John Gallagher

Detroit Free Press

Dan Gilbert's next big bang in downtown Detroit is ambitious new construction near Campus Martius that would feature two gleaming high-rise towers contingent on state lawmaker approval of a new tax incentive plan meant to spark development of skyline-changing projects across Michigan.

The new vertical construction and multimillion-dollar incentives strategy is a departure from Gilbert's usual practice over a decade-long Detroit development spree. Gilbert's Bedrock real estate arm has mostly used private resources to purchase and renovate abandoned downtown buildings and then leased the restored spaces to other businesses or moved Gilbert-owned companies inside. Bedrock now owns or controls more than 80 properties in the downtown Detroit area.

This proposed project, which calls for a 20-story office tower and 16-story residential tower on the Monroe Block, would cost "substantially more than $100 million" and involve transfer of land to Bedrock that is owned by either the City of Detroit or the Downtown Development Authority.

Steve Rosenthal, a lead principal at Bedrock real estate who heads development work, said the plan would be scaled back if the new incentive legislation is not passed into law.

“To do these types of transformational projects we need economic development tools," he told the Free Press. "We would revisit the site and then respond accordingly. Obviously, we would move forward with something not of this scale.”

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The plan calls for preserving the façade of the National Theatre at 118 Monroe St. but demolishing most of the rest of the structure, which could spark controversy among preservationists and others. Rosenthal said his team was studying different options for the rundown theater, which has been vacant for years. The theater opened in 1911 and was designed by Albert Kahn and Ernest Wilby.

"I think that we recognize the importance and the historic value, and we absolutely envision restoration and preservation of the façade," Rosenthal said. "There’s many different ways in how we can use it."

The Detroit Downtown Development Authority approved the plan Wednesday afternoon, the first of various approvals required between now and early 2017, including approval by Detroit City Council. Construction could begin in 2018.

Under the terms approved by the DDA on Wednesday, Gilbert and his partners would pay $1 for the surface parking lot bordering on Woodward that would house the office tower, $1.5 million for the lot that was once the site of the Bates Garage that would see primarily residential development, and $1.2 million for the National Theatre, reduced by whatever Bedrock spends to preserve the facade, a cost estimated to be about $900,000.



Renderings provided by Bedrock show the 20-story office tower rising on what is now a surface parking lot at Woodward and Monroe directly east of Campus Martius. Further east, a combination of low-rise and a mid-rise residential towers are depicted. In all, at least 250 residential units could be created in the project. The project also includes about 60,000 square feet of retail space, underground parking, and public gathering spaces.

"I think the idea of this transformational project is really to have something that draws people downtown," Rosenthal told reporters after the DDA meeting. "The more the better, right? We're bringing more people downtown whether it be for residential, retail, office space. All these things are drawing people downtown and then creating more jobs."

All the images resulted from a master planning exercise and do not represent a final design concept, since Bedrock has yet to hire an architect for the project. That step and others, including City Council approval and negotiation of a development agreement, are expected to take place during 2017, with construction potentially starting in 2018.

Gilbert's stressing of the importance of new state-sanctioned tax incentives to the Monroe Block project brings to mind his recent dangling of a new soccer stadium surrounded by other development on the site of the stalled Wayne County Jail project. Gilbert has been lobbying in recent years for the county to make that site available for other development and hopes to build a stadium for a new major league soccer franchise on that site.

In perhaps the same way, Bedrock is releasing details of the Monroe Block proposal just in time to be part of the discussion in Lansing as lawmakers deliberate over new tax-increment financing (TIF) and other incentives for major projects.

At a recent appearance at the University of Michigan, Gilbert told his audience that a gap remains in what people are willing to pay and the cost of new construction. He said state-sponsored incentives could help.

“So it’s TIF generated stuff on real estate taxes, potentially sales taxes, and maybe part of the state income – so that’s the kind of things that’s an immediate, net tangible benefit to the state,” he told the UM audience.

In a follow-up interview at that appearance, he added, “Hopefully we’ll have some clarity on (the state incentives). So once we have that, we can make a decision” about his various projects.

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