Quicken Loans Inc. founder Dan Gilbert aims to woo top technology firms to the four massive downtown Detroit developments that were awarded a $618 million tax incentive package this week.
“We want the kind of office space that leading tech companies would want to be in,” said Jared Fleisher, a Quicken Loans Inc. vice president of government affairs and economic development, in a Wednesday interview.
The priority is to bring new firms to Detroit – particularly tech firms, Fleisher said.
On Tuesday, a state economic agency approved a $618 million tax incentive package that will go toward $2.2 billion in developments: creating a new 800-foot skyscraper on a block of Woodward that once housed the famed J.L. Hudson store; develop three acres of mainly vacant space on the Monroe Block; renovate the equivalent of seven football fields of interior space at the long-dormant Book Tower and Building on Washington Boulevard; and add an 11-story annex to the One Campus Martius building.
The tax money will be applied to the construction of the four projects. All are properties owned by an entity linked to Gilbert, founder of Quicken Loans and Bedrock Detroit, which controls more than 90 downtown area properties.
Some of the office space in the new Hudson and Monroe Block buildings will have “big, open floor plates,” which is the kind of design tech firms favor, Fleisher said.
The Hudson site development is expected to have 263,000 square feet of office space; 168,000 square feet of event and conference space; 93,000 square feet of exhibit space; 103,000 square feet of retail and restaurant space; and 330 residential units, according to city documents.
Plans for the Monroe Blocks include a 35-story office tower and 482 residential units, plus 169,000 square feet of retail. The office tower will have 814,000 square feet.
The Book Tower and Book Building will have 106,000 square feet of office space; 50,000 square feet of conference and event space; 29,000 square feet of first-floor retail; a 200-room hotel and 95 residential units.
“At the Book, we are working with set floor plate,” Fleisher said, referring to the layout of the historic builldings. Yet, Bedrock still has its “eye toward” high tech firms.
The addition to the One Campus Martius building will have 130,000 square feet of office space.
Given that the developments just received final approval for the tax incentives package, it was too soon to secure tenants for the projects, Fleisher said. “We have a lot of irons in the fire, but nothing is firm,” he said.
The tax incentives are intended to make southeast Michigan “more competitive” in its ability to attract new business, RJ Wolney, vice president of finance for Bedrock, said during a media conference call Tuesday. Gilbert led the city’s recent attempt to convince Amazon to build its second headquarters in Detroit. The city didn’t make the finalist list.
The incentives are intended to help fill the funding gap of building such projects that can’t be made up with current rents for downtown commercial projects, Wolney said.
“Rents have a long way to go” in Detroit, Wolney said. Bedrock is aiming to charge a rent “in the high 30s and low 40s per square foot” at the developments, he said. The average rent for “Class A” office space downtown is currently $23.69 per square foot, according to the most recent report by the commercial real estate firm JLL.
The office rents that Bedrock is aspiring to are about what prime office space rents for in downtown Ann Arbor and Birmingham, according to data by several commercial real estate firm.
“We are talking about trophy office space, really,” said Harrison West, a research analyst with the commercial real estate firm JLL. “The rent prices that Bedrock quoted would put Detroit on the level of a Columbus, Ohio and Cleveland.”