Fisher, Kahn buildings auctioned for $12.2M

Was it a steal or a risky buy?

Detroit's Fisher Building and the nearby Albert Kahn Building sold Wednesday at auction for $12.2 million, subject to verification. A real estate source identified the buyer as a team that included New York-based HFZ Capital, a major real estate investor in Manhattan, along with an unnamed metro Detroit investor as partner. The name of the winning bidder may not be known for a day or two until the sale is approved by the seller.

While not yet identified, the local investor is not Dan Gilbert, whose real estate arm has purchased many of the city's most prominent buildings.

If nothing else, HFZ Capital Group appears to have deep pockets. Founded in 2005, the investment firm is one of the most prolific developer of luxury residential condominiums in Manhattan. The company is managing and developing more than 5 million square feet of Manhattan real estate and is bringing nearly 2,000 residential units to market.

Both buildings last sold for about $31 million in 2001. If a winning bid of $12.2 million seems like a drastic comedown, remember that the Great Recession and real estate crash saw prices for real estate assets plummet, and many are yet to fully recover. And the need to invest substantially in upgrades in the two buildings in Detroit's New Center area to keep them competitive may also have held down bidding.

Some real estate insiders said those needed upgrades could run tens of millions of dollars.

Barry Swatsenbarg, a broker that represented the seller, said, "It needs some love, so $12.2 million is definitely a good number."

But Swatsenbarg said that multiple bidders had taken part in the auction, with interest spurred by the recent resurgences of Detroit's Greater Downtown. "There was definitely a ton of interest," he said.

And certainly Detroit is ready for a big-time win in the New Center area. Indeed, in the recent past, led by Gilbert's Quicken Loans and Rock Ventures family of companies, many of downtown's half-empty skyscrapers have filled up with new tenants and rental rates for office space have risen. So the buyer of the Fisher and Kahn building may have made a smart bet on Detroit's future.

It was too early to say what the new owners may do with the pair of buildings, but given HFZ Capital's track record of developing condominiums in New York, a mixed-use project featuring residential, retail and office would not be surprising at the Fisher.

The online auction ended shortly after 1 p.m. Wednesday following a flurry of last-minute bids that added time to the countdown clock.

The online-only bidding at the website auction.com had opened Monday morning at $3.5 million. The reserve price, or minimum that the seller would accept, was met at $8.4 million Wednesday about an hour before the auction closed.

In that final hour, about 25 bids drove the price up to $12.2 million.

The winner gets the 29-story Fisher Building itself, a vertical Art Deco masterpiece, and the nearby 10-story Albert Kahn Building, which originally opened in 1931 as the New Center Building.

Both buildings were designed by legendary architect Albert Kahn. Together, they encompass 776,502 square feet of rentable area and 2,000-some parking spaces.

And unlike many older Detroit buildings that go to auction, both still house rent-paying tenants.

The Southfield-based Farbman Group real estate firm bought the buildings in 2001 from TrizecHahn for $31 million, and eventually decided to stop making loan payments. It lost the properties to its lender earlier this year.

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com.

Fisher Building

Located in New Center

Opened in 1928

Architect: Albert Kahn

Height: 444 feet, not counting tower (29 stories)

Tower was originally covered in gold-leaf faced tiles

Gold tiles covered with asphalt material during WWII, later replaced with green terra-cotta tile.

Albert Kahn Building

Opened:1931

Architect: Albert Kahn

Height: 168 feet (10 stories)