From Detroit Free Press
DETROIT — Auto parts supplier Visteon Corp. is negotiating to become the lead tenant in a new office tower to rise in downtown Detroit, Mich., on the site of historic Campus Martius near the new Compuware Corp. headquarters.
If the deal, apparently nearing completion, comes to fruition, it would mark another major addition to a downtown that has recently seen completion for Compuware, Campus Martius Park, loft apartments, restaurants and shops.
Tentative plans call for a building of 10 to 15 stories with 250,000 to 300,000 square feet of office space. No cost estimate was available, nor could it be determined when construction might begin.
Word of the project involving Visteon, a financially troubled supplier that just opened its new Visteon Village headquarters campus in Van Buren Township, Mich., leaked out unexpectedly Friday. Detroit Mayor Kwame Kilpatrick hinted Friday morning during the dedication of the new General Motors riverside plaza near the Renaissance Center that a major announcement was coming next week.
Real estate insiders, speaking on condition they not be named, confirmed the deal involved Visteon and a new tower.
Redico, a Southfield, Mich.-based real estate firm, would develop the project. Redico officials could not be reached for comment Friday.
The mayor told a meeting of development professionals earlier this week that the new tenant, whom he did not name, would bring about 600 new jobs downtown, according to one person who was in the meeting. Most such projects also are designed to attract at least one retail tenant and possibly other office tenants, with shops and other services.
Kilpatrick has often tipped off listeners about pending announcements that were later delayed. Some real estate insiders said they weren’t expecting the Visteon announcement until January. But real estate insiders insisted Friday that the deal appears real.
George Jackson, president of the Detroit Economic Growth Corp., who negotiates such deals on behalf of the city, could not be reached for comment Friday.
Presumably the tower would be financed by Redico, which would arrange construction loans along with some incentives from the city, with Visteon paying rent on a long-term lease.
The tower would be built on the old Kennedy Square, between Woodward and Griswold in the heart of downtown, which once was part of Campus Martius, where City Hall stood for nearly a century until it was razed in 1961. The Kennedy site later became an underground garage with a seldom-used park on the surface. Over the past two decades, the location has been the focus of numerous talks in development circles as a possible site for a new building.
Coming after last year’s opening of the Compuware headquarters and the recent openings of Campus Martius Park and various restaurants, shops and other amenities, a new office tower could reinforce the image that Kilpatrick wants to project of a city on the comeback.
“It’s another positive sign for the city,” agreed Steve Morris, an office broker with the Southfield-based firm GVA Strategis. He predicted that the move would be good news for the budding retail and residential markets downtown.
But if the deal would be a boost for downtown, it raises interesting questions. The downtown office market suffers from significant vacancy, and some office brokers and investors said Friday that another new building might add to the overhang of available space.
Then, too, Visteon just this fall has been consolidating its employees from several locations into its new Visteon Village headquarters. With the paint barely dry there, it was unclear why the company would want to commit to yet more new space somewhere else.
Moreover, Visteon, like many automotive firms, faces significant financial challenges. It just announced to its 8,300 white-collar employees it would be offering buyouts by the end of the year.
For the third quarter that ended Sept. 30, Visteon posted a net loss of $1.36 billion, or $10.86 a share, on revenues of $4.15 billion. Suppliers such as Visteon are being squeezed as automakers continue to pare their business.
Visteon has 3,000 employees in its Van Buren Township headquarters and 71,000 worldwide.
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