 
Apbest
Member
Username: Apbest
Post Number: 586
Registered: 03-2006
| | Posted on Wednesday, July 18, 2007 - 9:37 am: |    |
at least the Guardian building will become basically fully occupied...will artificially increase the demand for other office space in downtown, I would imagine. Simply because each square foot is now more valuable once the large remaining chunk of one of downtown's most prominent buildings is taken |
Karl
Member
Username: Karl
Post Number: 8740
Registered: 09-2005
| | Posted on Wednesday, July 18, 2007 - 10:55 am: | |
Perhaps someone can post the cost/sq fit of this and other buildings to allow a fairer cost comparison. $14.5M may be a bargain, or ?? |
Spiritofdetroit
Member
Username: Spiritofdetroit
Post Number: 533
Registered: 11-2006
| | Posted on Wednesday, July 18, 2007 - 11:41 am: | |
well, if the county owns it they had better make it accessible to the community. Open up a viewing area at the top for the public to enjoy |
Gistok
Member
Username: Gistok
Post Number: 4867
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 12:44 pm: | |
Thejesus.... if the Guardian Building went for 14.5 million fully restored (as a larger building).... and the Stott Tower went for 3.4 million, but needed $10 million in restoration costs... would the price disparity then make sense? |
Thejesus
Member
Username: Thejesus
Post Number: 1642
Registered: 06-2006
| | Posted on Wednesday, July 18, 2007 - 12:54 pm: | |
Gistok:
Yes. Your question seems a bit random and I'm not sure why you're asking me, but yes.
And actually, the guardian is in a better location with more square footage and a better design, so all other things being equal, the value of the Guardian should always be higher |
Gistok
Member
Username: Gistok
Post Number: 4869
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 1:06 pm: | |
I was answering your 2 earlier posts on this thread where each time you were questioning why the Guardian Building price was 4 times the David Stott Building price. |
Jiminnm
Member
Username: Jiminnm
Post Number: 1327
Registered: 02-2005
| | Posted on Wednesday, July 18, 2007 - 1:20 pm: | |
You all may be interested to know that MichCon paid $15 million for the Guardian Bldg in 1974. Many more millions were spent on renovation over the years. MichCon later built the 1st St. parking deck, and both passed to DTE when they acquired MichCon. DTE subsequently sold them to the current owners. Both Detroit papers ran stories with the sale price, but I've lost the references.
My wife, who was once property manager for MichCon, thinks that the Guardian has about 250,000 sq ft of usable space - but it's been awhile, so don't bet a lot of money on that. |
Fury13
Member
Username: Fury13
Post Number: 1927
Registered: 10-2003
| | Posted on Wednesday, July 18, 2007 - 1:45 pm: | |
I can see why Ficano wants to do this... Farbman charges exorbitant rents and is difficult to deal with, from what I understand. However, what happens to the Old County Building if Wayne County moves to the Guardian?
Does it simply become an office building? And if it doesn't attract enough tenants, is it a candidate for demolition and site redevelopment? |
Deandub11
Member
Username: Deandub11
Post Number: 121
Registered: 05-2006
| | Posted on Wednesday, July 18, 2007 - 1:50 pm: | |
FYI the News says that when the building was bought in 2003 it went for 5.7 million |
Gistok
Member
Username: Gistok
Post Number: 4871
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 1:58 pm: | |
If I remember from a brochure, the Guardian Building has 385,000 sq. ft. Question is, is that gross footage or rentable footage. |
Jerome81
Member
Username: Jerome81
Post Number: 1578
Registered: 11-2003
| | Posted on Wednesday, July 18, 2007 - 2:08 pm: | |
The real question is...
Why did they buy it?
I can't imagine WC is expanding the amount of office space they need, so the secondary question is then, from what other buildings will those working in the Guardian come? And finally, what will happen to those buildings (such as WCB?) |
Gistok
Member
Username: Gistok
Post Number: 4874
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 2:25 pm: | |
Well I would assume that they are not going to kick out the 69% occupancy folks for one thing... maybe they only need the remaining 31% of the building. |
Thejesus
Member
Username: Thejesus
Post Number: 1644
Registered: 06-2006
| | Posted on Wednesday, July 18, 2007 - 2:44 pm: | |
Gistok:
I wasn't questioning why the Guardian building was 4x more than the Stott...I was saying that the price didn't seem low to me as others had said and was merely using the recent sale of the Stott building as a reference... |
Beatsworking
Member
Username: Beatsworking
Post Number: 81
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 3:00 pm: | |
Afternoon update:
http://www.freep.com/apps/pbcs .dll/article?AID=/20070718/NEW S02/70718036 |
Rfban
Member
Username: Rfban
Post Number: 141
Registered: 02-2004
| | Posted on Wednesday, July 18, 2007 - 3:02 pm: | |
WOW... |
Rfban
Member
Username: Rfban
Post Number: 142
Registered: 02-2004
| | Posted on Wednesday, July 18, 2007 - 3:29 pm: | |
Looks like Wayne county is going to have to change their logo.
|
Middetres
Member
Username: Middetres
Post Number: 3
Registered: 07-2007
| | Posted on Wednesday, July 18, 2007 - 5:43 pm: | |
I think a better question in all of this, regardless of the value of the Guardian Building, is why the parking structure the County also wants to buy is worth $17 million, $2.5 million more than one of the most beautiful buildings in the world?!! |
Thejesus
Member
Username: Thejesus
Post Number: 1646
Registered: 06-2006
| | Posted on Wednesday, July 18, 2007 - 6:20 pm: | |
^because it likely generates more revenue and costs far less to maintain... |
Billk
Member
Username: Billk
Post Number: 44
Registered: 09-2005
| | Posted on Wednesday, July 18, 2007 - 6:26 pm: | |
The more I think about this, the less it makes sense. I can't see why Wayne co. would buy a building that's 70% occupied by outside tennants. They are not in the leasing business. Are they going to kick out all the current tennants as their leases are up? Is this just posturing by Ficano? At his morning press apppearance he was still talking about negotiating for the Old Wayne County Building. |
3rdworldcity
Member
Username: 3rdworldcity
Post Number: 793
Registered: 01-2005
| | Posted on Wednesday, July 18, 2007 - 6:52 pm: | |
Who says the Stott sold for $3.5 million? That is inconceivable. |
Lmichigan
Member
Username: Lmichigan
Post Number: 5811
Registered: 10-2003
| | Posted on Wednesday, July 18, 2007 - 7:25 pm: | |
Bill,
Why would you figure they would be kicking any tenants out of the building? I personally don't like the idea of Wayne County getting so deeply into the real estate business, but I seriously doubt this means a huge change for the Guardian's existing tenants, rather Wayne County will probably fill it up the rest of the way. |
Gistok
Member
Username: Gistok
Post Number: 4878
Registered: 08-2004
| | Posted on Wednesday, July 18, 2007 - 7:41 pm: | |
I agree Lmichigan.
One of the big tenants in the Guardian Building is THE SMITH GROUP, the architectural firm formerly known as Smith Hinchman & Grylls... the designers of that building (under chief architect Wirt Rowland).
The Guardian Building is probably the "jewel in their crown" so to speak, and it probably helps their business the moment new clients are awestruck by that lobby.
It's not that unusual for county offices to share buildings with other tenants. After all 500 Monroe Ave., former Ferry-Morse seed warehouse where Fishbones is located, is used by the county treasures office, as well as other non-governmental offices. |
Titancub
Member
Username: Titancub
Post Number: 58
Registered: 08-2006
| | Posted on Wednesday, July 18, 2007 - 7:54 pm: | |
Doing some quick back of the envelope numbers, the sales price looks generally in line with what its probably worth...
250k sq ft; 163K leased (65% occupancy); Website says rent is 16-18psf so let's after concessions let's use 15psf.
Rev: 15 x 163k = 2.4M
Cost: 7.8 x 163k = 1.2M
NOI: 1.2M
This implies a cap rate (1.2M / 14.5M) of approx 8% -- not unheard of given conditions in downtown office space. |
Jdkeepsmiling
Member
Username: Jdkeepsmiling
Post Number: 284
Registered: 01-2006
| | Posted on Saturday, July 21, 2007 - 8:44 am: | |
Here is a link with some updated information:
http://www.freep.com/apps/pbcs .dll/article?AID=/20070721/NEW S02/707210328 |
Ramcharger
Member
Username: Ramcharger
Post Number: 377
Registered: 05-2006
| | Posted on Saturday, July 21, 2007 - 9:22 am: | |
Wayne County gets $9M pitch to keep current offices |
Iheartthed
Member
Username: Iheartthed
Post Number: 1202
Registered: 04-2006
| | Posted on Saturday, July 21, 2007 - 9:53 am: | |
"^because it likely generates more revenue and costs far less to maintain..."
You don't find it incredibly backwards tha parking is more valuable than office space? It sounds like a symptom of what's wrong with downtown, IMO. |
Thejesus
Member
Username: Thejesus
Post Number: 1651
Registered: 06-2006
| | Posted on Sunday, July 22, 2007 - 1:09 pm: | |
^I agree that it's unusual, but I'm not surprised by it given what I know about Detroit...
the present value of an asset is merely a function of the amount of future income an investor feels it's capable of generating...
so the fact that the guardian is an architectural "gem" isn't what matters...what matters is that it's a skyscraper with very high maintenance costs located in an area with an extremely weak commercial real estate market...
by contrast, the parking garage has very low maintenance costs and is located in the motor capital of the world, and, more specifically, a major downtown area with hardly any mass transit options whatsoever... |
Gistok
Member
Username: Gistok
Post Number: 4906
Registered: 08-2004
| | Posted on Sunday, July 22, 2007 - 4:07 pm: | |
The Guardian Building has undergone major renovations in 1984 (under Michcon), and major office renovations recently under the current owner). So I don't see it having high maintenance costs right now. Maybe ongoing maintenance costs, but that's true for all buildings.
And parking structures have a short lifespan. You probably won't find many parking structures downtown that date to the 1920's. Their being open to the elements causes them to deteriorate rapidly. Just look at the parking structure near DTE Energy that wasn't more than 35 years old... it was torn down due to corrosion.
Although I don't know the age of the parking structure in question, (I'm assuming it's not new) I too think that the parking structure is overpriced as compared to the Guardian Building.
(Message edited by Gistok on July 22, 2007) |
Thejesus
Member
Username: Thejesus
Post Number: 1652
Registered: 06-2006
| | Posted on Monday, July 23, 2007 - 9:09 am: | |
Gistok:
There's no question that the maintenance costs of the Guardian are higher than the parking garage...I don't think there's even a question to debate there, so I'm not sure what you mean... |
Thejesus
Member
Username: Thejesus
Post Number: 1653
Registered: 06-2006
| | Posted on Monday, July 23, 2007 - 9:10 am: | |
Gistok:
There's no question that the costs of maintaining the Guardian are higher than the parking garage...I don't think there's even a question to debate there, so I'm not sure what you mean... |
Gistok
Member
Username: Gistok
Post Number: 4915
Registered: 08-2004
| | Posted on Monday, July 23, 2007 - 11:20 am: | |
My point is that the price difference between the 2 buildings in maintenance costs is offset by the lifespan of the 2 buildings.
The Guardian could generate income for the next hundred years. The garage maybe the next 20 years. So that's just an additional factor that has to be added to the price discrepancy between the overvalued parking structure versus the Guardian Building. |
Thejesus
Member
Username: Thejesus
Post Number: 1655
Registered: 06-2006
| | Posted on Monday, July 23, 2007 - 11:26 am: | |
there's lots of stuff you aren't considering that the parties to these sales apparently DID take into account...
for example, the cost to demolish the parking structure after it's old and outdated and building a new one in its place (or cashing in by selling the land) is probably far less than it would cost to NOT demolish the Guardian given the high costs associated with keeping an old building standing and useable |
Gistok
Member
Username: Gistok
Post Number: 4916
Registered: 08-2004
| | Posted on Monday, July 23, 2007 - 11:37 am: | |
.... um so based on your argument... what you're saying is that in downtown Detroit old downtown parking structures will almost always be more expensive to buy than old office buildings???
I'm meeting with Anthony Pieroni this afternoon (owner of the Michigan Building/parking structure)... I'll run that past him and see what he says. |
Thejesus
Member
Username: Thejesus
Post Number: 1657
Registered: 06-2006
| | Posted on Monday, July 23, 2007 - 11:48 am: | |
no...I'm saying that an asset that is capable of generating X amount of income in the foreseeable future will always be more expensive to buy than an asset that is capable of generating LESS than X amount of income in the foreseeable future...
run that past your friend and see what he says...
apparently, the parking structure is expected to be more profitable in the foreseeable future than the Guardian, hence the higher sale price...and I'm not surprised by this given the lousy commercial office space market and the lack of public transit downtown |
Trainman
Member
Username: Trainman
Post Number: 454
Registered: 04-2006
| | Posted on Monday, July 23, 2007 - 9:21 pm: | |
This is enough to keep SMART in Livonia for five years.
If this was done then more of us would have jobs and have more transportation choices. This would mean more people paying taxes thus more money collected to help balance the Wayne county budget.
Instead, our leaders vote themselves big pay raises and cut off the workers from making money.
It's time to say NO next August 2010 if the bus service reduction continue. Or, pay even more for less. |
Thejesus
Member
Username: Thejesus
Post Number: 1663
Registered: 06-2006
| | Posted on Monday, July 23, 2007 - 9:42 pm: | |
please don't spam threads with your propaganda |
Scs100
Member
Username: Scs100
Post Number: 1255
Registered: 12-2006
| | Posted on Monday, July 23, 2007 - 10:24 pm: | |
^^ Thank you! |
Jasoncw
Member
Username: Jasoncw
Post Number: 399
Registered: 07-2005
| | Posted on Monday, July 23, 2007 - 10:27 pm: | |
I agree. |
Lmichigan
Member
Username: Lmichigan
Post Number: 5836
Registered: 10-2003
| | Posted on Monday, July 23, 2007 - 11:53 pm: | |
Asking Trainman to stop spamming is like asking the sky to change its color, or a Zebra to get rid of its stripes. It's not going to happen.
I'm still trying to make sense of Fianco's play, here. If he is still looking to buy the County Building, was the best way to blow some money on the Guardian? I'm not completely sure I buy that he wants to use the Guardian for county offices. Is it probable that he'll simply try to flip it now that it looks like he may get what he wanted in the first place (i.e County Building)? |
Thejesus
Member
Username: Thejesus
Post Number: 1664
Registered: 06-2006
| | Posted on Tuesday, July 24, 2007 - 8:47 am: | |
^I never read that he was trying to buy the county building anywhere...if anything, the announcement to buy the guardian may have been to get Farbman to lower the county's rent, which it appears they have done...whether or not Ficano will stay in the county building and chose not to buy the Guardian now the Farbman has lowered the rest remains to be seen |
Lmichigan
Member
Username: Lmichigan
Post Number: 5840
Registered: 10-2003
| | Posted on Tuesday, July 24, 2007 - 4:54 pm: | |
Fianco has stated that he wants to buy the county building, that's if the owners don't bring down the rent. |
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