10 Detroit projects that were announced — but never happened

Jul. 20--In the wake of economic collapse, the city of Detroit saw a surge of new construction and redevelopment announcements between 2013 and 2017 as property developers rushed to benefit from the sudden revitalization momentum in and around downtown.

Many of those projects got completed, including the Shinola Hotel, Little Caesars Arena and The Scott at Brush Park upscale apartments.

Others are still moving forward, such as the ambitious Book Tower and Building redevelopment in downtown.

Yet some development projects have stalled out or barely progressed since their announcement. They exist only in archived news stories or colorful renderings of what would have been built if the construction financing came through.

Many of these projects were announced with dramatic headlines, packed news conferences and group photos of beaming developers and elected officials. Everyone grew excited for what was about to happen.

But then, nothing happened.

Below are 10 higher-profile development projects that have floundered or encountered delays since their public announcements.

Development experts say that in general, every project faces its own unique set of challenges. Yet there are common reasons why some fail to get off the ground.

One is the late realization that a location is not as great as initially thought -- particularly in the eyes of would-be investors and lenders. That problem can doom the project's financing.

"People get caught up in the fever and the excitement, but a lot of these might be secondary sites at this point," said Steve Morris, managing partner of Axis Advisors real estate firm and an adjunct professor at the University of Michigan's Ross School of Business.

"Financing has never been more available, and at a lower rate, but the lender may not approve a secondary site that is questionable," he said.

Another common problem, especially recently, is rising construction costs related to materials and labor. Those increases can eclipse the ability to raise rents in the current Detroit market, according to Dennis Bernard, founder and president of Southfield-based Bernard Financial Group, a commercial real estate finance firm.

"Somebody announces (the project) a year and a half before they're ever going to get in the ground. Then when they start doing the numbers, their costs go up," Bernard said. "Rents continue to go up, but not the huge jumps that they did initially when everyone started (developing) downtown. And suddenly, the math doesn't work."

In other situations, a property owner may ultimately decide to sell his or her building rather than finish a complicated redevelopment project.

So here are 10 that were memorable, but not completed.

Where kids learned to swim was to be eatery

In April 2015, Detroit Mayor Mike Duggan stood with KC Crain, scion of the Crain Communications media dynasty, to announce plans to save the long-dormant Brewster Wheeler recreational center building and turn it into a trendy restaurant and event space.

The media event marked a big change of fortune for the graffiti-covered brick building, which dates to 1929, is adjacent to the now-demolished Brewster-Douglass public housing project near I-75 and Brush Park, and was once slated itself for demolition.

The city-owned rec center is where boxing legend Joe Louis trained and generations of young Detroiters learned to swim. The building was closed in the early 2000s and quickly decayed.

An investment group that included Crain and area restaurateur Curt Catallo was to undertake a $37-million redevelopment to reopen the building as a restaurant with a rooftop beer garden as well as event space and offices for groups such as the Slow Roll bike riders.

In addition, 150 units of new housing were to be built just south of the rec center.

Duggan said during the announcement that the restaurant could open by late 2016.

Today, the building still sits empty and undeveloped. However, it did host the invitation-only Crain's Detroit Homecoming in September 2016, an event aimed at attracting interest and investment to the region from metro Detroit natives who left.

In the lead-up to the homecoming, Duggan called the rec center a "symbol of what Detroit was, how far it fell and how it's coming back."

Neither KC Crain nor Catallo returned messages seeking comment that were left for them with representatives or staff.

A Duggan spokesman said the developers purchased the property from the city for just under $400,000 in January 2018 and have "invested $2.5 million in the site to prepare for the redevelopment."

Big Boy razed. Where's apartment tower?

In December 2017, Detroit-based developer The Platform announced plans to tear down the empty Big Boy restaurant on East Jefferson, across from Belle Isle, and replace it with a new $50 million eight- or 10-story residential high-rise. The Big Boy went out of business shortly after the developer purchased the property that spring.

The Platform's plans called for about 240 apartments in the tower, plus 11,000 square feet of ground-floor commercial space. Construction was to start in fall 2018 and finish by mid-2020. A full 20% of the apartments were to be "affordable" for those with below-average incomes.

Today, the Big Boy is long gone. And nothing has replaced it.

Dietrich Knoer, president and CEO of The Platform, said in a statement Friday that the project is still happening and pre-development work is moving forward.

"In addition, the rising construction costs in metro Detroit are creating obstacles that need to be overcome in order to realize the kind of development that this gateway site deserves," he said.

The Mondrian @ Midtown

This proposed five-story building on the 3400 block of Woodward, near the new Little Caesars Arena, was originally announced in 2013 as a future medical office building, with an expected completion in 2014. That date came and went.

After the project failed to pre-lease enough space to get a construction loan, according to a report in Crain's Detroit, its developers changed plans and decided to instead build a 104-unit apartment complex with ground-floor retail to be called The Mondrian @ Midtown. They also snared various development incentives.

Then nothing else happened. The site remains a vacant grassy lot surrounded by a chain-link fence. There is still a "Coming Soon!" sign announcing future luxury apartments and retail.

Messages left for a lead member of the project's development entity, called Queen Lillian II, were not returned.

Wayne State's boutique hotel

In November 2013, the Wayne State University Board of Governors approved a $60-million-plus plan to construct a nine-story building with about 248 apartments and 120 boutique hotel rooms on what was -- and still is -- a parking lot at Cass and Canfield, next to WSU's University Towers Apartments.

The targeted completion was sometime in 2016. But the project never got started.

At one point, furniture and home décor retailer West Elm was to locate its future Detroit hotel at the Wayne State site, but the company changed plans and instead will put its West Elm hotel along Woodward, next to the Bonstelle Theatre. (That project is still getting underway.)

A Wayne State representative this week offered no explanation for the project's long delay. Internal documents show the university hasn't dropped the Cass and Canfield project, and is working with Detroit-based real estate firm Broder & Sachse to construct a 100-unit condominium building with a 130- to 150-room hotel and retail space. Under these revised plans, the real estate firm would purchase the parking lot from the university rather than lease it.

What about the athletes' hotel?

The Ilitch organization faced public scrutiny this year for the slow pace of progress in building residential and commercial developments around the new Little Caesars Arena.

One of those projects is an upscale hotel between the arena and the Fisher Freeway service drive, which according to a 2016 tentative site plan for the district, was expected to open for business this year. The hotel was to feature many large suites and cater to the professional athletes who come through Detroit. However, there was never an official announcement for the project.

Today, the hotel -- like other once-planned aspects of the arena district -- is still unbuilt.

An Ilitch Holdings spokesman said Friday that the organization is in active discussions with the Downtown Development Authority on development plans for the site.

#LuxuryCondoFail

Announced in late 2016, The Ashton Detroit was to be a newly constructed 11-story luxury condos building at the western edge of downtown with floor-to-ceiling windows, elaborate penthouses and an indoor swimming pool. It was to rise next to the Walker-Roehrig Building at 600 W. Lafayette, across from the old Detroit News building, and be finished in 2018.

But those dreams proved fantasy.

This March, one of the project's developers said that they failed to meet lenders' requirements to pre-sell at least 50% of the planned 83 condos to get construction financing. So they decided to drop the condos idea and build a 154-room hotel on the site instead, with a groundbreaking happening as early as this summer. So far, nothing has happened.

Lee Plaza dreams deferred

Formerly unknown in development circles, Detroit native Craig Sasser made headlines in November 2015 when he announced plans to purchase Detroit's vacant and ravaged Lee Plaza high-rise and transform it into 200 luxury apartments.

The once-elegant 17-story tower on West Grand Boulevard, about a mile west of New Center, dates to the late 1920s and closed in the 1990s as low-income senior housing. It was then trashed and gutted by scrappers.

Sasser, who had recently returned to Detroit from Los Angeles, claimed to have deep-pocketed investors lined up for his $51 million rehab.

He said he was close to buying Lee Plaza from the Detroit Housing Commission for $258,000, the first big step in his project, which he hoped to finish by fall 2017. But the sale's closing date got pushed back numerous times and Sasser conceded to losing some of his investors. Ultimately, the sale did not happen.

In late 2017, the city put out a call for new redevelopment proposals for Lee Plaza, and announced a possible deal this year to sell the historic tower to Detroit-based Roxbury Group and Ethos Development Partners for $350,000. The site's would-be developers are considering renovating the building into 180 apartments, at least half of which would be reserved for lower-income families.

Palazuelo's plans for Packard Plant

Spanish-born developer Fernando Palazuelo became a Detroit celebrity overnight in 2013 after buying the mostly abandoned Packard Plant for $405,000 at the annual Wayne County Treasurer tax foreclosure auction.

The 40-acre industrial site, ravaged by metal scrappers and decades of neglect, had become a widely recognized symbol for Detroit's fall into post-industrial ruin. Palazuelo beat out a motley assortment of competing bidders, including a Texas doctor who issued a bizarre statement with a "prophesy" for the city's future.

Palazuelo, who left Spain for Lima, Peru, in the wake of the global recession and real estate crash, laid out ambitious plans to redevelop parts of the factory as a mixed-use development in phases over many years, starting with a rehab of the old administration building into modern offices and event space.

There was a festive grandbreaking event in May 2017 that included remarks by Wayne County Executive Warren Evans. The project's initial phase was to take 18 to 24 months and cost $16 million.

But work progressed slower than the announced timeline. And things were further hampered by the structural collapse this January of the plant's iconic bridge over East Grand Boulevard.

Attorney Joseph Kopietz of Clark Hill, a spokesman for the Packard Plant project, said Thursday that the redevelopment has encountered delays, but insisted it is still happening and that the redone administrative building should be ready by late spring 2020.

Galapagos buys warehouse, then cashes out

In late 2014, a high-profile arts program called Galapagos Art Space made headlines when its director announced plans to close the program's popular Brooklyn headquarters and reopen in Detroit, because artists were getting priced out of New York and needed a new hip city in which to congregate.

Galapagos Detroit was envisioned to be a sort of "TechTown for the arts" where emerging artists could rent inexpensive studios as they cultivate their talents.

For the Detroit space, the program's director, Robert Elmes, purchased an old Apac Paper warehouse near Corktown and Michigan Central Station for $500,000 in late 2013. Later, in 2016, before the new Galapagos opened, there was commotion on social media when news emerged that the same warehouse had been listed for sale for $6.25 million.

The program director said he intended to use money from that sale to finance a more realistic plan to operate Galapagos in Highland Park. In December 2018, the warehouse sold for an undisclosed price to businessman Dan Gilbert's real estate firm Bedrock.

Elmes said earlier this year that he still wants to open an arts megacomplex in two former Highland Park school buildings that he purchased, but was considering alternative sites.

Chinese left lofts empty. Then came Gilbert.

In fall 2013, a Chinese firm called DDI Group bought a trio of downtown buildings at auction, including a 10-story apartment complex at 35 W. Grand River known as Clark Lofts.

The building, purchased for about $2.6 million, was occupied with tenants. DDI stopped renewing the leases and shuttered the building. At the time, a representative for the firm said DDI intended to fully renovate the property and subdivide its giant apartments into smaller rental units.

DDI also bought the old Detroit Free Press building at the 2013 auctions and shared its plans to convert the long-vacant structure into as many as 170 apartments with ground-floor commercial space.

But neither plan came to fruition. In May 2015 the Chinese firm sold the two buildings, plus the David Stott tower that it also got at auction, to Gilbert's Bedrock firm. The sale prices weren't disclosed, and it was unclear whether DDI had been serious about its redevelopment intentions.

Today Bedrock is busy turning the old Free Press building into a residential and office tower, and last year the company finished rehabbing the old Clark Lofts into a 24-unit upscale development called 35W Capitol Park Apartments.

Contact JC Reindlat 313-222-6631 or [email protected]. Follow him on Twitter@jcreindl. Read more on business and sign up for our business newsletter.

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