Creating 1,000 new apartments in Detroit is ‘sound business decision’ for development group

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By Paula Gardner |
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on May 31, 2016 at 11:32 AM, updated June 01, 2016 at 10:56 AM
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DETROIT, MI — The Fisher Building, sitting north of downtown Detroit, offers its new owners both immense challenge and opportunity.

Dietrich Knoer describes just the plans evolving for The Fisher Building as a “Rubik’s cube,” where one move that looks right through one lens may create a series of additional unplanned changes that require attention.

Getting that right, he said, will take “time and skill.”

However, those two factors don’t just describe a development company’s approach to the landmark skyscraper.

They form a foundation for his new company’s wave of investment in Detroit that reaches into the hundreds of millions in capital, focused on creating at least 1,000 new apartments in mixed-use buildings.

Shaping that ambitious plan is The Platform LLC, a Detroit-based development group formed in late 2015 as a group of experienced real estate professionals saw opportunities aligned with their desire to be an essential element in Detroit’s rebirth.

$250M housing development planned along Detroit’s QLine rail
$250M housing development planned along Detroit’s QLine rail
News broke Saturday night of a prominent investor’s plan for housing

It started with the $12.2 million purchase of The Fisher Building in summer 2015 and grew from there.

“We discovered a common interest and common enthusiasm and vision for what else we’d like to do in the city,” Knoer said.

Knoer, with a background at REDICO in suburban Detroit, joins Peter Cummings as principal. Mike Hammon, who’s worked with Stephen Ross’s Related Group and Cummings, is chief development officer.

Cummings spent many years working in south Florida with his RAM Realty Services, but has ties to projects in Detroit over decades. As son-in-law of the late magnate and philanthropist Max Fisher, Cummings worked with him for many years in the city; more recently, Cummings restored Orchestra Hall, owned Riverfront Towers and developed The Ellington in Midtown, home to the city’s Whole Foods since 2013.

Today’s efforts will bolster Detroit, Cummings said. But they won’t end there.

“These are sound business decisions,” he said. “We’re replying to what we see as significant demand.”

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Paula Gardner |

An announced set of four projects totals $202 million. A fifth is in the works, along with three separate Detroit neighborhood projects. All will join the planned restoration of The Fisher Building in The Platform’s growing Detroit-based real estate portfolio that seeks to expand the vitality created over the past few years.

The announced projects are all north of downtown. While one will be in Midtown, the other four will stretch the city’s active development zone into the New Center area of Woodward and West Grand Boulevard.

It’s an area that already has notable buildings, anchored by the former GM headquarters and The Fisher Building, described as “Detroit’s largest art object.”

The corridor is vibrant from the many offices nearby, but it’s still finding its cachet among millennials. Existing retailers on these blocks of Woodward aren’t yet Nike, Starbucks, or even a former food cart elevated to bricks and mortar; instead some storefronts are vacant and shoppers would be more likely to find an independent apparel store than something like Shinola.

Knoer said history points to the New Center as an area that was built to be a meaningful destination for Detroit.

“It was meant to be a new urban center,” Knoer said, mentioning marketing materials from 1928 for The Fisher Building that called it “the center of everything.”

In that era, the road network made that the case. Today, a network of nearby highways makes it visible and accessible. And by 2017, it will host the northern end of the QLINE as the 3.3-mile M-1 rail connects it to downtown and Midtown.

With The Fisher Building, the team will restore the building that now houses some retail, offices and the Fisher Theater.

“We take great pride in our efforts to restore the building and create a commercial and retail district that will … be a destination where people will want to come and participate in or start living in,” Knoer said.

The Platform’s announced pipeline:

• Third & Grand: 207,000 square feet to be built on the eponymous juncture just west of The Fisher Building. It will include 231 apartments, 20,000 square feet of retail and 343 parking spaces.

• The Khan Building: This office building dates to 1931, but it will be converted to mixed-use with the renovation of floors 3-11 into luxury apartments. They’ll range from 447 to 1,290 square feet.

• Baltimore Station: The block known for the former Caribbean & American Bar & Grill at the corner of Woodward and Baltimore – along with another parcel northeast of that – will become this 160,000 square foot project with 170 apartments, 18,000 square feet of “excite-the-sidewalk” retail, and 250 parking spaces.

• Cass & York: Another location-based name denotes a 283,000-square-foot project planned for property that includes a Wayne State University surface parking lot. The building will add 180 apartments to the campus, along with 38,000 square feet of retail, 540 parking spaces and an art gallery for Wayne State.

A fifth project also is in the works, according to the company. This will be a 235,000-square-foot mixed-use development in Midtown, with five buildings around a courtyard. It will include 230 apartments and 48,000 square feet of commercial space, along with 304 parking spaces.

The city will have untapped need for quality newer apartment construction for several years, Knoer said. While that may seem contrary to the average home sale price of $42,000 in Detroit — making home-buying affordable to people who would pay $1,000 or more per month in rent — the city core appeals to a different audience that wants to rent, he said.

The Platform isn’t alone in targeting Detroit for development right now. While investors like Dan Gilbert and the Ilitch family work the highest-profile deals, others are turning to the city, too.

Dennis Bernard, principal of the Bernard Financial Group in Southfield, leads the largest commercial lending firm. He said he’s seen $650 million in loans over the last two years. He estimated a $130 million pipeline for new projects.

11 changes that are transforming downtown Detroit right now
11 changes that are transforming downtown Detroit right now
11 changes that are transforming downtown Detroit right now

“This is vastly improved over the last couple of years,” he said. It’s enough to attract recent national investment interest, he said.

“We see more explosive growth and development along the M-1,” he said of the future. “And we see more national tenants coming to the city of Detroit.”

The Platform’s investments fulfill its goals of targeting large-scale, institutional-quality mixed-use projects within walking distance to M-1 rail stops. But the company’s work won’t be contained to the M-1 corridor, Knoer said.

“(We’re) in it to be contributors to the resurgence of Detroit,” he said. “The entire Detroit.”

Paula Gardner |

That means the team has focused on three neighborhoods for smaller projects that also have mixed-use elements. Property near the Redford Theater at Grand River and Lasher; near the riverfront at East Grand Boulevard and Jefferson; and in the University District near Livernois all will be used toward neighborhood revitalization.

“(The projects) are not as much a real estate venture as social involvement in these neighborhoods,” Knoer said.

Cummings recalled a description of Detroit as downtown holding the city’s heart while the neighborhoods are its soul.

“I think that’s so true,” he said. “That’s where the soul is.”

But, after the city’s depopulation, leaving the poorest residents in many areas along with few services and many blighted houses, he notes the challenge. Baby boomers and millennials seeking urban environments near the city’s anchors of the Detroit Institute of Arts and Wayne State University are fueling housing expansion there, but there are different dynamics outside of the 7.2 square miles of high-powered Detroit development activity.

“It’s complicated,” Cummings said.

Yet, as he looks at images of the Redford Theater block, he also says, “there’s no reason you can’t create a city center here.”

The new neighborhood housing will have nonprofit partners to bring affordable housing into the mix, the principals said.

And, Cummings hopes, it will start to change the narrative of the city. “We need to focus on what they do have.”

Meanwhile, the Third & Grand project is likely to break ground this fall, Knoer said. Within five years, The Platform expects to deliver the full 1,000 apartments to the market.

And by then, its development pipeline should have new projects.

“We’re looking to grow the business and will add to it,” Knoer said.

Paula Gardner covers Detroit-area real estate and investment as business reporter on’s statewide reporting team. Contact her by email or follow her on Twitter.

Article Source:
MLive, May 31, 2016