Dan Gilbert believes his vast swath of downtown Detroit real estate holdings will benefit the city's bid to recruit Amazon.com Inc. for its so-called "second headquarters."
During an exclusive hourlong interview with Crain's reporters and editors Thursday about the city's pitch for the online retail giant, Gilbert said his expansive portfolio in and around downtown is something that "nobody else has."
The comments are the founder and chairman of Quicken Loans Inc. and Rock Ventures LLC's first extended discussion with reporters on the subject since Seattle-based Amazon announced Sept. 7 its efforts to find a North American city for what it is dubbing its HQ2, which the company promises will bring 50,000 high-paying jobs and $5 billion in investment over the next 15-17 years.
"We have a path on the real estate to get you (Amazon) your 8 million-plus (square feet) because of the concentration of ownership that we have, and the land that we have and the developments that can happen" Gilbert said Thursday morning.
"There are multiple paths you can go on. Tons of optionality for you. Your 1 million square feet that you need in 2019? We have it for you in beautiful, cool, renovated downtown buildings."
Out-of-state real estate observers agreed.
"One of the things Amazon is going to have to deal with is the holdup problem that they are going to face bidding for large parcels of land owned by multiple owners; they can make headway for some of them, but others are going to hold out," said N. Edward Coulson, professor of economics and public policy in the Paul Merage School of Business at the University of California Irvine and former professor of economics and the director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas.
Luke Bonner, CEO of Ann Arbor-based economic incentive, real estate and economic development consulting company Bonner Advisory Group LLC, said that provides a boost to Detroit's chances but there is also a downside.
"If anybody is going through a professional real estate acquisition process or due diligence, you'd like to have options to know that you are getting the best rate possible," Bonner said. "But I do think it's very positive, very, very positive, especially in Detroit, where dealing with multiple land owners is not always the easiest thing."
Richard Karp, a developer active in Capitol Park, said the positives outweigh the negatives.
"A single-sourced landlord for all of Amazon's office square footage needs would definitely offer benefits in the way of speed, flexibility and simplicity in negotiation, which probably would far outweigh any of the downside of Amazon having to source their square footage needs from one landlord," Karp said. "One downside would be if elements of the landlord/tenant relationship turn south, the tenant no longer has the flexibility as they would with multiple landlords of dropping only portions of its office space presence."
Gilbert's real estate empire in and around downtown has transformed him from not just the billionaire founder and chairman of an online mortgage company into the city's largest and most influential landlord and developer, buying up vacant and largely vacant buildings, filling them with tenants and proposing billions of dollars in new development in the central business district.
In the last seven years, Gilbert's portfolio has grown to more than 100 properties — mostly in and around downtown Detroit, although there are also a few in Cleveland — totaling more than 16 million square feet. Bedrock says it has spent $5.6 billion in acquisition and development since 2011.
There are more buildings expected to come under its control, including the Buhl Building on Griswold Street downtown.
Gilbert's companies occupy 2.8 million square feet in Detroit, according to a Bedrock spokeswoman. That's primarily in downtown, although Quicken does have a tech center in Corktown factored into that figure. Estimates of how large downtown's office market is generally range from about 14.3 million square feet to about 16 million, meaning that employees in Gilbert companies occupy between about 17.5 percent and 19.6 percent of the office market.
Since 2016, Gilbert has proposed or privately discussed several new developments downtown, and also:
• A $900 million skyscraper, the tallest building in the city, on the former site of the J.L. Hudson's department store at Woodward and Grand River avenues. As currently envisioned, the project is slated to include 240,000 square feet of office space (down from 275,000), 330 apartments (up from about 250), 100,000 square feet of retail space plus 120,000 square feet of event space and an exhibition and skydeck totaling about 90,000 square feet. A ground-breaking is expected this year and Bedrock officials have said they anticipate it will take more than three years to build.
• An $800 million-plus two-block development east of Gilbert's headquarters in the One Campus Martius building downtown. The plan for the Monroe blocks includes 818,000 square feet of office space in a 35-story tower, about 480 multifamily units, 170,000 square feet of retail space and 48,000 square feet of public space. Construction on the Monroe Block development — bounded by Randolph Street, Bates Street, Cadillac Square and Monroe Avenue — is expected to begin early next year and be complete by early 2022.
• A $1 billion development anchored by a Major League Soccer stadium flanked by three high-rise buildings for residential, hotel and office uses. The project, proposed for the site of the half-built Wayne County Consolidated Jail on Gratiot Avenue at I-375, is subject to county approval of a proposal by Gilbert's Rock Ventures LLC.
• A mixed-use development along with General Motors on at least 10 acres of GM-owned land east of the Renaissance Center on the Detroit River. The project would include residential, office and retail uses, if built.
• A development on the former Uniroyal Tire Co. site across from Belle Isle. The 45-acre site, flanked by Mt. Elliott Park and Gabriel Richard Park, is one of the most daunting Gilbert will undertake if his team strikes a deal for the city-owned property. He has not publicly confirmed the negotiations, which have been ongoing for several years, Crain's reported last month.
• A $95 million, 310,000-square-foot addition to the One Campus Martius building, which Bedrock co-owns with Detroit-based Meridian Health.
Gilbert said while co-hosting CNBC's Squawk Box last week that he would consider moving some of his employees out of his buildings to accommodate Amazon's initial wave of employees should the company choose Detroit. He echoed that sentiment Thursday, and also said there are plenty of areas around the downtown core that would make sense for new buildings the retailer could occupy.
"There's Monroe, there's Hudson's, there's Uniroyal, the river, the jail site, the Gratiot site," he said.
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