RenCen towers purchase price revealed

The new owner of a pair of Renaissance Center towers paid one of the lowest prices per square foot for prime downtown office buildings in years.

The buyer, Farmington Hills-based Friedman Real Estate, dropped $15 million just for the real estate itself in the multi-property purchase that closed in December. Included in the sale were the 500 Tower and 600 Tower, both 336,000 square feet and 21 stories for a total of 672,000 square feet, plus the land in front of the two towers along East Jefferson Avenue. 

Jared Friedman, executive managing director of acquisitions and business development for Friedman Real Estate, told me last week that the purchase price listed in public records did not reflect the perhaps $10 million to $15 million being spent retaining Blue Cross Blue Shield of Michigan in the 500 Tower, as well as relocate some BCBSM employees into that building from the 600 Tower and building out space.

Whether you factor those additional costs in or not, the RenCen sale still clocks in at one of the lower per-square-foot purchases of large downtown office buildings since 2010. 

 

If you factor that in for $30 million between the $15 million for the real estate and $15 million for BCBSM retention, that puts the rate at $44.64 per square foot. And if not, it comes in at $22.32 per square foot. 

The low purchase price on a prominent office property gives Friedman the flexibility, if it chooses, to undercut other competing landlords on rental rates for desirable waterfront space, said Steve Morris, a longtime broker focused on tenant representation with his Farmington Hills-based Axis Advisors LLC firm.

According to data from CoStar Group Inc., a Washington, D.C.-based real estate information service, the last time a downtown Detroit office building with more than 100,000 square feet sold for less than $45 per square foot was in 2021, when New York City-based Reign Capital LLC paid $15.5 million for AT&T Inc.’s 20-story addition to its central business district campus complex, a rate of $28.11 for its 551,500 square feet. 

Prior to that, you have to go back to 2015, when Joe Barbat paid $3.2 million for the 105,400-square-foot former Gabriel Richard Building on Michigan Avenue. That’s a rate of about $30.38 per square foot. 

Regardless, the low purchase price can be attributed to the side effects of the COVID-19 pandemic, which has plunged office values across the country as hybrid work arrangements remain common and landlords continue to look for ways to use office space that has gone dark. Friedman is fluent in repositioning real estate that has seen better days, I noted in this space last month. 

Here are the other large office buildings downtown that have sold at less than $45 per square foot since 2010, arranged by order of price per square foot, according to CoStar:

  • David Stott Building, 1150 Griswold St. October 2013. Buyer: Bedrock LLC. Purchase price: $9.4 million. Price per square foot: $44.98. 
  • Marquette Building, 243 W. Congress St. December 2014. Buyer: Carlos Slim Helu. Purchase price: $5.775 million. Price per square foot: $33.97. 
  • Grand Park Centre, 28 W. Adams St. July 2013. Buyer: Princeton Management. Purchase price: $4.25 million. Price per square foot: $32.17. 
  • Former Chase Building, 611 Woodward Ave. April 2011. Buyer: Bedrock LLC. Purchase price: $16 million. Price per square foot: $29.24. 
  • One Woodward Avenue. November 2012. Buyer: Bedrock LLC. Purchase price: $8.35 million. Price per square foot: $22.55. 
  • Former Detroit Free Press building, 321 W. Lafayette Ave. October 2013. Buyer: Bedrock LLC. Purchase price: $4.23 million. Price per square foot: $13.98. 
  • David Whitney Building, 1 Park Ave. February 2011. Buyer: Roxbury Group. Purchase price: $3.3 million. Price per square foot: $13.20. 
  • First National Building, 660 Woodward Ave. August 2011. Buyer: Bedrock LLC. Purchase price: $8.1 million. Price per square foot: $9.52. 
  • Federal Reserve Building, 160 W. Fort St. January 2012. Buyer: Bedrock LLC. Purchase price: $959,000. Price per square foot: $6.63. 
  • Penobscot Building, 645 Griswold St. May 2012. Buyer: Triple Properties LLC. Purchase price: $4.8 million. Price per square foot: $4.82. 
  • 500 E. Lafayette Blvd. August 2013. Buyer: Blue Cross Blue Shield of Michigan. Purchase price: $1.4 million. Price per square foot: $4. 

At the higher end of the spectrum, for example, Southfield-based Redico LLC paid $81.5 million — $141.83 per square foot — for the 150 West Jefferson high-rise in July 2016. 

Last year, Boca Raton, Fla.-based The Herrick Company Inc. paid $150 million for the new 20-story Huntington Bank tower on Woodward Avenue downtown. That sale price amounts to $355.08 per square foot. 

That one, however, is a bit of a different animal as it is a brand-new, build-to-suit single-tenant office headquarters completed in the last couple of years rather than an early 1980s multi-tenant building like, for example, the 600 Tower.

Twelve Oaks, Great Lakes Crossing sign on to DTE green power effort

Twelve Oaks Mall in Novi and Great Lakes Crossing Outlets in Auburn Hills have become the first Michigan shopping malls to take part in Detroit-based DTE Energy Co.’s MIGreenPower program. 

The program, introduced in 2017, allows customers to choose how much of their monthly energy usage, in 5% increments beyond DTE’s minimum of 15%, is powered by sources such as wind and solar farms, said Steven Moore, senior director of central operations for Taubman Realty Group LLC, which owns the two malls and is a joint venture formed in late 2020 between Indianapolis-based Simon Property Group (NYSE: SPG) and the Taubman family. 

Taubman Realty has opted for 100% of the two malls’ energy usage to come from wind and solar, and the company will pay a premium for that, which DTE then invests in the creation of more wind and solar farms. 

The decision results in the equivalent of offsetting greenhouse gas emissions of more than 5,600 gas-powered cars per year, Taubman said in a news release. The two malls use about 3.7 million kilowatt hours of electricity per month. 

“Our partnership with DTE further underscores our aggressive sustainability goals and our commitment to Michigan’s sustainable future,” Moore said in the release. “MIGreenPower offers a meaningful way to reduce the environmental impact of our shopping centers without incurring the cost of installing and maintaining solar panels, which is an added benefit of the program that we hope more companies will explore.”

Taubman Realty owns the real estate, and The Taubman Company LLC is responsible for management and leasing of the Taubman malls in the U.S., while Taubman Asia, headquartered in Hong Kong, is responsible for management and leasing of its malls there. 

Other real estate companies involved in the DTE program include Dan Gilbert’s Detroit-based Bedrock LLC and Southfield-based Farbman Group, among others, Crain’s has previously reported.

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