Long road ahead toward Packard Plant site redevelopment

Another marker was hit in Detroit’s long-running quest to demolish the Packard Plant on the east side.

But don’t get your hopes up for something new to rise in its place quickly. Getting a development out of the ground there will be a challenging process complicated by a host of factors.

But rst things rst: e city said Tuesday that it has started demolition on the Packard Plant property it owns at 1539 E. Grand Blvd., across from the Fernando Palazuelo-owned chunk of the massive, historic former auto factory.

LaJuan Counts, the director of the city’s demolition department, said Tuesday morning while talking to reporters outside the building as crews from Carleton-based Homrich Inc. were tearing it down, that demolition — minus the facade, which is expected to be saved — should be complete by March.

Eventually the city envisions razing virtually all of the plant that has been a hulking symbol of Detroit’s decline, and a huge portion of which Palazuelo purchased in a Wayne County tax-foreclosure auction in 2014 for just $405,000. In all, he picked up dozens of parcels totaling some 3.5 million square feet, including the administration building on Grand Boulevard.

Tearing the plant down started in September, when Mayor Mike Duggan and other o cials kicked o the demolition of a Palazuelo-owned building at 6199 Concord St., the rst Packard property Palazuelo owned to come down.

It was a start. And Tuesday’s an- nouncement is another. e property is at 631 Orleans St. in the city’s Lafayette Park neighborhood. It has 92 units with 69 one-bedrooms averaging 650 square feet with an average asking rent of $1,195 per month; and 23 two-bedroom units averaging 900 square feet with an average asking rent of $1,495 per month, according to CoStar Group Inc., a Washington, D.C.-based real estate information service.

“Central Park Apartments is a great asset in a great Detroit neighborhood,” Justin Golden, co-founder of Greatwater, said in an email. “The building is in good shape and we intend to continue maintaining it at a high standard for its residents. We are excited about all the development happening in and around Lafayette Park including the I-375 project and riverfront investments.”

Counts ere’s still a long ways to go before the site’s 40 acres or so — bifurcated by East Grand Boulevard — become ... well, something else, whatever that may be.

Developers will have a host of issues to contend with.

First, the boulevard itself represents a big barrier toward redevelopment, with about half of the property north and half of the property south. So rather than a contiguous 40 acres, you’re dealing with 20 acres or so on each side — making it trickier from a developer perspective.

Secondly, as I have noted before, Palazuelo has pretty deftly kept control of some key parts of the property even though he surrendered many to foreclosure last year under the weight of hundreds of thousands in unpaid taxes and Detroit Water and Sewerage Department bills.

So ownership of the plant itself also complicates the matter ... at least for the time being.

But Charles Raimi, Detroit deputy corporation counsel, said in an email on Tuesday that the city is moving on making Palazuelo pay for demolition costs it has incurred tearing down 6199 Concord; if Palazuelo doesn’t pay those, the city will pursue taking title to other Packard Plant properties he still owns.

And one expert pointed to demolition and cleanup costs also being key challenges (the city received $12 million from the state for future Packard Plant demolition, so that certainly helps).

Couple all those with what that expert described as a somewhat funky, narrow site shape north of Grand Boulevard bounded by Concord to the east and railroad tracks to the west and you’re left with a host of issues that still need to be sorted through.

In addition, the ultimate question of what ends up at the site will be key.

For years, Palazuelo had oated a quasi-Bohemian, eclectic mix of uses at the site — ranging from apartments to light industrial, art galleries to breweries and o ce space — but in the last couple years pivoted his vision to what real estate observers have long said was the site’s optimal use: industrial and warehouse space.

We’ll see if that’s the ultimate use that materializes — whenever something does.

Central Park Apartments sells for $11.6 million

Detroit-based Greatwater Opportunity Capital has purchased the Central Park Apartments for $11.6 million.

e sale, which nalized late last year, was brokered by the South eld o ce of Berkadia.

e previous owner, an entity called Central Park Detroit Holdings LLC, paid $6.2 million for the property in March 2017, according to Detroit land records.

“Central Park will bene t greatly in this situation as the buyer plans to continue the initial improvement plan started by the seller prior to the pandemic,” Kevin Dillon, senior managing director of investment sales for Berkadia, said. “ e property is poised for property and unit interior upgrades creating an outstanding living experience for the residents. It was an excellent experience working with both the buyer and seller. is was a strategic acquisition for Greatwater as they continue to add to their Detroit holdings.”

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

Elliott President, Bank of America Detroit