Detroit October 2023 Key Take Aways
Scott Elliott – Signature Associates –
• While watching the Tiger’s game on television, Scott noticed the Hudson building and the construction progress on it towering above the stadium. The crane was perched on top of it.
• Scott reports that the office sector is limping along, and free-standing buildings have all been gobbled up. The office market is alive, but not well.
Billy Morrison – Steelcase –
• Billy indicates that his office’s second-quarter earnings report just went out and they actually surpassed their goals. Much of that was operational changes. But we definitely had a strong second quarter. I think we’re about 20% of our stock.
• Steelcase is seeing return to the office as more mandates are being put in place right now for the larger companies.
• Steelcase experience centers are being set up in major cities.
• Smaller deals are the ones that are the most active. The small market has been active.
Dan Stys – Professional Engineering Associates –
• From the development side, numbers over the last 90 days, we’ve seen an acceleration of opportunities coming in our office as far as people wanting to develop.
• We had a pretty slow middle of summer but we’re starting to see more requests for proposals for surveys. Hopefully, it means that people are getting back into the game, despite the interest rates.
• Housing, residential, commercial, and a lot of program retail work is still going strong. Getting better now.
Nick Maloof – Associated Environmental Services –
• Feds are saber rattling another quarter-point rise.
• We did have a little bit of a pickup in people purchasing properties, especially retail and shopping centers and things like that. But not a whole lot of new development.
• There has been a little pickup in retail and shopping centers. Not a lot of new development. A couple of Brownfield projects.
Angela Ladetto – Detroit Regional Partnership –
• I handle all our marketing and business intelligence and general economics. I’m here to learn from all of you today. This will be a good conversation to better understand and articulate to our clients.
• Strong shift over the next few years in the automotive space. How do we then leverage all our automotive intelligence into other sectors and where we’ll be focused over the next couple of years?
• We are figuring that piece out, and then how do we leverage all our automotive expertise into other adjacent sectors for mobility defense, aerospace, rail, maritime, drones?
Gary Kravitz – Maddin Hauser –
• I do real estate and corporate work. I thought that I would be relatively quiet now, and I am not. It is interesting how the change has happened.
• Last year I was doing multiple apartment deals and they were going crazy with transactions. Nothing this year. Waiting for things to move. I have a couple of oddball apartment deals looming.
• The clients that I have are not doing many apartment deals now. Nobody wants to pay what the sellers are asking.
• On the corporate side of things and retail leasing, that has been active. Many small clients are opening in downtown Detroit, like coffee shops and daycare. A lot of clients are doing corporate acquisitions.
• I see franchise restaurants and gyms. I haven’t done a deal for a clothing store or anything in 4 or 5 years. Other various things, like laundromats, are keeping me busy.
• I’m having one of the biggest years I’ve had, thought I’d be slowing down I and would take the year and sort of relax because interest rates were high.
Phil Seaver – ATA National Title Group –
• Fraud sales are one of the things that’s sweeping the nation. A local story to illustrate this with a vacant lot. The party who’s selling the property – which is here in Michigan, is purportedly from Georgia, and he doesn’t have a deed to it yet. It doesn’t have the title on record yet. Doesn’t want to record the deed because the taxes will change or something like that.
• This type of fraud is usually out-of-state owners. FBI does not get involved in attempts, just in the successful fraud. It is occurring often now.
• The New York Times LA paper printed kind of a how to do it what was going on and all these fraud deals, and now everybody knows how to do it. We normally catch one or two a year in the last 12 months we’ve had seven where they recorded their fraudulent discharges but that’s starting to sweep the country.
• Detroit makes sure you get with the water department and determine what is and is not permeable. Looks like the junkyards and parking lots will be exempted.
• Rouge River and the Detroit River are 99% cleaner now. It has worked, but it is extremely expensive to separate the waters.
Tony Roberts – Newmark –
• Our acquisitions and transaction volume have been pretty low. If they don’t have to do anything, they just don’t.
• Appraisers are bearish on the office market now.
• Vacancies are real in Troy and other large cities.
• We appraised a piece of property recently and it came in about $150,000 below the asking price. There’s been some activity out there.
• I think there were a few phone calls over the last couple of days for acquisitions, but it’s certainly significantly less than it was 12 months ago, 18 months ago. Transaction volume is still pretty low.
Dave Dismondy – District Capital –
• I don’t hate where we are now because deals need to be refinanced and life insurance and CNBS money is available.
• Not much issue with the higher rates. Their banks step up and do the value and construction and do it even though it is closer to 8%. Spreads are wider and it is nonrecourse.
• Short-term rates are higher. Longer-term rates are starting to run away too.
Mike Sabrosky – Oliver / Hatcher Construction –
• The third quarter was a little slow, and we see November, December, and January being very busy.
• We just were awarded the Porsche and Audi dealerships in Novi. Those are two really nice projects. One is a ground-up and one’s a renovation of the Jaguar dealer.
• Self-storage on the development side. Looking at a 120-footer in Detroit. Willing to do the deal, even though it is not a great one.
• Multifamily, we hear the same thing, now the only ones we see are office buildings to apartments.
• Revenue is down overall, but 2024 is looking strong.
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