John Gallagher

Detroit Free Press

The sale of a parking deck next to the Renaissance Center is expected to close this month for $55 million — more than triple its previously estimated market value and the latest evidence of downtown Detroit's red-hot real estate market.

The buyer, MVP REIT of San Diego, owns a portfolio of parking lots and garages around the nation. REIT reported the purchase in a recent filing with the U.S. Securities and Exchange Commission. The property is known as the Center Parking Garage at 414 Renaissance Drive W. The structure is situated between the RenCen and Hart Plaza.

The new owners are expected to continue to operate the garage as a parking facility. An official for MVP REIT could not be reached for comment Thursday.

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Steve Morris, managing partner of the Farmington Hills-based firm Axis Advisor real estate firm, said the hefty purchase price reflects the growing popularity of downtown as a business center with firms including Quicken Loans and Blue Cross Blue Shield of Michigan bringing a large number of staffers downtown in recent years. That puts a premium on the limited supply of parking downtown.

“There are thousands of additional people working in the city that weren't there before. Parking is tight,” Morris said. "This (the sale) is emblematic of companies from out of town reaching to be involved in the city and knowing they will easily be able to raise the daily rates based on the strong market and the lack of supply.”

The value of downtown Detroit real estate languished for many years during the city's decline, with office vacancy rates reaching near 30% and office rents among the lowest of large metro areas in the U.S. But as multiple companies, including Ally Financial and Adient, snapped up newly popular downtown sites, office vacancies have dropped to about 11%, and residential apartment rental rates have roughly doubled in a few short years.

With the economy expanding and automakers reporting record sales of vehicles in 2016, the popularity of downtown is likely to continue, and with it, the rise in real estate values. For that reason, paying a top-dollar price for a garage near the Renaissance Center represents a bet on the future.

Built in 1978, the 1,275-space garage leases parking to General Motors' employees in the RenCen as well as to daily visitors. It stands seven stories tall and measures 382,470 square feet.

The current owners who are selling are a group of local investors including Bloomfield Hills-based attorneys Lawrence Jackier and Alan Ackerman.

City of Detroit 2016 tax information shows the garage has had an assessed value of $7.7 million, which translates into roughly half the estimated market value. That would indicate the buyers are pay significantly more than the marketplace recently thought the garage was worth.

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.