Downtown lofts liven Woodward

[Allan]

It's nice to hear that even more people are moving downtown....

DETROIT REDEVELOPMENT: Downtown lofts liven Woodward

Old buildings draw new kind of renters

October 11, 2004

BY JOHN GALLAGHER

FREE PRESS BUSINESS WRITER

Sue Krause grew up in the suburbs and visited downtown Detroit over the years only for events like the annual auto show. But last year she tried out some architectural walking tours and met a lot of city residents.

Like a slowly growing romance, Krause says, she "really fell in love with Detroit and wanted to move down there."

The result: Krause last week became one of the first residents to move into the Lofts of Merchants Row, one of downtown's biggest and most ambitious mixed-used developments.

Carved out of several adjacent historic buildings on Woodward Avenue across the street from where the old Hudson's Building once stood, Merchants Row holds a central place in the city's hopes to create a vibrant 24-hour community downtown.

Merchants Row and similar projects are important because they promise to bring new residents to a city that has lost more than half its population since the 1950s. Previous downtown redevelopment focused on stadiums, casinos and other venues that draw visitors but not permanent residents.

"I'm amazed about how many people ask me why," Krause says of her move downtown from Shelby Township in Macomb County. She'll still work in Rochester Hills as a human resources assistant, commuting opposite the normal rush-hour flow. "I met so many people who live downtown, learned so much more about the events and festivals. I absolutely love it and want to live down there," she says.

Merchants Row is one of several similar residential projects taking shape downtown. With a surplus of early 20th-Century office and retail buildings standing empty downtown, city officials are concentrating on getting several of them converted into loft-style residential buildings. While newly built townhouses like those going up near Comerica Park are important, too, renovation projects like Merchants Row allow the city to keep some of its historic architectural flavor as it redevelops.

Mayor Kwame Kilpatrick's administration has set a goal of having 2,000 new residential units downtown in time for Super Bowl XL at Ford Field in February 2006. While some real estate experts say that goal might be tough to reach, there are several hundred new units coming on line this year or in various stages of planning.

Another project, a remaking of the historic Kales Building on Grand Circus Park into loft apartments, is expected to be ready for residents this year.

The Merchants Row project consists of 157 loft-style apartments carved out of several historic buildings along two blocks of Woodward. Units range from 600-square-foot studios to 3,000-square-foot luxury apartments. Rents start at $750 a month and go up to $2,700 for the biggest units.

Given the complexity of remaking and linking the multiple buildings, there are about 45 floor plans. Detroit-based Kraemer Design Group did the architectural work.

Located in the heart of downtown, Merchants Row is an easy walk from the new Compuware Corp. headquarters, Ford Field, Comerica Park and the new Campus Martius park scheduled to open in November.

The project includes a parking garage offering valet parking for residents. Merchants Row was developed by a team that includes Southfield-based Schostak Brothers & Co. and the Detroit-based Sterling Group development company.

Like most projects in Detroit, Merchants Row faced a host of difficulties. Land speculators held up the project, and soft real estate values made it complicated to finance. Robert Schostak, president of Schostak Brothers, says he began planning Merchants Row five or six years ago. By contrast, a routine apartment or condo project in the suburbs might take only half or two-thirds as long to complete.

"I think a lot of people felt we were pioneering, and we were," Schostak says. "But we're proving that there is that pent-up demand to live back in the city and have a nice place to live."

Some of the newest residents of Merchants Row were attracted by the project's granite countertops, stainless steel appliances, valet parking and other upscale amenities not often found in apartments.

"I think we've made a very wise decision to build quality and to not allow purely the perception of demographics in Detroit to dictate the kind of unit and the type of finishes," he says. "We really reached out to bring to this corridor very high-quality finishes, something very nice."

Downtown residential projects can benefit from a variety of subsidies provided by private and quasi-public investment groups. One such group, the Detroit Investment Fund, formed by corporate donors interested in seeing the city come back, loaned about $1.8 million toward the $30-million-plus cost of Merchants Row. That money provides so-called gap or mezzanine financing for projects whose costs exceed what normal lending sources are willing to risk.

"The reality is that the market is just now being tested, and a lot of developers out there are waiting to see how successful this project is going to be," Dave Blaszkiewicz, president of the Detroit Investment Fund, says of Merchants Row. But lenders are showing a growing confidence in the downtown market. "Every housing deal that we do, it gets easier for that next deal," he says.

If optimism is on the rise, nobody is declaring victory. Each new opening merits media attention. People moving downtown remain far from routine.

"There's no question we're still early in the process, and we've got a ways to go," Schostak says. "But it's people taking small steps that are making a difference."

For leasing information, call 313-418-4700 or visit www.loftsofmerchantsrow.com

Contact JOHN GALLAGHER at 313-222-5173 or [email protected]

[Mojo]

Is there anything planned for the buildings next to Merchants Row? Seems kinda strange that they would rennovate the buildings in the middle of the block, and leave the rest vacant. Anyways, I hope there's a plan for them.

[Allan]

The buildings that were not renovated with the Merchants Row Buildings are owned by somebody different. I hope they get renovated soon. Some of them do have "For Sale" signs on them, so I'm hoping that is a good sign. I especially like the old Kresge Building. It seems to have been empty for a long time now - probably 30 years or more.