The Dirt: GM and Bedrock play the downtown shell game

GM’s eventual move to the Hudson’s skyscraper remained the big story from this past week. We also learned what’s going to be in the project’s residential and hotel components. But will Detroit benefit financially from the deal?

What’s next for the RenCen?

General Motors Co. plans to relocate its headquarters to the new Hudson’s Detroit development when it opens. As soon as the news broke last week, people immediately began speculating about the fate of the Renaissance Center , which will be almost entirely empty once GM vacates.

It’s unlikely to fill up soon given its enormous size (about 5.5 million square feet) and the dismal prospects for office space in the city. GM and Hudson’s developer Bedrock Detroit said they would jointly study what to do next with the RenCen (paywalled), which includes the city’s tallest building. The most likely scenario according to some real estate experts is converting part of the complex to hotel or residential space . This kind of adaptation is more feasible than in other modern office buildings (paywalled) and because the RenCen, nearly 50 years old, will soon be eligible for historic preservation tax credits.

Demolition is also a possibility, given the high expense of any conversion and the prime value of the RenCen’s real estate. There are also a number of underutilized parcels adjacent to the building complex, many of them parking lots, that could make the whole area highly attractive to potential developers. (Detroit Free Press, Axios Detroit, Outlier Media, Crain’s Detroit Business, Detroit News, WWFerguson2)

No new jobs

GM’s move also led economists to again question Bedrock’s lofty job creation claims , which it used to justify public incentives that helped fund Hudson’s.

Bedrock and the city argued in favor of the hundreds of millions of dollars in tax breaks, saying Hudson’s would add revenue to the city through building tenants’ income taxes. None of that promised revenue will be coming from GM employees, however, since they already work in the city. Bedrock promised about 2,000 new non-construction jobs and $43 million in new municipal income taxes. But GM will make up about 850 of those jobs, or less than 43%. The deal will actually cause Michigan to lose revenue because part of employees’ income tax will now be captured by Bedrock instead of going to the state. It also won’t generate much new sales tax revenue because GM’s workers are already spending money downtown.

One expert described the move as “shuffling the deck chairs,” something economists predicted would happen when City Council approved a $60 million tax break in 2022. (BridgeDetroit, Detroit City Council, Deadline Detroit)

Elmo comes to Milwaukee Junction

Detroit Public Television is changing both its name and location. The station, now named Detroit PBS, is planned to make a major move from Wixom back to Detroit . Its parent nonprofit, which was rebranded to Detroit Public Media, bought a vacant warehouse on Piquette Street (paywalled) in Milwaukee Junction for around $10 million last week using proceeds from the sale of its former headquarters.

It plans on turning the property into a “community media campus” as part of a $20 million renovation. The Detroit PBS station will have more studio space at the new headquarters, alongside space for community events, a performance studio and educational facilities. Classical radio station WRCJ, also owned by Detroit Public Media, will also move into the new headquarters. It’s expected to open in 2026. (Detroit News, Crain’s)

Wealth generation (for most)

A new study from the University of Michigan Poverty Solutions initiative found owner-occupied homes in Detroit grew in value by $3.9 billion from 2014-2022. The sizable increase happened across neighborhoods and demographic groups in a “relatively equitable” way, the study says. Black homeowners’ property values grew 80%, and some of the poorest neighborhoods saw the biggest increases in home value .

The study’s authors also subtracted the value of nearly 15,700 homes lost to tax foreclosure: about $535 million. More than two-thirds of those foreclosures took place in the first two years, before the city and Wayne County Treasurer’s Office started taking measures to bring down foreclosures through payment plans and reductions in tax assessments.

Many of those owners might have been able to hold on to their homes had these measures been enacted sooner and realized the hundreds of millions of dollars in gains from rising property values. (University of Michigan, Freep)

Development news quick-hitters

Here are a few more details about Hudson’s from this past week: All 45 floors of the tower’s residential component will be produced by Edition Hotels , the luxury hotel brand of Marriott International. That includes the city’s first five-star hotel and 97 condos that will sell for between $550,000 to more than $3 million . Those parts of the building are all at least three years out from completion (paywalled). (MLive, Freep, Crain’s)

City Council approved $142 million in tax breaks for a proposed riverfront hotel and praised developer Sterling Group for a community benefits package that effectively addressed community needs. (BridgeDetroit)

Tenants, organizers and two City Councilmembers gathered last week to demand more units and better conditions for older adults renting in Detroit . Speakers described widespread safety and health concerns and the need for more action in enforcement and funding from the city. (BridgeDetroit)

Homeowners who have mortgages with fixed interest rates several points below what’s available now are sitting on their homes in huge numbers . Even if they want to move, it doesn’t make financial sense for them to do it, resulting in a “nationwide lock-in effect” that’s kept housing inventory at historic lows. (New York Times)

Outlier Media · The Dirt: GM and Bedrock play the downtown shell game