Discuss Detroit » Archives - July 2007 » New Comerica Tower owners see bright future « Previous Next »
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Apbest
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Username: Apbest

Post Number: 601
Registered: 03-2006
Posted on Friday, August 10, 2007 - 3:54 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

http://www.crainsdetroit.com/a pps/pbcs.dll/article?AID=20077 08060329
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Livernoisyard
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Username: Livernoisyard

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Posted on Friday, August 10, 2007 - 4:13 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Don't virtually all new owners of a business, building, etc. say much the same about having bright futures? Otherwise, why would they have purchased it? Stands to reason that they feel that their investment should pay off.

The rub is that not all businesses prosper, even in regions that are much more profitable. Along the same line, why did the previous owners feel that they had to sell? Were they offered so much money that they couldn't rightfully refuse? In that case, the new owners probably overpaid.

And on it goes in the financial and business reporting biz..

(Message edited by Livernoisyard on August 10, 2007)
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Charlottepaul
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Username: Charlottepaul

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Posted on Friday, August 10, 2007 - 4:33 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

LOL, I picked up on that in general terms too when I read this quote in the link: "'I'm big on what I see in Detroit right now,' he said. 'This city has more upside potential than most cities in the United States.'"

I guess you have to take it as a compliment to the city, but why would someone want to buy the building for just the challenge of trying to fully lease it? Seems pretty goof ass...
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Iheartthed
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Username: Iheartthed

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Posted on Friday, August 10, 2007 - 5:23 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

^If you get it at a deep discount.
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Mackinaw
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Username: Mackinaw

Post Number: 3540
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Posted on Friday, August 10, 2007 - 5:45 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

"With a stable ownership situation now, Becker predicts the building will draw more interest from tenants."

What was unstable about Hines? Just wondering.

The most interesting thing to me is what Comerica will do in 2012. Most of their infrastructure remains in Detroit so you'd expect them to retain 200-300k sf downtown, but if they downsized any more then that's awful news for that building.
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Iddude313
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Username: Iddude313

Post Number: 104
Registered: 07-2005
Posted on Friday, August 10, 2007 - 6:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

All I want is for that dang building to be lit up at the top.
Yay Phillip Johnson!
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3rdworldcity
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Username: 3rdworldcity

Post Number: 856
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Posted on Friday, August 10, 2007 - 6:18 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Uh, people, re-read the story.

Hines did not "sell" the building. It was a big money loser and Hines could not or would not pay the mortgage. The lender then acquired ownership by a deed-in-lieu of foreclosure; the lender probably had no choice because the loan was probably non-recourse, which means that Hines had no personal liability to pay the loan and the only thing the lender could do upon default was to take the property.

Gerald Hines (the company is Houston based) has a long history of dealing with distressed properties. He's the guy who in the '80's allegedly was the first distressed owner to throw the keys on the table in order to get a good work-out deal which would enable him to keep the property under a restructured mortgage. Most lenders are smart enough to know that's the best course in many situations. Apparently, Hines didn't think attempting to hold on to this one was worth the effort.

Believe me, the lender, iStar, doesn't believe a word of that press release crap about a bright future. iStar owns the building because it made a very bad loan and is paying the consequences. It's probably as we speak out in the international marketplace trying to dump the building on yet a greater fool. It will take a very substantial loss if it's ever able to sell the building.

Hines is a national developer/owner that is 10 times smarter than the banks and others with which it deals. If Hines couldn't make it work, and it obviously had no hope of doing so in future years, the yahoos from iStar don't have a chance. Hines knew exactly what it was doing and clearly views the downtown Detroit office market as a disaster for years to come.

What people should be asking is why the Pension Fund "invested" $20,000,000 to buy a 10% interest in a 60% occupied building that has been for a long time and will continue to be for a long time in financial distress. They apparently value the building at $200,000,000. I hope no one on this forum has to rely on the idiots who run the pension fund for the safety of their retirements.

The last two (and only two) major new office buildings built in downtown Detroit in the last 15 years (the Madden Building - 150 Jefferson - and this building) have both tanked and were financial disasters. What does that say about Detroit? Most knowledgable lenders wouldn't look twice at a Detroit deal, and you never see Detroit banks getting involved in any of them.
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Andylinn
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Posted on Friday, August 10, 2007 - 7:23 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

3rdworldcity : please define what counts as a "major new office building" - I would argue that Compuware, Price Waterhouse Coopers, and One Kennedy Square all count... this brings the total of major office buildings built in the last 15 years to 5.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 858
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Posted on Friday, August 10, 2007 - 9:11 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Fair question. I should have said "Multi-tenant" office buildings. My mistake.

I don't consider the One Kennedy building to be a "major office building." Anyway, from what I've heard it's not a great deal either. We'll see.

(Message edited by 3rdworldcity on August 10, 2007)
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Mind_field
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Username: Mind_field

Post Number: 759
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Posted on Friday, August 10, 2007 - 10:51 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

3rd world city wrote: "What does that say about Detroit?"

I don't think the city has any bearing on the fate of Comerica Tower. The tenants that left all had their own reasons for leaving, independant of the city their offices were located in. Arthur Anderson, this company isn't even in existance anymore, correct? This has nothing to do with Detroit. The Michigan Supreme Court. This was probably a consolidating move, correct? Isn't 2002 when Cadillac Place opened and the state consolidated many of their offices there? Ernst and Young. They moved into a building that should never have been constructed in the first place. The failure of Visteon to anchor a building they said they would, only added to the oversupply of downtown office space. And finally Comerica Bank. The CEO is a Texas native who has little loyalty to this state. If the CEO of Comerica was a michigan native, i would think the bank would still be headquartered here.

So, 3rd world, your statement about Detroit is off base IMO. It's like saying since Pfizer left Ann Arbor, what does that say about Ann Arbor? Ann Arbor is still a great city that suffered from a corporate restructuring.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 860
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Posted on Saturday, August 11, 2007 - 9:18 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Mind_field: Not unreasonable observations. What I am saying is that these office building failures send a clear message to the national lending community that insofar as the Detroit market can't support first class office buildings there's no reason to think that any new deals, not only office buildings, but other large scale commercial developments, are prudent lending possibilities. I'm told by a couple of mortgage banker friends that they see most of the prospective financing deals as they're proposed and the national lenders with which they deal won't even consider a Detroit submission.

These failure taint the financial image of the whole city.

There must be at least a couple of commercial bankers on this forum who could weigh in on the topic.

Comerica moving a few people to TX has been debated here ad nauseum. As a Comerica shareholder and long-time customer, I personally applaud the move of 225 corporate officers and its more or less symbolic headquarters to TX. I do much business in TX and go there frequently, and have for years. TX is booming and is very business-friendly. MI is not. The Comerica Board, which represents all of the public shareholders, had an obligation to do something which goes a long way towards insuring the financial viability of the bank. Besides, the vast majority of its employees will remain in MI.

It never ceases to amaze me that some people think corporate officers owe a greater duty and their loyalty to their birth state than the company's employees and shareholders.

Back to the topic. I feel that the statement made by iStar about the rosy future it sees for Detroit is BS and that it raises false hopes in people who believe what they say.
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Rhymeswithrawk
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Username: Rhymeswithrawk

Post Number: 860
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Posted on Sunday, August 12, 2007 - 9:15 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I just hope the name is changed. As Comerica has dropped us, let them drop Comerica.
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Charlottepaul
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Username: Charlottepaul

Post Number: 1435
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Posted on Sunday, August 12, 2007 - 10:39 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Def. sounded like they were going to do that as potential tenants had a misconception that it was a single tenant (for Comerica alone) building.
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Jasoncw
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Username: Jasoncw

Post Number: 422
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Posted on Sunday, August 12, 2007 - 10:53 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I think the official name has always been One Detroit Center, and I think it's name has been Comerica Tower at One Detroit Center.

I forgot where I heard it, so it might not be true.
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Miketoronto
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Username: Miketoronto

Post Number: 610
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Posted on Sunday, August 12, 2007 - 11:49 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Why were these buildings built in the first place, if the downtown market was tanking?

There was no shortage of office space downtown. So why add more when it was not needed?


If more companies keep moving downtown like Compuware, then they should be encouraged to use the buildings already standing, and not add new buildings.
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Focusonthed
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Username: Focusonthed

Post Number: 1243
Registered: 02-2006
Posted on Sunday, August 12, 2007 - 11:53 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

quote:

Hines knew exactly what it was doing and clearly views the downtown Detroit office market as a disaster for years to come.


That's a little bold. I think you'd be safe to say they found the Detroit office market RISKY, for years to come. Perhaps a risk they weren't willing to take. But not a disaster, necessarily.
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Andylinn
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Username: Andylinn

Post Number: 513
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Posted on Sunday, August 12, 2007 - 11:59 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

a little off topic, i just wanted to say that i applaud this conversation. no sarcasm intended: this is the first detroityes debate i've been involved in where there was no mud slinging and name calling. even though it's been a thread where 3rd world stated opinion + facts and others (including myself) have challenged him(/her?) this has been a really high class thread. people are keeping it nonpersonal. keep it up. I hope this can spread to more of the debates on this forum.
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Mind_field
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Username: Mind_field

Post Number: 761
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Posted on Monday, August 13, 2007 - 2:37 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

As an addendum to my previous post #759, i forgot to mention one tenant that left, JWT, formerly known as J. Walter Thompson ad agency. They left for Dearborn to be closer to Ford's world headquarters. In much the same way GM enticed some of it's affiliated companies like EDS and Onstar to move from Troy to the Renaissance Center, Ford prodded and coerced JWT to move out of Comerica Tower into Dearborn.

A couple years ago Sara Lee moved their headquarters from downtown Chicago to the suburb of Downer's Grove, i think, in part, because the new CEO (at the time) lived in Downer's Grove. IMO, it was a foolish move becuase the greatest concentration of talented, educated, young workers is currently in the central city, and companies are realizing this and seeking downtown Chicago addresses. Because Sara Lee, Sears, and I'm sure other companies left for the suburbs, doesn't mean the city is tanking. Conversely, these companies that left central Chicago are missing out on the creation of one of the greatest urban environments, and the opportunities and amenities that it affords, in the world!
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Iheartthed
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Username: Iheartthed

Post Number: 1360
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Posted on Monday, August 13, 2007 - 1:29 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Arthur Andersen is now Accenture.
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Iheartthed
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Username: Iheartthed

Post Number: 1361
Registered: 04-2006
Posted on Monday, August 13, 2007 - 1:34 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

So what was Hines speculating on in the late 80s/early 90s that never materialized and thus caused the downtown office market to further tank?

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