Dan Gilbert buys Cadillac Tower

Dan Gilbert has returned to a familiar playbook and purchased the Cadillac Tower skyscraper on Cadillac Square downtown.

After amassing a Detroit real estate portfolio by acquiring down-on-their-luck mid- and high-rise buildings on the cheap in Detroit’s central core early last decade like the First National Building, Dime Building (now Chrysler House), 1001 Woodward and Chase Tower, among others, Gilbert completed the purchase of the largely vacant 40-story office building at 65 Cadillac Square on Tuesday.

The purchase price was not disclosed, although a source familiar with the matter said it was approximately $36 million.
The purchase also marks what is arguably his most significant downtown real estate acquisition since the March 2015 purchase of what was, at the time, One Detroit Center and its parking garage for $100 million.

The Rocket Companies Inc. (NYSE: RKT) billionaire’s significant real estate acquisitions in the last year or so have been outside the city core, spending no less than $28.5 million on the Stroh family portfolio of east Detroit riverfront property earlier this year, as well as $38.5 million on the former Sakthi Automotive Group USA Inc. property in southwest Detroit in September 2020. His last major high-rise purchase was the 390,000-square-foot Buhl Building and its parking deck on Griswold Street as part of a $38.5 million deal in December 2017.

Kofi Bonner, CEO of Gilbert’s Detroit-based Bedrock LLC real estate development, ownership, management and leasing company, said in a statement: “I’ve long thought that under the right circumstances, given the strategic location of the Cadillac Tower within the downtown core and adjacent to our Monroe site, it would make sense for this property to become part of Bedrock’s continued commitment to making downtown a premier destination.”

Prior owner Zaid Elia, developer and restaurateur, paid just $24 million for the sparsely occupied 425,000-square-foot building, or about $56.47 per square foot.

Elia, the founder and CEO of Birmingham-based The Elia Group, said in a statement:

“When we acquired Cadillac Tower, we knew it would play an important role in the future trajectory of downtown Detroit due to its rich history and prominent location adjacent to Campus Martius Park. We are proud to have successfully navigated this project through a challenging global pandemic, while still delivering a phenomenal investment return … The redevelopment of Cadillac Tower by Bedrock will continue to spur future development in the surrounding central business district of Detroit and benefit the Elia Group’s other downtown projects.”

Elia said three years ago when he bought it that he has had studies done on a potential hotel/apartment redevelopment and it could accommodate up to 305 hotel rooms, a restaurant, lounge, banquet space and 160-180 apartments.

Within four months of buying the building, however, Elia put it up for sale.

Real estate experts have said Cadillac Tower makes more sense for hotel or apartments, or both, rather than office space because of the small floorplates, although that was prior to the COVID-19 pandemic bludgeoned the hospitality industry. At 40 stories but with only about 425,000 square feet, that puts the floors at only about 10,600 square feet each. That’s smaller than many prominent office users prefer because larger floorplates of 20,000 square feet or more allow them to take large blocks of space without being spread out across many floors.

In addition, there is also no hotel or large chunks of residential space that close to Campus Martius, leading to the long-held speculation that Cadillac Tower is an ideal redevelopment into those uses under the right ownership group.

Cadillac Tower, built in 1927 by John Barlum and designed by Bonnah & Chaffee, has had a turbulent ownership history this century.

Read More:Dan Gilbert buys Cadillac Tower

2021-11-30 22:20:35

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