Monday, February 25, 2008

More Upscale Condos In a Bad Housing Market

Last year General Motors gave six acres of land just east of the Renaissance Center to the Hines Real Estate in exchange for a cut of the future profits from a development there. They plan on building about 600 luxury condominiums that would sell for roughly $300,000 to $1 million apiece. By late summer or early fall model condos should be available for viewing with the units going on sale shortly afterward.

This announcement comes at a time where many previously planned condo/loft developments in the city are struggling with financing, or have failed. The Mid-Med lofts in Midtown are being converted to commercial uses after the units failed to sell. The Griswold luxury condominium project was scrapped. In total, this cost the Detroit Downtown Development Authority close to $1.5 million. The city and its partner had to pay half the cost for structural steel and precast concrete molds that they had previously ordered for the project as well as paying for the structure to be reinforced in order for the condominiums to be built on top.

Two other project in the immediate vicinity of the GM's riverfront development have been delayed and may never come to light. Dave Bing's $60 million Watermark Detroit recently received a nine month extension on its development agreement deadline for providing the Detroit Economic Growth Corp. proof of its financing commitments. Banks are now insisting that more than 60 percent of the 112 residential units be pre-sold before the project continues. The @water lofts (dead link), which was due to break ground last summer is faced with similar funding problems. The developers have been forced to find additional investors after banks increased the required level of pre-sales to more than 60 percent as well.

Hines plans to complete the project in phases. Where the money is coming from will be a determining factor in whether or not this project comes to fruition as planned. Something will be built upon these parcels eventually.The question is what and when?

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