A series of high-priced land acquisitions in a forlorn stretch of Detroit’s lower Midtown area is fueling speculation a major development project could be in the works.
Eighteen parcels, mostly blighted and empty, have been quietly bought or optioned since September 2008 in the area just north of the Fox Theatre and close to Woodward Avenue. These properties are near four empty blocks of Woodward Avenue owned by the city. The area of activity is bordered by Woodward and Cass avenues from east to west and Temple and Sibley streets from north to south.
In at least two cases, the sellers have been asked to sign confidentiality agreements not to divulge the identity of the buyers.
The secrecy surrounding the deals has sparked speculation among commercial real estate sources about a major commercial development, such as a hotel or a new casino site.
But the most frequent speculation centers on the area being a prospective site for a sports arena that could become the new home for the Detroit Red Wings and possibly the Detroit Pistons, if that team can be lured from Auburn Hills.
Plans for light-rail transit along Woodward from Hart Plaza to Eight Mile also could be fueling the land speculation.
The biggest deal took place last month: An investment firm in Palo Alto, Calif., supplied a $2 million mortgage on the blighted former Eddystone Hotel and two adjacent empty parcels in a neighborhood where the annual median household income is $8,317. Most of the deals, though, don’t list the transaction price, according to public records, but at least two have been in the $650,000 range.
“Who pays $650,000 for anything in the Cass Corridor? You don’t unless there is a bigger plan by someone who wants to be next to the city’s entertainment district,” said Jeffrey Bell, first vice president of the Southfield office of CB Richard Ellis, a global real estate advisory firm. “I’m thinking either a hotel, casino or new sports stadium.”
A new hotel seems unlikely given the recent opening of casino hotels and others downtown, including the Westin Book Cadillac, and the weak downtown hotel market.
Plans for a casino are a long shot. The city’s casinos lost revenue last year. Although a state ballot initiative effort led by Benton Harbor’s mayor would try to amend the state constitution and allow the opening of up to eight casinos, including one in Detroit, backers of the initiative still must collect enough signatures to get it placed on the November ballot and approved by voters.
And in June, Ilitch Holdings of Detroit must tell city officials whether it will keep the Red Wings in the city-owned Joe Louis Arena. There has been speculation for years about whether the team will build a new arena in the city.
Ilitch Holdings e-mailed a one-sentence reply for this story: “Whether we are involved or not in these particular business opportunities — or any others, for that matter — is not something that we would comment on publicly.”
Nearby stop planned for rail
There also are private plans to build a light-rail system along the Woodward Avenue corridor. The route for such a transit system has a stop near the area of land acquisitions.
The city-owned empty Woodward property is a few blocks away from the Fox Theatre, headquarters of Ilitch Holdings and Comerica Park, home of Mike Ilitch’s Detroit Tigers. The Ilitch-operated Masonic Temple is a block away from the buildings bought in the past year. And MotorCity Casino, owned by Marian Ilitch and other partners, is within several city blocks of the Masonic and the Fox.
Detroit officials declined comment on what plans the city may have for the big swath of land it controls. Much of the city’s land is controlled by the Detroit Economic Growth Corp., the quasi-public agency that handles development, which declined comment. The city also owns many other parcels near the area of private deal-making.
Prices seem high
“There is nothing in the market now that would suggest why anyone would pay those kind of prices,” said Steven Chaben, managing director of the Detroit office of Marcus & Millichap, a national real estate investment service. “You’re describing a power play; someone coordinating an overall plan for the area and using different agents to get the properties.”
The $2 million mortgage for the former Eddystone Hotel and two adjacent properties was granted in February by Better Planet Investments LLC.
The properties are owned by Harper Woods-based Eddystone Development LLC, and state records show one person is identified with the firm, Raif Harik. The only person connected to Better Planet Investments is George Harik, who once lived at the same Grosse Pointe address as Raif Harik, public records show. Neither Raif nor George Harik returned telephone calls. Raif Harik lives in Grosse Pointe Shores and Georges lives in Palo Alto, Calif., according to public records.
Temple Street, which appears tough and forgotten, is the main source of the buying. Two houses, at 52 Temple and 56 Temple, are empty and boarded up.
Last May, the properties sold for $670,000 to Victorian Rentals LLC. State records show the only person identified with Victorian Rentals is a real estate paralegal who works in the Grand Rapids office of Miller, Canfield. The paralegal, David Jarvis, did not return phone calls.
The next biggest deal is a $650,000 purchase for an empty building at 131 Temple. Local developer Joel Landy sold it in January 2009.
“I’ve signed a confidentiality agreement that I will honor by not saying another word,” Landy said. The buyer was TSD Solutions LLC, an East Lansing firm controlled by CSC-Lawyers Incorporated Services Co. It’s unclear who currently runs TSD Solutions or CSC-Lawyers.
Other deals ongoing
There’s at least one other potential deal in the works: the Temple Bar. Owner George Boukas said in the past few weeks he has rejected an offer from a representative who will not say whom he represents.
The Michigan Veterans Foundation has optioned four parcels in the area, but foundation Executive Director Tyrone Chapman says they have no immediate plans for the land, and no intention of moving.
Another property owner, Dennis Kefallinos, who owns the former American Hotel, said he hasn’t had any offers.
“If someone wants to make me an offer, I’d be more than happy to listen,” Kefallinos said. But the Detroit developer said he is wary of guessing what the Ilitches might do for a future arena.
“Who knows if they have it here? I think they have, especially with that Woodward space,” he said. “But then again, (what) someone told me last week is they want to put the new arena near the old Cass Tech” High School, Kefallinos said.
In fact, a few properties have been bought in the past year in the immediate vicinity of the former public high school. And there is not much public information about the sales.
The Detroit News:
