It seems like just about every building in Detroit has been bought recently, an indication that the commercial real estate prices in Detroit are on their way back up.
After years of stagnation downtown, business leaders have finally decided to stop waiting on city leadership to get their act together. With the Mayor and city council losing some of their control, business leaders are feeling more comfortable making investment in the city.
The proud new owners of the Penobscot Building in Detroit is a real estate company out of Toronto called Triple Properties. The company already owns the Pontiac Silverdome, so their judgment on investments should be called into question. Also, the fact that Dan Gilbert didn’t like the price probably indicates that the building wasn’t quite worth the selling price, estimated at around $5 million.
The Penobscot Building is currently around 50% occupied with tenants, which is a little on the low side. To increase occupancy, Triple Properties is expected to drop rental rates to $10 per square foot, which is a lot cheaper than comparable rental rates in other buildings. That may induce more businesses to move downtown, although the City Council doubled the tax rate on businesses in Detroit so that additional cost may not make the move worth it.
Despite the best efforts by city council to drive business out of Detroit, we’re still seeing a steady flow of good news out of the city. Let’s hope the trend continues.