On Friday, September 6th at The Westin in Southfield, the Midwest Real Estate News held their 5th Annual Detroit Commercial Real Estate Summit. The event had a networking session and three panels opining on current commercial real estate conditions and what’s ahead in 2020.
Game Changing Projects in Downtown Detroit & Suburban Developments
Jared Friedman, Director of Opportunities with Friedman Real Estate, commented on the activity at the Northland Center project, with 95 of 110 acres currently under contract. Susan Harvey, SVP at Ashley Capital, updated attendees on redevelopment of the Old Liberty Ballpark on Detroit’s Eastside, along with redevelopment of the Hazel Park Racetrack and new development of large industrial space on another 250 acres in Van Buren Township.
Todd Sachse, Founder and CEO of Sachse Construction, spoke of additional development of the Pullman Parc project in Detroit and the firm’s continuous development interest 1 mile east of the Dequindre Cut. Melissa Dittmer, Chief Design Officer of Bedrock, commented that after Bedrock’s 8 year effort with redevelopment of the Woodward corridor , they are now moving more aggressively into Washington Boulevard properties, as well as their current stake in redevelopment of Corktown buildings. Finally, Paula Roy Carethers of Ford Land discussed progress with the Detroit Central Train Station, a truly transformational project in Corktown.
Opportunities and Challenges in Multi-Family Markets
Cliff Brown, Managing Partner of Woodborn Partners, commented on what amenities are hot in the urban market. While construction costs continue to escalate and skilled trade labor is increasingly difficult to procure, Cliff remains bullish on development projects in Detroit, largely based on the continuing demand for multi-family units in the city. Kevin Dillon from Berkadia talked about Freddie Mac and Frannie Mae putting the breaks on much more lending this year with increased interest rates. While the multi-family market remains strong, uncertainty on national fiscal policy and recession fears is affecting even the this market in the area.
As always, Detroit remains an anomaly, according to David Walkins of Walker Dunlop, moderator of the panel. While there’s never been more money available for development in the city, which was also confirmed by District Capital Principal Kevin Kovachevich, Detroit has higher construction costs than most other cities in the country, according to Todd Sachse. With higher construction costs and lack of skilled labor, developments are more expensive and time consuming, making them more challenging than ever.
It was a very well attended, information rich summit for those in attendance at the morning event last Friday. While the warning signs are there, most developers are continuing their business strategies of building new and retrofit buildings where the market demand is strongest, mostly in the Multi-Family asset class. Looking forward to the Detroit 2020 Summit from Midwest Real Estate News.
Robert Mattler, JD LLM LEED AP BD&C, is a sustainable financing specialist, consulting with developers, redevelopers and building owners on financing upgrades to all asset classes of non-residential real estate for resiliency and sustainability. A former Board Member of USGBC Detroit Chapter and current Ambassador for Detroit’s 2030 District, Robert employs Property Assessed Clean Energy (PACE) financing and other financial structures allowing building owners to lower operating costs, increase building value without changing the owners’ goals of maximizing investment returns. Reach Robert at email@example.com or 248-762-4370 (cell).