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Detroit

Buoyed by a strong marketplace, Motor City keeps rolling on, though suburban strength dominates deals. Forget core competencies and other such business jargon. Sometimes it takes an imaginative, unexpected act to remind us of something more fundamental: the gospel truth.

Sure, Chrysler has been breaking all the rules. But General Motors' purchase last year of the landmark, 2.2 million sq. ft. Renaissance Center for its new headquarters served notice that Detroit remains the world's vehicle (i.e. auto) capital. Furthermore, GM will spend the bucks needed to energetically upgrade -- and humanize -- downtown Detroit's "keystone" property, which was admittedly languishing in less-than-stellar condition before the purchase.

>From street folk to corporate captains, our area also understands better than most how much the automotive industry fuels the American economy. Thus, a strong marketplace has been good to Detroit, not just in sales reports, but also through one global OEM or supplier after another setting up major-league R&D and design digs across metropolitan Detroit.

And the Clinton Administration has chipped in by awarding Detroit its Federal Empowerment Zone, as well as funding help for a long-awaited major expansion of the Metropolitan Airport, price-tagged at $1.6 billion, that includes a new, 74-gate midfield terminal.

Those lined up to run the three casinos state voters approved for downtown Detroit would probably talk about calling in markers. There's a lot of them these days. Besides the airport, they include a bulked-up Detroit Medical Center, commitments by Chrysler and GM to expanded development in the Empowerment Zone and plans for side-by-side downtown stadiums for the baseball Tigers and football Lions.

Additionally, Metropolitan Detroit's single-family residential market is among the hottest and strongest in the nation, reflecting job growth and consumer confidence. The USPS is running out of zip codes and Ma Bell exchanges for Oakland County's running-on megapolis of Birmingham, Bloomfield, Troy, Auburn Hills and Rochester Hills and other northern exposures. At the same time, settled communities like Royal Oak, Dearborn and Plymouth continue to define and refine their downtown mixes, while prosperous Novi builds from scratch.

Good space, if you can find it Overall, the vacancy rate for the more than 60 million sq. ft. of office space in Detroit's MSA (Metropolitan Statistical Area) has fallen for eight consecutive quarters, according to Cushman & Wakefield of Michigan's First Quarter 1997 Office Market Report. Cushman & Wakefield reports an overall vacancy rate of 12.5%. The average rental rate is $15.61 per sq. ft.

Of individual markets, Detroit's CBD (about 21% of inventory) has an overall vacancy rate of 20%, nearly 4% better than a year ago; the tightest markets are Auburn Hills/Rochester Hills, at 5.9% overall vacancy rate; and Troy, at 7.8% overall vacancy rate, followed closely by Birmingham/Bloomfield Hills, Bingham Farms and Farmington Hills.

For all of 1996, net absorption was 1,679,982 sq. ft., and leasing activity was 5,188,589 sq. ft., according to Cushman & Wakefield's year-end 1996 report. The first quarter 1997 shows net absorption of 38,747 sq. ft. and leasing activity of 777,448 sq. ft.

Comparing today's office market to that of a decade ago, Jeffrey W. Shell, Cushman & Wakefield's senior managing director, client services Midwest, says that "the demand side is similar; it's the supply side that is different. Owners of properties are regaining loss of value that they were hit with in the early-'90s."

"Lease deals are close to being able to support the cost of new construction, but the capital side is so much smarter than they were before. They are not interested in financing speculative development," Shell says. "It's going to take a significant preleasing component, including scrutiny of the credit of the tenant. (However,) within the end of 1997 or 1998, companies will be paying rates that will clearly support or may be higher than the cost of new construction."

While it remains to be seen whether GM's move will lead to new Class-A office towers for downtown, owners of older office properties will be looking to revitalize their spaces -- perhaps not so much to accommodate tenants displaced from the Ren Cen, but those drawn to an overall more exuberant downtown. City of Detroit officials are also studying whether to take up GM on its suggestion to move City Hall to the historic Albert Kahn structure GM is vacating on Detroit's New Center area. It gets more complicated. If the move takes place, developers would then upgrade the city's well-positioned, riverfront offices into market-rate Class-A office space.

One Class-B downtown Detroit property repositioning itself is the venerable, 47-story Penobscot Building, with three towers built from 1903 to 1928, comprising 906,000 rentable sq. ft. The complex is currently 80% occupied, with an asking rate of $12 to $15 per sq. ft.

Overall, Cushman & Wakefield reports an average CBD rental rate for first quarter 1997 of $22.15 per sq. ft. for Class-A space and $15.34 per sq. ft. for Class-B.

While Gale Research recently announced plans to vacate its 135,000 sq. ft. (effective August, 1998) and build a new headquarters in Farmington Hills, leasing and marketing manager Kevin Shea sees brighter days ahead for Penobscot. A key factor, according to Shea: a return to stable, interested ownership, the PBI-Kinmont group based in Montreal, Canada.

"The Penobscot is to Detroit much like the Empire State. The building has been studied by ownership, and we're not trying to renovate as much as revitalize, bringing the grandeur of the building back. We will manage it like a Class-A building," says Shea, vice president with the Hayman Co., assigned Penobscot duties last August.

Some displaced Ren Cen tenants may face sticker shock when they try to find comparable space in Detroit's CBD, especially as the overall market tightens up, according to Shea.

The real boost to downtown, however, won't come for several years, with fundamental demographic changes based on GM employment, including new hires right out of college. These people, Shea says, will demand and help revitalize downtown residence, retail and nightlife.

One Ren Cen move has been finalized. Ford Motor Co. will relocate its 2,500 Ren Cen employees, occupying about a half-million sq. ft., to corporate facilities in its Dearborn turf.

Doug Van Noord, senior marketing associate with Hallwood Commercial Real Estate, sees increased demand for office space in Dearborn, especially as Ford suppliers, including advertisers and market researchers, gravitate homeward.

Ford Motor Land Development has several projects recently completed or in progress in Dearborn and Allen Park, according to Sales and Leasing Director Mark Woods. These include a trio of 38,400 sq. ft., 58,800 sq. ft. and 67,200 sq. ft. office/high-tech buildings, plus twin 67,000 sq. ft. buildings in the planning stage at Fairlane Business Park; a 72,000 sq. ft. multitenant office building on Town Center Drive in Dearborn; and a 67,000 sq. ft. retail center, plus outlot.

Southfield redefining urbanism In Southfield, Detroit's first suburban office mecca (15 million sq. ft.), developers and city officials are working hard to rehabilitate older properties, as well as rethink uses, especially in the city's southeast corner.

Buildings that have been successfully reworked and retenanted in recent years include the Advance Building, the Comerica Southfield Tower and the Honeywell Building.

Matt Bounds, vice president of property management for the Berger Realty Group, reports that Comerica Southfield Tower, purchased by Berger in 1994 and subsequently renovated, is now 98% leased, at an asking rate of $15 plus electric per sq. ft. Bounds is now working to improve conditions at the 300,000 sq. ft., 17-story North Park Plaza, built in 1972 and "the tallest office building between downtown Detroit and Southfield's Prudential Town Center."

"This is a project that needed local ownership," says Bounds, who reports that occupancy has been increased from 59% to 68% since Berger purchased the building last September. Next goal: finding a big anchor tenant for a 70,000 sq. ft. or so block of space.

Additionally, the Kojaian Cos. are rehabilitating the 220,000 sq. ft. Northwestern Corporate Center (former Empire Complex) and the recently acquired 140,000 sq. ft. 26711 Northwestern Building (former Doner Building), both of which require environmental remediation.

The majority of renovation on Northwestern Corporate Center should be completed by the fourth quarter of this year, according to Kojaian Senior Vice President David Haboian, who also expects 26711 Northwestern to be ready for major tenant CSC Healthcare Systems Inc. (100,000 sq. ft.) by September.

The busy and aggressive Kojaian Cos., who now have a strategic partnership with Grubb & Ellis' Axiom Management Division, have purchased and are preparing the 110,000 sq. ft. former FTD Headquarters on Northwestern Highway for occupancy later this summer, at an asking rate of $18.25 plus electric per sq. ft. ESG Service Group, an engineering firm, will take 68,000 sq. ft. of the building.

In other areas, the city of Southfield is working to clear mothballed buildings and make way for new uses. Having acquired the vacant and tax-defunct Quad Building and CUNA Insurance Building, directly opposite Oak Park to the east, the city is selling the site to West Bloomfield's Solo Corp. to develop as a 130,00 sq. ft. retail center.

A similar strategy will apply to One Northland Drive (former Specs Howard building) and adjacent South Park Plaza along Eight Mile Road, also acquired by the city, according to Don Gross, Southfield director of community development. Once cleared, this area would also be redeveloped as retail.

Overall, Gross envisions another 130,000 to 200,000 sq. ft. of retail in the area surrounding Northland Mall and the viable core of southmost office buildings.

"There's a demand and market for retail that can be supportive and complimentary to the office buildings," Gross says.

Also on Southfield's dream sheet, a pedestrian village concept for JL Hudson Drive, providing "fill-in" retail and services for nearby apartment complexes and the Providence Hospital and Oakland Community College campuses.

Southfield welcomed the new Sony Star megatheater complex on the Galleria Office campus on 12 Mile Road between Telegraph and Northwestern, Gross adds. Slated for a late June opening, the nearly completed project boasts 20 movie screens, four restaurants and complementary retail.

Southfield's newly founded Business Development Team, modeled on a similar program of Norfolk, Va.'s, has contacted more than 200 companies in the past six months in retention and/or attraction efforts.

Troy appeals Among major submarkets, Troy (nearly 11 million sq. ft.) has adapted well in recent years to a changing tenant mix. This year's first quarter 1997 office vacancy rate of 7.8%, according to Cushman & Wakefield, is more than 4% better than the same time last year -- and as much as 10% better than as recent as two to three years ago.

Shifts of some auto-related firms to Chrysler's sphere of influence in Auburn Hills, or GM's in Pontiac, has brought about a more diversified, possibly more recession-proof mix, including "commodity" tenants in health care, financial services and communications.

Troy owners have also proven adept at upgrading properties, according to Signature Associates-Oncor International Partner David Miller. Examples from the early-1990s include City Center, the former Volkswagen headquarters; Sam Frankel's Somerset II; and, more recently, Sheffield Park IV, refitted for the D'Arcy Masius Benton & Bowles advertising agency. The firm's former 80,000 sq. ft. home in Bloomfield Hills is being renovated and converted to multitenant use.

Miller also reports several new office projects being evaluated by developers. These include a 150,000 sq. ft. Building E (final phase) for Troy Officentre; a 200,000 sq. ft. technical center and headquarters for Canadian-based auto supplier, Magna International, at the northwest corner of Big Beaver and I-75; and three buildings from Kirco Development: a 260,000 sq. ft., 14-story Columbia Centre II; a 80,000 sq. ft., 4-story Columbia Centre III; and a 46,000 sq. ft., single-story building at Kirts and Troy Center Drive, on a site to be shared with a Candlewood Suites extended-stay hotel.

Additionally, in busy Troy, Miller notes plans for a 46,000 sq. ft. Wilshire Office Centre on Crooks, just north of Big Beaver, and a 90,000 sq. ft. office building on the Long Lake Crossings site, to be developed by the Damone Group.

Other favorable submarkets for new construction (given quality leases in hand) are the I-275 and I-696 corridors, which includes Novi, Farmington Hills and Livonia, especially at Victor Corporate Park and possibly Duke Associate's Seven Mile Crossing location.

Money matters On the busy refinancing front, "some rules are being bent if not broken," says Larry Hadley, president of Southfield-based commercial mortgage banker Hadley & Associates.

"First, there is an incredible appetite for office, with more generous underwriting requirements. Second, hotels are coming back into vogue, as capacity is catching up with demand in midst of a halfway decent economy; and, third, in multifamily housing, I'm aware that generally life insurance [companies] are looking at either outright acquisitions of buildings or equity investments into buildings," Hadley says.

While office properties are not the bargains they once were, trading is still active, according to Eric Siegel, head of Trammell Crow's Investment Sales Division. Properties trading near the market's bottom at $50 to $60 per sq. ft., may now bring as much as $100 per sq. ft.

Fueling the market, Siegel adds, is perceived room for rate increases in increasingly crowded office markets, including Southfield, where GISC Realty Group, an investment arm of the government of Singapore, recently purchased the 2 million sq. ft. Prudential Town Center.

Taking flight While economic development experts, here and elsewhere, debate the real benefits of projects like casinos and stadiums, many observers suggest the $1.6 billion expansion and upgrade of Detroit Metro Airport -- an essential international hub for resurgent Northwest Airlines -- may have a greater positive long-term impact on our area's economy.

The agreement between Wayne County and Northwest Airlines calls for a new 74-gate midfield terminal with 64 domestic and 10 twin (domestic or international) gates, to open by December 2000; as well as a fourth parallel runway; a new South Access Road (to be linked to I-275); a new 5,000-space parking deck; plus extensive renovations of Metro's three existing terminals.

Last year, Metro handled more than 30 million passengers, making it the ninth busiest in North America and 13th busiest in the world in passengers, according to Wayne County statistics. International traffic -- which now includes nonstop service to 12 global destinations -- has increased 353% over the last decade.

Funding is comprised of $700 million in passenger facility charges ($3 passenger enplanement fee), $350 million in direct airport rates and charges to airlines, $225 million in concessions and related sources and $276 million from the Federal Aviation Trust Fund.

Already in progress: $60 million in interim improvements, including expansion of the international check-in and luggage systems, and land assembly, in association with The Farbman Group, of about 750 acres each at Metro's South End, for commercial and industrial users, as well as on its north side, where a new I-94 interchange is under construction at Vining Road, near Lloyd Ecclestone's proposed Metro World Centre.

The Farbman Group is also helping develop this Metro World Centre site, just west and north of Detroit Metro Airport, where Tanger has an option on a 140-acre parcel. Tanger is considering a multi-use development with movie theaters, restaurants, big-box retail and even a hotel, in addition to a factory outlet mall, according to Daniel Boorstein, vice president with The Farbman Group. Boorstein also notes that master planning has begun on the entire 450-acre site, with potential uses including low-rise office and a business technology park.

A little further west, in Ypsilanti, Insight Real Estate Development, of Oak Brook, Ill., has completed its purchase of the 2.1 million sq. ft. former GM Willow Run Assembly Plant, according to Susan Lackey, executive director of the Washtenaw Development Council.

While Metro airport is busy, with excellent nearby growth in air cargo, warehouse and distribution facilities over the last decade, there is still plenty of space around which to roam. Unlike many other major cities, Detroit's industrial base centered around semi-far flung auto plants (including those in Pontiac and Flint, Mich.), instead of the airport.

One of the leading players in the warehouse and distribution arena has been Ashley Capital, which controls in excess of 8 million sq. ft. of property nationally. In Metropolitan Detroit, it's been a rehab or new build a year (or more) for Ashley, notes Dan Labes, director of Cushman & Wakefield's Industrial Division: 900,000 sq. ft. Brownstown Center I in 1992, 1 million sq. ft. Romulus Center in 1993, 500,000 sq. ft. Warren Business Center in 1994, Romulus Phase II in 1995, 495,000 square Romulus Phase III in 1996. Next up: 500,000 sq. ft. Brownstown Phase III in 1997 and, within the coming year, 1.1 million sq. ft. Crossroads Distribution Center in Van Buren Township.

Labes is also working with developer Stuart Frankel to reform Chrysler Corp.'s former Highland Park headquarters location into a modern, "suburban style" industrial park.

"The steel is up," on the first spec building at this 145-acre Oakland Park, a 141,000 sq. ft. warehouse facility, with an asking rate of $4.50 per sq. ft.triple net.

While Oakland Park tenants will qualify for tax abatements, job training dollars and industrial revenue bond financing, the real keys to success for Oakland Park, according to Labes, will be its location and highway access, quality of construction and amenities, and spirit of cooperation from Highland Park officials.

Further afield Overall, according to Cushman & Wakefield of Michigan's First Quarter 1997 Industrial Market Report, there are 22 million sq. ft. of available industrial space (warehouse, manufacturing, high-tech) in metropolitan Detroit out of an estimated inventory of 500 million sq. ft., for an estimated overall vacancy rate of 4.5%. Cushman & Wakefield also reports first quarter 1997 leasing activity of 2.2 million sq. ft. and first quarter 1997 sales activity of 780,084 million sq. ft.

With vacancy rates at historical lows, the industrial market is responding with new construction, predominantly built-to-suit. At year-end 1996, 2.7 million sq. ft. were under construction, according to Cushman & Wakefield, nearly twice the 1.4 million sq. ft. under construction at year-end 1995. Also, last year, direct rental rates for all types of industrial properties climbed more than 7%, from $3.93 triple net at year-end 1995 to $4.24 triple net at year-end 1996.

On the west side, Trerice Tosto's Glotzhober expects continued development south on the I-275 corridor, "directly related to the light industrial and R&D properties that have been developed throughout Livonia and Plymouth." Factors include scarcity of good sites in Plymouth and infrastructure limitations to the west.

Larry Emmons, vice president with Trerice Tosto's industrial division, concurs.

"We are out of land in primary markets. Formerly 'B' and 'C' markets along I-275 will turn into 'A' markets," says Emmons, also predicting growth along I-275 south, between Ford Road and I-94, as well as industrial expansion north and west of Detroit toward Wixom and Brighton.

In Canton Township, near I-275 and Michigan Avenue, road improvements and master planning are proceeding with the Frankel Associate's Haggerty II Corporate Park. The conceptual design calls for up to 1.5 million sq. ft. of eventual construction at the 100-acre site.

Future industrial development beyond Chrysler Corp.'s sphere of influence in Auburn Hills is likely to include Independence and Orion townships, possibly even Grand Blanc. Paul Hoge, partner with Signature Associates*Oncor International, notes strong activity in the last year at Orion Business Park and Northpointe Industrial Park, both in Orion Township.

"It's class urban sprawl that is driving demand on the next frontier, including Chesterfield Township in the north to Huron Township in the southwest and everything in between. At the same time, the negative stigma that Detroit used to have of being highly cyclical is starting to disappear. We are seeing increased interest from Wall Street, pension funds and other institutional investors," Hoge says.

Noting that light industrial rental rates have increased 10% to 15% over the last 18 months, Hoge adds that "I'm as bullish as ever, because we don't see overbuilding of speculative development. People are still being cautious, looking to have an actual customer in hand. Our market is demand-driven."

Similarly, Jon Savoy, also a partner with Signature Associates*Oncor International, reports more than 80 industrial projects between 1992 and 1995 in Wixom, northwest of Detroit. Next closest in prosperous Oakland County is Commerce Township, with 10 projects.

Needless to say, "last year was a banner year" in Wixom, according to Savoy, giving credit to Wixom's excellent freeway access and positive development attitude, as well as Livingston County's position as Michigan's fastest growing county in population.

Centerpoint -- redoing industrialism Development critics are often quick to point out how easily industrial companies and developers can abandon existing "brownfield" sites for unsullied green fields.

At the Centerpoint Business Campus, General Motors Corp., Etkin Equities and the city of Pontiac have been able to transform a to-be-abandoned assembly plant into the anchor of a 350-acre mixed-use business park, while helping keep as many as 10,000 GM employees contributing to the Pontiac economy.

Besides successfully renovating a 4.5 million sq. ft. assembly plant to a 1.1 million sq. ft. truck product center and group headquarters and constructing a 400,000 sq. ft. Development Center, the real key to the project, according to Curtis Burstein, vice president finance/development for Etkin Equities, was to "show GM how we could not only renovate the assembly plant, but also create this campus and develop peripheral property to create value."

Since the GM phase of Centerpoint was completed, Etkin Equities has proceeded quickly with its next phase of development. The list of new R&D, office and commercial construction includes: a 60,000 sq. ft. U.S. headquarters for Hawtak Whiting, finished this last summer; a 71,000 sq. ft. Centerpoint Corporate Center, finished last fall and whose tenants include Lear Corp., Kelly Services, Modern Engineering and Aerotek; a 8,770 sq. ft. Prodigy day-care center; and a Wendy's/Tim Horton's hybrid, with Dave Thomas and hockey great Gordie Howe on hand for the hamburger/donut shop-plus face-off.

Also completed or about to be: a BP Service Plaza; a 20,000 sq. ft. Marketplace at Centerpoint retail center; and Burger King and Papa Vino's restaurants. Etkin Equities also broke ground this March on a 110-room Courtyard by Marriott and a 114-room Residence Inn by Marriott, with completion of both slated for January 1998. A possible third hotel would be a 100-room Holiday Express.

Between the existing campus and another 40 acres north of South Boulevard, Centerpoint could harbor another 500,000 sq. ft. of office, warehouse, research facilities and an eventual total population of 18,000 employees, Burstein adds. Nearby, at Square Lake and Opdyke roads, Etkin Equities also totally renovated a 104,000 sq. ft. former Kmart retail center into a GM training facility.

"We have proven that Centerpoint is successful. Two years ago, people would have said, 'We're not sure yet.' Centerpoint has made it out of its cocoon and it's matured now; really evolving," Burstein says, "We consider Centerpoint the only mixed-use business campus in Oakland County, with the day care, commercial, hotel, retail, office and fast food."

Let's make a deal Overstored as we may be as a nation, suburban Detroit retail operators and developers continue to quickly evolve new formats, while working to revive declining ones.

Smaller enclosed centers are being "de-malled" to better compete with big-box power strips, examples being Crosswinds Mall in West Bloomfield and Winchester Mall in Rochester. With a squeeze on prime land, smaller centers with perhaps only three or four tenants are being plopped on highly trafficked corners, a favorite of chain drugstores seeking pockets of population density.

At the same time, developers inspired by a "new urbanism" are working to integrate residence, retail and other commercial uses in many communities. In the wings as we continue to redefine civic space -- the megatheaters, the next great thing in movies.

A potent force in the days ahead will be continued consolidation of both mall and retail operators, according to Barry M. Klein, chairman of Barry M. Klein Real Estate, who has handled most of Pep Boys auto parts and service chain's Michigan locations.

"REIT money has stabilized the mall development business. ... The best mall operators are merging and going to buy more," says Klein, citing Simon-DeBartolo and General Growth, which recently agreed to purchase Westwood Mall in Jackson, Lakeview Square in Battle Creek and Lansing Mall in Lansing from Forbes/Cohen, allowing the later group to concentrate on its upscale malls like Troy's Somerset Collection.

While some malls in suburban Detroit owned by smaller groups will make good acquisition targets, Klein says that, overall, "Detroit's a pretty strong mall town, I don't see us losing any but, around the country or other places in Michigan, about one in five or six must dramatically adapt or be converted to some other use."

However, as malls try to cope with falloffs in such merchandise areas as women's wear, not to mention relentless competition from category killers and superstore concepts, Klein expects "mall managers to be given more local leasing latitude, as malls may be more willing to pay a commission to a broker to bring them a legitimate independent merchant ... to combat that disease of sameness from mall to mall."

Bennett Terebelo, executive vice president with Southfield's LaKritz-Weber & Co., says that there is still pent-up demand for supermarket locations in metropolitan Detroit. Additionally, while Sears seems to be doing well by expanding its home hardware format to neighborhood strip malls, Terebello cautions that "since the male shopper would rather run to a store five miles away, Sears could be eliminating the male shopper from regional malls, which means cutting down on family trips."

New big-box entries in our area should include Home Place and some of the health and medical aids concepts, while the new high-definition televisions should lead to a major resurgence in profitability for electronic chains, according to Terebello.

A time for building "Watch for growth in the hotel market, which can't help from overbuilding itself as pent-up demand has caught up with supply," suggests mortgage banker Larry Hadley.

For the time being, metropolitan Detroit's hotel and motel sector is solid, according to Chuck Skelton, president of Ann Arbor-based Hospitality Advisers.

For year-end 1996, Skelton reports southeast Michigan occupancy of 67%, at a $67 average rate, compared to year-end 1995 occupancy of 66%, at a $64 average rate. The strongest submarkets, with year-end 1996 occupancies greater than 70%, include Auburn Hills, Dearborn, the I-275 Corridor/Farmington and Romulus-Airport.

Skelton's firm surveys nearly 27,500 rooms in Wayne, Oakland, Macomb and Washtenaw counties, about two-thirds of which are full-service.

In advance of stadiums, casinos and completion of GM's move to the Ren Cen, downtown Detroit's hotel market is already benefiting from weekday turnaway from strong suburban markets, according to Skelton, who expects the GM move to add a strong commercial demand component to downtown's existing group business.

Rates also apparently have nowhere to go but up, compared to most any major metropolitan downtown.

For year-end 1996, Skelton reports downtown occupancy of 59%, at an average rate of $84, compared to 58% occupancy, at any average rate of $79 for year-end 1995.

Overall, prime areas for new product include Novi, Farmington Hills, Pontiac, Auburn Hills and Ann Arbor. Leading this product path are the extended-stay and limited-service product lines, according to both Skelton and Wanda Spencer of Plymouth's The Spencer Group.

Extended Stay America of Ft. Lauderdale, Fla., already has nine projects completed, under construction or under active consideration in metropolitan Detroit for its three extended-stay formats, according to Mike Wilson, vice president marketing. Completed properties are in Novi, Auburn Hills and Madison Heights, with properties under construction in Ann Arbor, Farmington Hills and Sterling Heights, and under consideration in Sterling Heights, Southgate and Livonia.

Overall, according to Wilson, Extend Stay America plans 421 units of all brands nationwide by 1999; 541 by the end of 2000. Presently, 85% of the chain's patronage is from business travelers.

Luxury living The Detroit area's current prosperity hasn't been lost on residential developers, including the Village Green Cos., which is proceeding with an extravagant apartment community, Regents Park of Troy, near Big Beaver and Crooks roads, a short stroll from the Somerset malls.

Construction should begin this summer, with first occupancy a year later, on 300 luxury apartments "with finishes and square footage like ownership," including eat-in kitchens and full laundry rooms. Regents Park of Troy will also feature concierge-guided access to underground parking, a 6,300 sq. ft. resort-style clubhouse, business center, indoor racquetball court, billiard room and exercise room.

The target group, according to Village Green chairman Jonathan Holtzman, is primarily those sophisticated 50-, 60- and 70-year-olds (the first of the baby boomers and their healthy, wealthy parents) "who want to be close to an urban downtown, the Somerset location, the restaurants along 16 Mile Road and the country clubs in Bloomfield Hills," while being freed of home ownership.

"This is a totally new product for us. ... Sophisticated apartment living is rare in metropolitan Detroit," says Holtzman, describing this area's few comparable projects as downtown Detroit's Riverfront Apartments, Southfield's North Park Towers and Southfield's 5000, which is being converted to condominiums.

Village Green completes its offerings to three other key apartment consumers -- those in their 30s, who want a better product than they lived in 10 years ago; the divorced or separated person moving from a single-family home; and job transferees -- with the Village Green luxury apartment product (the newest being Village Green of Rochester Hills) and the Village Park product (Troy, Southfield and Ann Arbor in the last four years), which rehabilitates and repositions older properties to appeal to first-time renters.

"We've followed that retail, car company, hotel mentality which says have different products for different markets," Holtzman concludes.

Also recently proposed: 300-unit Carriage Homes of Rochester, a hybrid of the Village Green family, with apartments divided within larger architecturally distinct buildings, representing perhaps a return to lifestyles of 30 to 40 years ago -- made nicer with 1990s amenities.

Among other multifamily housing developments, Gilbert "Buzz" Silverman reports that construction is well under way on a second phase of luxury apartments at Indian Lake Village Apartments, near Bald Mountain State Park, which will bring the complex up to its planned size of 394 units. Indian Lake Village Apartments and 370-unit Lake Village of Ann Arbor (in Ann Arbor) are joint ventures of the Silverman and Fenton companies, both third-generation firms.

The luxury apartment market should hold firm, according to Rick Fenton, president of The Fenton Co. and Cadroy Management Co.

"The market is guarding against overbuilding. The appetite for apartments is a reflection of economy in general. ... We also see the apartment market reacting to shifts in the employment base, such as Chrysler and the Oakland Technology Park providing a strong impetus for residence along the I-75 corridor," Fenton says.

Silverman, who is immediate past president of the Building Industry Association of Southeast Michigan, is also proceeding with the approval process for 400-unit Lake Village of Auburn Hills. This development will be located at the southwest corner Baldwin Road and I-75, the same intersection as The Taubman Co.'s proposed megamall.

"This is a site with tremendous natural features, with nearly half of the land preserved as open areas; we will have ponds, a little lake, mature stands of trees and every luxury rental will have views of natural space," Silverman adds.

Singh Development has been active in the higher-priced Detroit apartment marketplace in recent years with developments totalling nearly 700 units completed or planned for Farmington Hills, Novi, Canton and Commerce Township, according to Vice President Mike Kahm. Additionally, the firm has completed Waltonwood senior housing developments in Rochester Hills and Canton Township, with further units proposed for Novi and Royal Oak.

Creating Main Street Novi Singh Development is also a participant in Main Street Novi, a decade-long quest to create a downtown identity for the community.

At the southeast quadrant of one of Michigan's busiest and most prosperous commercial crossroads, developer James Chen of Evergreen III Inc. has planned from scratch a pedestrian-friendly commercial street with downstairs/upstairs mixed retail and office use and plenty of architectural flourishes like brick pavers and designer street lights.

A key to the project, according to Chen and broker Todd Smith, of Thompson-Brown Realtors, has been to create a landmark (the already-completed 90,000 sq. ft. Vic's Market) and residence (the 240-unit Main Street Village apartments) before proceeding with the actual Main Street.

Apartments at Main Street Village range from one-bedroom, 804 to1,097 sq. ft. units starting near $900 per month, to two- and three-bedroom, 1,365 to 1,557 sq. ft. townhouses, with rents up to $1,450 per month.

The first residents, a target group of professionals, empty-nesters and young families, took occupancy this March, according to Singh Development's Kahm.

A 42,000 sq. ft. second phase, housing a micro-brewery, oriental market, Nevada Bob's golf store and 11,000 sq. ft. of office space should be ready for occupancy this summer. Asking rates are $16 per sq. ft., triple net, for retail and $13 per sq. ft., triple net, for office, according to Smith.

Evergreen III also expects to break ground this summer on a third phase of up to 150,000 sq. ft. of office and retail, an anchor to the actual main street, plus a standalone Main Street Court, which will include Fifth Avenue Billiards, restaurants and other retail uses. Final plans call for as many as 10 distinct units (connected on Main Street through second-level walkways), with up to a half-million sq. ft. of office, retail and specialty users.

Chen says that another important goal for Main Street Novi is to create a more successful -- and affordable -- atmosphere for smaller, specialty retailers who are being lost in the bigger-box traffic of nearby Twelve-Oaks Mall, Novi Town Center and the West Oaks malls.

David Stein is a Farmington, Hills, Mich.-based writer who contributes to our sister magazine Midwest Real Estate News.

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