Discuss Detroit » Archives - Beginning January 2006 » Lafayette Developer Eyes Mid-Summer for Launch of $40M Renovation « Previous Next »
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Itsjeff
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Username: Itsjeff

Post Number: 5281
Registered: 10-2003
Posted From: 68.42.168.211
Posted on Thursday, December 29, 2005 - 2:15 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

DETROIT-A renovation launch date for the historic 14-story Lafayette Building is in the sights of Coral Gables, FL-based Peebles Atlantic Development Corp. The condominium conversion project, estimated at a cost of $40 million, is slated to begin some time during mid-2006.

"We'd like to start working on the building by summer, and we're very close to that,” says R. Donahue Peebles, president and CEO of the development company, which will be renamed Peebles Corp. on Jan. 1. “We're likely to be done within 12 months of that, but hopefully we can improve on that timeline."

http://www.globest.com/news/44 1_441/detroit/141427-1.html
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Itsjeff
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Username: Itsjeff

Post Number: 5282
Registered: 10-2003
Posted From: 68.42.168.211
Posted on Thursday, December 29, 2005 - 3:28 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I stopped reading when I saw that they're starting their models at $400K for 1000 sq ft units. But I wish them well.
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Darwinism
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Username: Darwinism

Post Number: 294
Registered: 06-2005
Posted From: 70.226.99.45
Posted on Thursday, December 29, 2005 - 4:41 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The condo/loft development downtown is taking on a whole new can of worms. Many developers have been able to sell-out hot properties at premium prices. I too wish Peebles Corp. the best of luck in their venture to put all these together. There are people with the affordability to purchase those units - the question is - how many people are willing to do that at this point in time ?
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Urban_shocker
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Username: Urban_shocker

Post Number: 238
Registered: 12-2003
Posted From: 68.248.7.192
Posted on Thursday, December 29, 2005 - 4:50 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)


quote:

The condo/loft development downtown is taking on a whole new can of worms.




Right, this is the icing on the pie;)
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Lmichigan
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Username: Lmichigan

Post Number: 2874
Registered: 10-2003
Posted From: 67.172.95.197
Posted on Thursday, December 29, 2005 - 5:26 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

What? Are we not allowed to use mixed cliches? :-)

I too, wish them the best of luck. But, I will always disappointed about them having to bring down another building of nearly the exact same height for a parking garage.
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Itsjeff
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Username: Itsjeff

Post Number: 5283
Registered: 10-2003
Posted From: 208.27.111.125
Posted on Thursday, December 29, 2005 - 11:01 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

As long as we get the new development, any port in a toaster, I always say.
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Supersport
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Username: Supersport

Post Number: 9659
Registered: 10-2003
Posted From: 69.246.37.236
Posted on Thursday, December 29, 2005 - 11:24 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

This isn't where Detroit starts to turn into Chicago is it? God help us if "Real World MTV" decides to film from downtown in a year or two.
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Jfried
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Username: Jfried

Post Number: 701
Registered: 11-2003
Posted From: 209.131.7.190
Posted on Thursday, December 29, 2005 - 11:41 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I'm hearing you itsjeff!

".....which will be marketed at a sales price beginning at $400,000 per unit.

"On average, the units will be 1,000 sf..."

more than $400 per sq ft?! even the new stuff in birmingham and royal oak isn't selling for that...
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Detroitduo
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Username: Detroitduo

Post Number: 403
Registered: 06-2005
Posted From: 68.255.243.195
Posted on Thursday, December 29, 2005 - 11:57 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Oh, Please! Detroit is far and away from becoming a "real" city. If we ever get a real mass transit line, THEN we can talk about that...

Regardless, I wish these guys good business. They must feel there is a market. We shall see....
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Ltorivia485
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Username: Ltorivia485

Post Number: 2254
Registered: 08-2004
Posted From: 172.148.113.151
Posted on Thursday, December 29, 2005 - 12:43 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Even if there is a real "market" the folks will leave in five years because they can't afford the insurance rates and poor services here!
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Atl_runner
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Username: Atl_runner

Post Number: 1754
Registered: 10-2003
Posted From: 68.209.118.72
Posted on Thursday, December 29, 2005 - 12:54 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Most 'New' Condos are bought by Investors. People who know they can flip in a few years and make some money. Obviously, there is outside interest in the potential of Detroit, and that is GREAT news.

It's highly likely that at ~400k for ~1000 sq, feet, these will be top end luxury places. Another great sign.

Even though the prices are high, this is good news all the way around.
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Ndavies
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Username: Ndavies

Post Number: 1476
Registered: 10-2003
Posted From: 70.230.228.201
Posted on Thursday, December 29, 2005 - 2:13 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)


quote:

Most 'New' Condos are bought by Investors. People who know they can flip in a few years and make some money.




That might be true in other markets, It's definitely not true in Detroit. A vast majority of Detroit condo buyers buy them to live in them.

We don't have a rental market. Rental rates in the region won't cover building costs. We don't have a condo tourist industry. We're not a destination resort. You can't buy a condo for it's speculative value in the city. Condo prices are barely rising above the level of inflation in the area. Without a growing metro area popluation there is no driver for speculative price increases. That only leaves one reason to purchase a condo. You need a place to live.

Most of the condos prices in the city, while high for the city, are in line with new housing prices charged in the suburbs. While I hope they can get their $400 a sqaure foot. They are so far above even the premium markets in the area, I believe their chances are slim to none of getting it.

At $400 a square foot I can buy top end lakefront property in the burbs, and I'd be assured of being able to resell it for that price. I honestly don't believe they have a handle on the Detroit market. Detroit is not Miami, Atlanta or Chicago.
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Eric
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Username: Eric

Post Number: 271
Registered: 11-2004
Posted From: 69.136.144.196
Posted on Thursday, December 29, 2005 - 2:41 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I'm opitmistic about the Detroit market, but this way out of line $280 would be high for Detroit the let alone $400 I can't see anyone willing to pay those prices
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Panson
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Username: Panson

Post Number: 756
Registered: 10-2003
Posted From: 67.185.190.23
Posted on Thursday, December 29, 2005 - 3:00 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Realative to other markets, $400/SF is still extremely cheap. Most major downtowns are $800 to $1,000+
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Burnsie
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Username: Burnsie

Post Number: 383
Registered: 11-2003
Posted From: 35.9.3.70
Posted on Thursday, December 29, 2005 - 3:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

As much as I'm also disappointed to know that the Peoples' Outfitters building will be coming down, I realize now that if it didn't, that building and the Lafayette would probably just both sit empty for years more and then both would be demolished.
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Detroitkev
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Username: Detroitkev

Post Number: 32
Registered: 04-2005
Posted From: 66.178.218.40
Posted on Thursday, December 29, 2005 - 3:26 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I disagree about the condo prices rising barely above inflation. Unless inflation is about 10% per year, that is the average rate of appreciation yearly in downtown condos & lofts. Just as a heads up, Downtown Royal Oak is approaching 400 per square foot, and some parts of Downtown Birmingham are 600 per square foot.

Although, I would love for the Layayette to be successful at those prices, I don't think they will. There are simply too many units in that building to justify that high of a price per square foot. With Riverfront or 1001 not even at $300 per square foot, how can they justify charging that much more...amenities can't make that much of a difference.
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Ndavies
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Username: Ndavies

Post Number: 1477
Registered: 10-2003
Posted From: 70.230.228.201
Posted on Thursday, December 29, 2005 - 4:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Sorry DetroitKev, You're delusional if you think Condos are appreciating by 10% per year. They are barely ticking off at 4% right now.

In 2000 When I bought my condo it was $160 a square foot. I just listed it at $200 a square foot. While my place is in very good condition I doubt I'll get that.

According to my little spreadsheet here,
2000 160 166.4
2001 166.4 173.056
2002 173.056 179.97824
2003 179.97824 187.1773696
2004 187.1773696 194.6644644
2005 194.6644644 202.451043


That amounts to just less than 4% compounded annually return on investment. I can do easily that well in a mutual fund. Why would I take on the risk of real estate for a puny 4% return.

(Message edited by ndavies on December 29, 2005)
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Detroitkev
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Username: Detroitkev

Post Number: 33
Registered: 04-2005
Posted From: 66.178.218.40
Posted on Thursday, December 29, 2005 - 4:48 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I bought at Crosswinds for $125 per square foot about 5.5 years ago. So, for me it has been just under 10% annually (averaged). I will agree that not everyone Downtown experienced the same, but there are others. Another condo I purchased for investment downtown should give me at least a 10-15% return in the past year.

While Crosswinds product is not the same as other products in the downtown area, there are developments selling in the $240-$280 range on the riverfront (Harbortown & Riverfront), and $200-$240 range in Midtown (Carlton, Ellington). I think you may get $200 per square foot at Crosswinds...just might take a little bit of time.
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Ndavies
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Username: Ndavies

Post Number: 1478
Registered: 10-2003
Posted From: 70.230.228.201
Posted on Thursday, December 29, 2005 - 5:10 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Definitely delusional. Sorry at 10% inflation, your $125 rate would mean your place would be worth $221 a square foot now. You're definitely not getting that. Even if you could get $200 a sq foot for a crosswinds condo that would give you less than an 8% return.

And don't confuse the price crosswinds can get for a new condo, with the price you'll receive when you resell.
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Swingline
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Username: Swingline

Post Number: 380
Registered: 11-2003
Posted From: 64.12.116.195
Posted on Thursday, December 29, 2005 - 5:41 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Panson suggests,

quote:

Realative to other markets, $400/SF is still extremely cheap. Most major downtowns are $800 to $1,000+


Simply not true. Those rates are at the very high end for Manhattan and practically unheard of anywhere else. You cannot go to "most major downtowns" and find $1million 1BR apartments.

$400 sq.ft is very optimistic for Detroit. Odds are that when they go on the market, the units will be around 300 sq ft.
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Bobj
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Username: Bobj

Post Number: 305
Registered: 11-2003
Posted From: 68.40.89.238
Posted on Thursday, December 29, 2005 - 5:43 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

That sounds like an outragous price unless you are on water or have some unbelievable view - I think there must be some misunderstanding in that article.
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Patrick
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Username: Patrick

Post Number: 3148
Registered: 10-2003
Posted From: 65.222.10.3
Posted on Thursday, December 29, 2005 - 5:45 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Here is a rather odd inquiry. Would one ruin the building if a glass-enclosed atrium was added to that rear “V” area? Perhaps one could make an entranceway or indoor courtyard? I have seen examples of this in NYC and I think it was Washington. Would that ruin the building or help?
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Alexei289
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Username: Alexei289

Post Number: 939
Registered: 11-2004
Posted From: 68.61.183.223
Posted on Thursday, December 29, 2005 - 5:51 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

You have to remember that this may just be a marketing ploy to shore up fiancing... If they tell the bank that they plan on charging 400 a square foot, and plan on getting it... considering their status as a reputable developer, the bank will be that much more willing to finance 40 million in Detroit.. what they really might get is about 250, if they are high end. NOT only that, but they may be trying to set price trends for the area that would make future developments and investments downtown worth that much more... so that in a future development, they MAY get 400$ a foot.

Its all about blazing the trail in the market.
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Detroitkev
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Username: Detroitkev

Post Number: 34
Registered: 04-2005
Posted From: 66.178.218.40
Posted on Thursday, December 29, 2005 - 5:58 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Ndavies, I'm not trying to offend you by saying your logic is wrong. You have a number of resales around you that will affect your potential final sales price. If you are willing to wait, I think you will get the price you are asking for. If you need to sell now, you should undercut both what Crosswinds is offering, and your neighbors. The market is definitately very close to 200 per square foot...my clients have no problems with that price per square foot. Some have no problems with the $270-$280 that Harbortown, Riverfront, and 1001 are charging. But, the majority of condo/loft buyers in the downtown area feel most comfortable with prices under $220 per square foot.
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Itsjeff
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Username: Itsjeff

Post Number: 5284
Registered: 10-2003
Posted From: 208.27.111.125
Posted on Thursday, December 29, 2005 - 6:23 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

It's perfectly okay to offend NDavies. Don't hold back.
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Gambling_man
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Username: Gambling_man

Post Number: 612
Registered: 11-2003
Posted From: 199.178.193.5
Posted on Thursday, December 29, 2005 - 8:01 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Ndavies, I hate to call you out, but just because your condo has appreciated at "only 4%" per year doesn not mean your return on your investment is 4% (Unless of course you paid cash) If you put say, 10% down on a 150K condo, you have an investment of 15K. By your numbers, your property has appreciated 36K. 36K/15K=240% return on your investment......not too shabby at all. I don't have the numbers in front of me, but residential real-estate has averaged about 5% per year appreciation (overall) for a long time. I would have liked to see you get a 4% return on a mutual fund over the past five (5) years....you would be one of the lucky ones. Overall, inflation has been much less than 4% over the past five years, so earning just 4% has been pretty good, especially considering that they are still building new in your complex.
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Ndavies
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Username: Ndavies

Post Number: 1481
Registered: 10-2003
Posted From: 70.230.228.201
Posted on Thursday, December 29, 2005 - 10:28 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Gambling man did you forget about the 5K per year it takes to borrow the other 85% of the money? Borrowing $125,000 At 4% interest rate costs you $25,000 over 5 years. What does that do to your profit. Other peoples Money is never free.

And I agree. Housing prices have been rising at about 5% a year forever in Detroit. That's all it's been doing. It hasn't met the rates that inspire rampant speculation. It's nowhere near the 10% claimed. If it was I would have all my money in play in real estate.

I don't need to resort to Gambling Man's fuzzy math to see where the profits really are.
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Sknutson
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Username: Sknutson

Post Number: 409
Registered: 03-2004
Posted From: 64.139.1.36
Posted on Thursday, December 29, 2005 - 11:22 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Why not just rent and be assured of no return on your money ever?
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Bindetroit
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Username: Bindetroit

Post Number: 1241
Registered: 10-2003
Posted From: 69.215.79.21
Posted on Friday, December 30, 2005 - 12:18 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Peebles is dreaming if he thinks a lender will fund his project at $400 a sq. ft. Maybe in Miami, but welcome to Detroit. The requisite market study will inject a necessary dose of reality. Whether Mister-Pie-In-The-Sky will stick around for the lower profit potential after the money-folks are done raining on his parade remains to be seen. (And what about his never-gonna-happen tower on the DDA's land on the riverfront? Dare he imagine $1000 a sq. ft? Ooooh).
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Gambling_man
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Username: Gambling_man

Post Number: 613
Registered: 11-2003
Posted From: 199.178.193.5
Posted on Friday, December 30, 2005 - 12:30 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The 4% is a deduction on your federal tax return at your top rate.......reducing it significantly. Plus, paying 4% on a mortgage is a "sunk cost"....in other words, you have to pay the 4% if you want someplace to live, so including it in the calculation is moot......Agreed, however, that owning a home/condo is not one of the better investments around......it's just a good leveraged investment that you really have to make anyhow....since most people really do need a place to live.....
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Ndavies
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Username: Ndavies

Post Number: 1482
Registered: 10-2003
Posted From: 70.230.228.201
Posted on Friday, December 30, 2005 - 1:17 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Yes, I agree Gambling Man. That was my original point. It makes sense if you're going to live in the unit. Not if you're looking for pure investment return.

Remember my original statement that started off this discussion.


quote:

That might be true in other markets, It's definitely not true in Detroit. A vast majority of Detroit condo buyers buy them to live in them.




It was in response to Atl_runners claim that most condo buyers buy them as investments, not as places to live.

The other issue in Detroit is property taxes. If your unit is not NEZed, you will not make any money out of it. The NEZ cxredit is only applicable, if your home is your primary residence. This truly restricts the investment potential of any new property. It can't be held as investment property and collect the tax incentive.

The the historic long term appreciation on real estate is 5%. Detroit's is only growing at 5% during one of the highest boom eras for real estate. Other cities are growing at 20%-25%. If you're looking for speculative real estate investments, Detroit is definitely not the city to be lookiung at.
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Detroitkev
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Username: Detroitkev

Post Number: 35
Registered: 04-2005
Posted From: 70.225.112.189
Posted on Friday, December 30, 2005 - 1:59 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

You can receive an NEZ on non-homestead property if it is a rehab. Examples include Park Shelton, Riverfront Condominiums, and Garden Court Condominiums
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Swingline
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Username: Swingline

Post Number: 381
Registered: 11-2003
Posted From: 172.133.176.227
Posted on Friday, December 30, 2005 - 4:13 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Does anybody have reliable information on whether the Peebles organization has closed on the construction financing?
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Pjazz
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Username: Pjazz

Post Number: 1
Registered: 04-2005
Posted From: 69.212.44.222
Posted on Friday, December 30, 2005 - 10:48 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Hi I'm new to the site, and live in East English Village in Detroit. I just walked by this building the other day thinking about how great it would be if someone took an interest in it.

I'm optomistic and hope continued the investment in these buildings become contagious.
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Itsjeff
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Username: Itsjeff

Post Number: 5290
Registered: 10-2003
Posted From: 68.42.168.211
Posted on Friday, December 30, 2005 - 10:49 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Hi, Pjazz. Welcome.
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Pjazz
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Username: Pjazz

Post Number: 2
Registered: 04-2005
Posted From: 69.212.44.222
Posted on Friday, December 30, 2005 - 10:50 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Does anyone have any history on the building?
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Itsjeff
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Username: Itsjeff

Post Number: 5291
Registered: 10-2003
Posted From: 68.42.168.211
Posted on Friday, December 30, 2005 - 11:01 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The history of its construction is around here somewhere.

The story of how it closed is unique. It wasn't "abandoned." The Lafayette Building had decent occupancy. Wayne County Circuit Court had satellite courtrooms there, attorneys and court reporters leased office space and there was a large restaurant (Sero's,) a men's clothing store and a travel agency on the ground floor.

The problem was that around 1988, the out-of-state landlords stopped paying their utilities. So one day Edison cut off the power. The tenants went to court to force Edison to turn the power back on, buyt all they could get was one day so they could vacate. One Saturday the power was restored, the tenants moved out and that was that. It's been boarded up ever since.
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Lmichigan
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Username: Lmichigan

Post Number: 2889
Registered: 10-2003
Posted From: 67.172.95.197
Posted on Friday, December 30, 2005 - 11:55 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

How odd, and how incredibly unfortunate for the tenants. I guess this is a good reason why it is better for the state to own the space that they occupy, than to simply lease it. I have never heard of that happening before.
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Slows
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Username: Slows

Post Number: 99
Registered: 01-2005
Posted From: 68.42.77.90
Posted on Tuesday, January 03, 2006 - 1:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Detroitkev, in regards to the non-homestead NEZ qualification, I was told that it does apply but at only a 1/2 of what a principal resident receives. Not saying the source was reliable just trying to get accurate information. If you could point me in the direction of your info it would be greatly appreciated.

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