The clearest picture to date of what is expected to be built around the new Detroit Red Wings arena includes a dizzying mix of retail, office, multifamily and hotel space expected to be largely completed by the time the first puck of the 2017-18 season drops.
And within six months — two months after this National Hockey League season ends in June with — a series of substantial milestones, including major tenants such as a large grocery store and hotel, are expected to be announced.
Among those seriously being courted is Walker, Mich.-based Meijer Inc., which has been exploring conceptual plans for smaller stores to fit in dense urban areas, according to Olympia Development of Michigan executives and other real estate sources.
In the area immediately around the arena billed as Woodward Square, Olympia is building about 160,000 square feet of office space. Offices for the Red Wings and Olympia Entertainment, the venue management arm of team owners Mike and Marian Ilitch’s business holdings, are expected to take about 100,000 square feet of that.
An additional 55,000 square feet of retail space, plus a 350- to 400-room upscale hotel and more than 120 multifamily units, will be in the area bounded by Woodward and Cass avenues to the east and west and Sproat Street and the Fisher Freeway service drive to the north and south.
Total investment in the Woodward Square area — one of five neighborhoods in the area Olympia intends to rehabilitate as part of its broader The District Detroit plan — is now $1.2 billion, of which 75 percent is (or will be) private spending, according to Olympia executives.
When the district was publicly unveiled 18 months ago, the investment estimate was $650 million, including $450 million in public-private spending on the arena.
The 20,000-seat venue is scheduled to open by September 2017 and its latest cost estimate is $627.5 million.
Why such a massive increase?
Overwhelming demand for things like apartments, office and retail space, plus improvements to the original design of the arena, Olympia says.
“We are out in the marketplace and we are reacting to this incredible feedback,” Steve Marquardt, vice president of Olympia Development, the real estate company owned by Mike and Marian Ilitch, said in an interview with Crain’s last week.
The District Detroit is ambitious and daunting: 50 city blocks, the majority of which were remarkable mostly for their barrenness, wedged between the freshly blooming downtown and Midtown areas, teeming with recent development and business activity.
At its heart is a hockey and event arena rising now at the corner of Woodward and Henry Street. Ancillary development is planned in dozens of individual projects spread across the 50 largely Ilitch-owned blocks, which will bring hundreds of thousands of square feet of office and retail space, plus about 1,000 multifamily units, to the market in the next several years.The arena’s steel skeleton and concrete guts are rising above a 40-foot hole dug into the ground for the lower bowl and ice rink. A pair of office and retail buildings flanking its southern and eastern side, expected to bring a mixture of local and national tenants such as restaurants, bars and shops, also are under way.
“The plan appears to be very progressive and should contribute to Woodward and the surrounding streets’ walkability and urbanism,” said Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc. “Unusually skillfully planned for such a large area.”
Olympia said about $30 million has been spent just on infrastructure surrounding the arena.
Across Henry Street, another office building is in the works. This one, 40,000 to 50,000 square feet for multiple office users with first-floor retail space, is known as Building C.
To the west, about 132 multifamily units — 108 apartments (buildings D and E) and 24 townhomes — wrap around the nearly 1,200-space, six-story main parking deck for the arena, according to a request for proposal from developers.
That RFP, which focuses specifically on those two projects and was obtained by Crain’s last week, spells out 19 separate sites throughout the district where multifamily construction and redevelopments are possible.
Among those possible projects (see map below): 300 units along Woodward in the so-called “superblock;” another 75 in the former United Artists Building on Bagley Street; 100 in the historic Eddystone Hotel that will be renovated; an undetermined number on a 1-acre patch of Brush Park land owned by Wayne County Community College District; and an additional 250,000 square feet billed only as “student housing” next to the planned Mike Ilitch School of Business for Wayne State University.
The superblock has long been talked about at the corner of Woodward and Montcalm in an area that is now surface parking lots just west of Comerica Park. The land is currently owned by St. John’s Episcopal Church.
The United Artists Building is planned for about 75 multifamily units, the RFP says. According to a source, the redevelopment is expected to include first-floor retail space and a repurposing of at least some of the theater inside the 223,000-square-foot building, which was constructed in 1935 and has been owned by the Ilitches since 1997.
It has not yet been determined how the theater would be reused, if at all, said Richard Heapes, co-founder and partner of White Plains, N.Y.-based Street-Works, the planning consultant on the project.
The 250,000 square feet of multifamily space identified as “student housing” near the business school is not incorporated into the official plan for the new WSU building, said Steven Townsend, director of marketing and communications for the business school.
Smaller planned projects — 15 units here, 25 units there, another 30 units there — are peppered along Second Avenue, Cass Avenue, Park Avenue and Temple Street, among others.
There are still plenty of unknowns, however.
Multiple sites spelled out in the RFP for multifamily development contain no information about the number of units they are expected to accommodate.
All told, the RFP’s 19 sites total about 1.44 million square feet of building space, plus the acre of Brush Park land. The 675 units identified sit in about 958,000 square feet, or about 1,419 square feet per planned unit. At that rate, the 1.44 million square feet would accommodate about 1,015 units — right around how many units Olympia executives say are expected as part of the district project at this time.
Even though there are 19 sites identified in the RFP, responses to which were due Friday, Olympia remains cautious about how many projects would actually materialize. Doug Kuiper, vice president of corporate communications for Ilitch Holdings Inc., parent company of Olympia Development, said at least 10 residential projects are expected.
Residential properties for which Olympia Development is seeking proposals, according to an RFP obtained by Crain’s. Click on each site for information about that property.
The project is expected to add 500,000 square feet to the downtown office market across the 50-block area, according to Kuiper.
In addition to the added office space surrounding the arena, the first new office building construction in the downtown core is part of the project.
Among the large office projects previously announced is the new Little Caesars Pizza Global Resource Center, plans for which have grown by one floor to be a nine-story building at Woodward and Columbia Street. It will sit next to the company’s current headquarters inside the Fox Theatre. Original plans called for a 205,000-square-foot building; it is expected to now be about 240,000 square feet, Kuiper said.
Currently, there is about 12.84 million square feet in the central business district, about 13.7 percent of which was vacant in the fourth quarter last year, according to data from the Detroit office of real estate brokerage firm Jones Lang LaSalle.
The average asking rent was $20.64 per square foot, according to JLL.
There is another 1.12 million square feet north of the district boundaries in the New Center area, where the vacancy rate is 14.3 percent and the average asking rents are $18.54 per square foot.
Total, the 13.96 million square feet of space is about 14.2 percent vacant with an average asking rate of $20.39 per square foot, according to JLL.
Heapes said a mixture of local and national tenants is being sought for the retail space at ground level in the Woodward Square area.
Jim Bieri, president of Detroit-based Stokas-Bieri Real Estate, said the types of tenants sought will depend significantly on the individual space sizes and configurations, but that Olympia gets a lot of firepower by bringing in CBRE Inc., the Los Angeles-based real estate brokerage with a local office in Southfield, to handle the retail leasing.
“Because of the CBRE connection and because they have contacts with a lot of national tenants, I would hope that some of their national tenant assignments would take a look at some of this retail if it’s right for them,” Bieri said.
Specifically on food options, Marquardt said discussions are ongoing with well-known grocers.
“We have a ton of conversations underway with all the names you’d expect,” Marquardt said Thursday.
Heapes said, however, that one of the keys will be getting grocers to adapt “their own rules” to urban settings, a conversation that apparently is ongoing.
“I know what the Target rules are,” he said. “I’ve tried to change them. The rules are in a grocery store — they want a big … sign, they want a street surface parking lot and they want freeway access. But how do you take dinosaur rules and get them to think differently?”
But patience, Detroit. Patience.
“When we pitched the original vision, it was to connect downtown with [Midtown],” Heapes said.
“This is the connector. As you can imagine, people say, ‘What the hell is going on?’ This is the biggest sports and entertainment project ever conceived in America. It’s not going to happen overnight in a city that hasn’t had new development in three decades.”
Michael Cooper, president and managing principal of Southfield-based architecture firm Harley Ellis Devereaux Corp., said the revised plans reflect a commitment to what he called “complete communities.”
“The community is built around the office, retail, hotel and multifamily. People can live, work and shop down there, have family come down there and stay with them,” he said.
“That can involve the arena or another destination, but those are the sustainable pieces of a community that will work for the city and the region, regardless of whether a destination event is happening. The urban centers that are successful and vibrant and rich with energy have a sustainable, community-complete component where you have a full integration of all these things.”
Eric Larson, CEO of Bloomfield Hills-based Larson Realty Group and CEO of the Downtown Detroit Partnership, agreed that diversity of product type has been executed well.
“What they are creating is a very, very sustainable foundation for what is really an entirely new neighborhood,” he said. “The way they are approaching the mix of uses allow for not only diversity in product type, but also activities at all times of day and night, which is very important not only to the reality of a resilient community, but the perception of one.”
Main photo Courtesy of Olympia Development, A conceptual rendering of Woodward Square.