Capital maze

Financing for the developments reflects the complexity of the projects. The $90 million redevelopment of the Fort Shelby, included several capital sources. Chicago-based ShoreBank provided a $14 million construction loan, while the General Retirement System of the City of Detroit provided a $32 million, first-mortgage loan. Other funding sources included a HUD Section 108 loan for $18.7 million, state historic tax credits, and Michigan single-business tax credits.

John Ferchill, founder of The Ferchill Group, put $8 million of his own money into the $200 million Westin project. The remaining funds came from a patchwork of 22 different capital sources. All totaled, private capital accounted for approximately $103 million, including a $44 million mortgage held by iStar Financial. A combination of tax credits and loans from the city and state also were key to getting the deal done.

“What we learned is that if you get a lot of collaboration from any group such as the city, the state and the county government, and people want to see a project happen, it can get done,” says Christopher Ferchill. “It took us two years from the first time we started talking about financing to get to the closing date.”

How was The Ferchill Group able to achieve its redevelopment vision for the Book Cadillac in light of the fact that so many previous plans to bring the property back to life had fizzled? “I think the majority of it has to do with my father's passion and his ability to never let go once he gets hold of something,” says the younger Ferchill. “He has a never-say-die attitude. I think it speaks volumes about him more than anything else.”

Matt Valley is editor-in-chief.

DETROIT - BY THE NUMBERS

CITY POPULATION

4.4 million

Source: U.S. Census Bureau

UNEMPLOYMENT RATE:

10.6%

Source: Michigan Department of Energy, Labor & Economic Growth

LARGEST PRIVATE EMPLOYERS*

1. Ford Motor Co.
   45,000 employees

2. General Motors Corp.
   40,142 employees

3. Chrysler LLC
   29,205 employees

* as of January 2008
Source: Crain's Detroit Business

METRO AREA VITAL SIGNS

(Note: All rents are effective rents)

Office:

24.6% vacancy, 4Q 2008

21.0% vacancy, 4Q 2007

$15.42 rent per sq. ft., 4Q 2008

$16.22 rent per sq. ft., 4Q 2007

Source: Reis

Multifamily:

6.7% vacancy, 4Q 2008

6.4% vacancy, 4Q 2007

$768 rent per sq. ft., 4Q 2008

$771 rent per sq. ft., 4Q 2007

Source: Reis

Retail:

10.4% vacancy, 4Q 2008

9.4% vacancy, 4Q 2007

$15.70 rent per sq. ft., 4Q 2008

$15.94 rent per sq. ft., 4Q 2007

Source: Reis

Industrial:

12.5% vacancy, 4Q 2008

11.8% vacancy, 4Q 2007

$4.71 rent per sq. ft., 4Q 2008

$4.80 rent per sq. ft., 4Q 2007

Source: Reis

Hotel:

46.5% occupancy, 4Q 2008

52.5% occupancy, 4Q 2007

$81.95 average daily rate, 4Q 2008

$85.10 average daily rate, 4Q 2007

Source: Smith Travel Research

MAJOR PROJECTS

Oakland County: Henry Ford West Bloomfield Hospital, a $360 million, 730,000 sq. ft. facility will open for patients March 15 with 191 beds. Designed to look like a northern Michigan lodge, it is built on 160 acres of woodlands and wetlands. By 2011, the last two patient lodges will be built, raising the total number of beds to 300. All rooms are private. The hospital, which is seeking LEED certification, is attached to a 250,000 sq. ft. medical center.

Developer: Henry Ford Health System

Completion: March 2009

Cost: $360 million

Downtown Detroit: State legislators approved a plan in mid-December to allow for a $288 million, 166,000 sq. ft. expansion of Cobo Center, home of the North American International Auto Show and a host of other trade shows and conferences. The state plan called for the establishment of a regional authority to own and run the facility, but on Feb. 24 the Detroit City Council rejected the idea in a 5-3 vote, leaving the project in limbo.