]

BTW, I found out that because of the poor state of the prominent machine/mechanical tower on the B-C, that they've completely deconstructed it, and will reconstruct it to a shorter height making the decorative crown ziggurats the tallest parts of the structure for the first time ever, so, the old girl is shrinking.

[RustTown]

Does anyone know when The Griswold Capitol Park, next door, is scheduled to begin to rise?

[Allan]

LMich, where did you hear that the reconstructed penthouse is going to be shorter? I'd heard that they were reconstructing it to be the same height as it was.

They're still clearing out the basements of the People's Outfitting Company, so it looks like it's going to be a while yet before they prep for the new foundations.

[RustTown]

Sandvick Architects, but I'll check back just to make sure.

[Allan]

Judging from this photo I took last night, you're correct on this, although the penthouse is far from complete....

[Jasoncw]

I noticed how messed up looking it was in the old construction photos, but I just figured that they would fix it somehow (I'm always really surprised at how well some of these renovations are).

Have they started the addition yet?

Also, does anyone know if they'll be rebuilding the cornices? From what I understand they're not.

[Allan]

The addition has not started yet, and they are not rebuilding the cornices.

[RustTown]

Allan, I was able to find that, yes, they are reconstructing the penthouse 18 feet shorter than it original was bringing it from ~357 feet to ~340 feet. The copper crowns rise to 350 feet.

[Michi]

June 1, 2007

The Pick Fort-Shelby has been fenced off and is itching for its major overhaul to kick into full swing! What a fantastic project.

[RustTown]

Nice!

Does anyone think they could get a view of the renovation of the Book-Cadillac looking up Shelby between Lafayette and Fort?

I got this view a few years back, and thought it would be nice to see the contrast. I can't wait until the Lafayette finds a viable redevelopment plan, and when that parking lot to the west is developed completing this view.

[tombarnes]

Thanks for sharing the pictures! I'm really happy to see the progress on the BC and can't wait to see the Fort Shelby take shape. The restoration of just these two buildings will do wonders for the heart of Detroit.

[seicer]

Book-Cadillac video

A Developer Bets on Detroit By Giving Old Hotel a Facelift

Notes --

1. Detroit is facing a population flight to the suburbs -- something that began four decades ago. It's exodus rivals the hurricane-ravaged New Orleans. In a city where the real-estate market is so bad that houses are cheaper than cars in many areas, it is a shock as to why an out-of-town developer is planning to convert the old Book-Cadillac Hotel into a four-star hotel and luxury condominiums for $180 million. It is planned to be restored by fall 2008 as a 455-room Westin. The top eight floors will house 67 upscale condos, most of which have already been sold. Prices for the penthouses have gone for as much as $1 million.

Another developer has also expressed strong interest in building a new condo project on top of the hotel's adjacent parking structure. Half of the unbuilt structure has been sold, including penthouses that have fetched as much as $800,000.

1a. The developer, from Cleveland, has specialized in redeveloping buildings in risky markets. He has been successful so far, restoring buildings in cities such as Buffalo and Pittsburgh. The company that the developer represents has assumed more than $80 million in loans and other debts for the project. Ferchill, the developer, has committed $4 million in equity, and $8 million in start-up costs. He also has arranged more than 15 public and private investors. About $24 million came from two of Detroit's pension boards. Other sources include a $50 million loan from iStar Financial Inc., a real-estate financing company -- and National City Corp. agreed to invest $28 million+ after the developer agreed to a conservation easement.

1b. Detroit is a risky market -- it has one of the highest unemployment rates in the nation at 13.7%. It has rampant crime and troubled schools. But a turnaround is underway -- the city boasts new ballparks, casinos, and multimillion-dollar housing developments that have lured more tourists and investors.

1c. The Book-Cadillac is being considered a 'bellweather' for downtown redevelopment -- especially on the west side that has been long neglected.

2. The 33-story Book-Cadillac Hotel, closed in 1984, has been gutted and abandoned on a downtown block that is dominated by empty storefronts and abandoned buildings. It was opened in December 1924 by brothers J.B., Frank and Herbert Book. It was constructed on the site of the old Cadillac hotel, which was named for Antoine de la Mothe Cadillac, a French fur trader who founded Detroit in 1701.

2a. At the time, the city was thriving and hosted a booming auto industry. The city's ornate, Gilded Age architecture earned the city the nickname "Paris of the West". The Book-Cadillac hotel was part of a plan to transform Washington Blvd. into a "midwestern Fifth Avenue." It was the city's tallest building and the tallest hotel in the world. The city opened with huge fanfare -- more than 2,000 guests attended and more than 3,000 had to be turned away.

2b. In 1951, the Sheraton Hotel corporation bought the hotel and renamed it the Sheraton-Cadillac. By the 1960s, changes occurred that would cause Detroit's decline. Interstate highways cut through the downtown neighborhoods, manufacturing plants that were aging could not expand because they were landlocked, and middle class residents fled the city after the race riots of the 1960s.

2c. The city attempted to redevelop and aid the downtown in the late 1970s with the construction of the Renaissance Center. But most of the success of this complex came from the movement of businesses from the city's west side. As a result, the Book-Cadillac changed hands several times between 1975 and 1980; occupancy rates declined, as did the surrounding area. The hotel closed in 1984. Various plans over the years tried to redevelop the hotel, but none were able to complete it.

2d. In 2001, the city regained control of the hotel and wanted it demolished, stating it was too expensive to renovate. When Kwame Kilpatrick became mayor in 2002, he ordered city officials to find developers for as many abandoned properties as possible. In 2003, Historic Hospitality Investments was tapped to restore the building. In late-2003, however, the company was unable to get the necessary financing and the developer abandoned the project.

3. Detroit has staged a comeback: $435 million in investments have redeveloped abandoned and neglected properties in the city. In 2006, the city beautified Campus Martius Park in the downtown to give it a good face for the Super Bowl. A neighborhood on the east side will soon be host to 300 new homes on 88 acres. And new condominiums on the waterfront, totaling $500 million in investments, could be built.

4. The developer redevelops into cities that appear to be on the "cusp of resurgence" -- second tier markets. He gives "extra points" to cities with new baseball parks and other entertainment amenities, and then finds voids in upscale housing and hospitality markets -- targeting historic properties for costly renovations.

4a. The developer is not new to Detroit. In 2003, he built a Hilton Garden Inn, a midpriced, 198-room hotel in the downtown. It boasts an occupancy rate of ~70%, which is great.

Article information: "A Developer Bets on Detroit By Giving Old Hotel a Facelift, By MIKE SPECTOR, Wall-Street Journal, June 1, 2007; Page A1"

[Michi]

Saturday, June 9, 2007

[hudkina]

The fact that the Hilton Garden Inn boasts an occupancy rate of 70% proves that the hotel market isn't as oversaturated as previously thought. If I remember correctly, a hotel can be profitable with occupancy as low as 40%.

[RustTown]

One has to take into account the type of hotel, though, and what other hotels it's competing with, not just that they are all hotels. The same goes for any building usage, and people often make the mistake of oversimplifying markets. I'm not exactly sure who or what that was in response to, though, or what hotel project(s) you're talking about, though.

[hudkina]

It's not that complicated. The Hilton Garden Inn is a upper mid-range hotel that competes with the two downtown Marriotts.

[RustTown]

What does that have to do with the Westin Book-Cadillac, or the Doubletree Fort Shelby, though? I guess I'm confused what your post was in response to.

[hudkina]

In the post by seicer, the last point states that the Hilton Garden Inn which was built by the same developer boasts an occupancy rate of about 70%. I was just pointing out that a 70% occupancy rate is very good and shows that all of the new hotel rooms won't necessarily make the current hotels go out of business as a hotel can remain profitable with an occupancy as low as 40% or something like that. The biggest problem the current hotels may face is having to charge a lower rate.

[RustTown]

Thanks for that clarification. I completely agree.

[Michi]

The 'wold.

[RustTown]

What company is on the left of that sign that shows Jenkins? Are these the firms for the demolition, or where these put up for the construction?