Crain's Detroit Business, April 1, 2024

Breaking ground in a ‘no-woman’s land’

Jill Ferrari is making space in the male-dominated eld of real estate development

By Kirk Pinho

When Michigan developer Jill Ferrari’s mother, Patty, was in her last days, after so many close calls with what could have been her last days, the two of them would spend hours threading together elements of a story about a dream vacation they would take.

Hospice is not generally a place for grand aspirations but here came something of one anyway. ey talked about where they would go, what they would drive and wear, the interesting people they would meet and see.

Ultimately, after more than a quarter-century of health scares, Patty, 79, would ultimately “lay down the sword” in 2021, as her obituary says.

See FERRARI on Page 16

As GM charges forward, suppliers weigh EV risks

Automaker

is calling on parts manufacturers to invest in unproven products

By Kurt Nagl

As General Motors Co. plows nearly $9 billion into making electric trucks and SUVs in Michigan, the automaker is calling on parts suppliers to invest alongside them in unproven products.

Doing so means devoting capital to delayed programs with volumes more unpre-

dictable than ever. Yet failing to make that leap could mean losing GM’s business and an important foothold in EVs.

Auto supplier executives must choose carefully in an industry transition fraught with risk, experts say. e risk also applies to parts makers for Ford Motor Co., Stellantis NV and EV manufacturers across the board, but GM’s harder charge into EVs presents a unique dilemma for suppliers.

It is playing out in a big way in Southeast Michigan, where GM is making some of the largest investments in

See EVS on Page 15

NFL DRAFT

Commercial real estate loans a dilemma for banks

Some in Michigan have sunk more than half of their lending into the risky sector

By Kirk Pinho and Anna Fifelski

Commercial o ce buildings vacated by the disruptions of the COVID-19 pandemic are now a predicament for the banks that are carrying their loans.

In Michigan, some banks have sunk more than half of their lending into this risky sector.

As the city builds on the Lions’ momentum, the draft payout may be more than nancial.

PAGE 8

“Two things make these commercial real estate loans scary: one is we’re not enjoying as many people going back to work in commercial real estate locations as we had expected,” said Erik Gordon, a clinical assistant professor at the University of Michigan Ross School of Business. “We’re through COVID, but lots of people are still working from home. ey’re not going back to o ce buildings. So there’s a big swath of commercial real estate where we have very high vacancy rates.”

See BANKS on Page 12

THE CONVERSATION

Brad Wardell founded what’s now Michigan’s biggest software and video game rm.

PAGE 18

TriMas board chairman retiring

By Kurt Nagl

Sam Valenti, credited with engineering the formation of TriMas Corp., is retiring as chairman of the company board after more than 20 years.

e board of directors for the Bloom eld Hillsbased manufacturer selected Herbert Parker to succeed Valenti in the role, e ective in May, the company announced March 20.

strategic acquisitions that would later become TriMas, launching an IPO in 1989.

“On behalf of our entire organization, I extend heartfelt appreciation to Sam for his decades of exemplary leadership, collaboration with our team and signi cant contributions to the community,” TriMas President and CEO omas Amato said in a news release.

Valenti, a Michigan venture capital virtuoso, said the timing was right to step down from the role he has held since 2002. At 78, his retirement from the board frees him up for other pursuits, namely his family investment o ce and foundation.

“ is was an honorable conclusion of this magni cent run,” Valenti told Crain’s. “ is little company is one of my pride and joys. It’s just something that I’m really proud of.”

TriMas, whose largest segment is packaging, has grown to nearly $900 million in annual revenue. e company dates back to 1986 when Masco Corp., where Valenti spent 40 years in various leadership roles, and Metaldyne predecessor MascoTech joined up for

Valenti said he has con dence in Amato and the future of the company and that his successor to the board chair position brings a wealth of management experience. Parker, 65, who has been on the board since 2015, formerly served as CFO at car tech and audio giant Harman International.

ter he steps down as chair. He continues to serve on the board of Detroit-based auto supplier American Axle & Manufacturing, as chairman of the Business Leaders for Michigan Renaissance Venture Capital Fund and as a senior adviser for Auxo Investment Partners.

He plans to devote his time mainly to Valenti Capital and his family foundation.

“I’m going to fund it big, and we’re going to be more active,” he said. “Now that I’m not chairman of a public company, I feel free to fund the family o ce and fund the family foundation, so that’s directionally where I want to go.”

By Anna Fifelski

Detroit-headquartered Ally Financial Inc. announced Michael Rhodes will be taking over as CEO e ective April 29.

Rhodes replaces former CEO Jeffrey Brown, who stepped down at the end of January 2024 to take a role as president of Hendrick Automotive Group.

to the mission of any organization. Indeed, his passion for serving both customers and employees makes him an unquestionable match to lead Ally.”

Rhodes recently served as the CEO of Illinois-based Discover Financial Services and was a member of the company’s board of directors. He additionally held the role of president of Discover Bank and sat on the bank’s board of directors.

“This little company is one of my pride and joys.”

Sam Valenti, TriMas chairman

Amid the change in board roles, TriMas is also evolving its business. e company is looking to get out of the oil and gas end market as it looks to boost pro t margins. Executives told investment analysts recently that they plan to sell Arrow Engine, a Tulsa, Okla.-based producer of single- and multi-cylinder engines for oil well pumpjacks, generators and other machines.

Valenti will stay plenty busy af-

Renowned for his involvement in various key business deals in Michigan, Valenti said he doesn’t have much time to re ect on the awards and accolades, which are voluminous, including a twotime member of the Crain’s Detroit class of Newsmakers of the Year, in 2007 and 2016.

“It’s a weird kind of thing to start so young and right now still be going,” he said. “I like making deals.”

Doug Timmerman, president of Dealer Financial Services, has been serving as interim CEO since Brown’s departure.

“After an exhaustive search process, the Board has chosen Michael to lead Ally into the next stage of its evolution. Our trust is grounded in his versatile consumer banking experience, his focus on using data and insights to drive decision-making, and his commitment to creating long-term value for our stockholders,” Franklin Hobbs, chairman of the Board of Ally Financial, said in a news release. “Importantly to Ally, Michael understands the power of a motivated workforce. He knows supporting team members and investing in workplace culture is essential

Rhodes also served in multiple roles at New Jersey-based TD Bank, including group head for Canadian Personal Banking and head of Innovation, Technology and Shared Services.

“I have long admired Ally’s transformational approach to digital banking and its leading position in automotive nance. e bank has successfully harnessed the power of technology to create nancial solutions for its customers and communities consistent with its ‘Do It Right’ mantra. I am so pleased the Board has put its trust in me to continue advancing Ally’s strategy alongside the strong leadership team,” Rhodes said in the release.

Sam Valenti

Michael

Retail sales continue to lag, but businesses look to better spring

Jay Davis

A slow winter of sales continues for Michigan retailers, according to the latest Michigan Retailers Association Retail Index.

Around 49% of retailers surveyed reported a decrease in February sales from January, according to the monthly survey released in March. About 42% of retailers said sales increased and 9% reported no change.

e February gure is higher than the 40% of retailers that reported a decrease in sales in February 2023 over January. Still, the new numbers are better than in January when the MRA reported

Stellantis cuts about 400 salaried employees

Vince Bond Jr., Automotive News

Stellantis said March 22 it is cutting about 2% of its U.S. engineering, technology and software jobs — about 400 people — because of “unprecedented uncertainties and heightened competitive pressures around the world.”

A ected workers were noti ed March 22. e layo s were e ective March 31.

e company con rmed to Crain’s Detroit Business that most of the a ected employees are based in Michigan, but did not give a speci c number.

“Stellantis continues to make the appropriate structural decisions across the enterprise to improve e ciency and optimize our cost structure,” the automaker said in a statement. It said the move resulted from “rigorous organizational reviews.”

Stellantis said the cuts would “better align resources while preserving the critical skills needed to protect our competitive advantage as we remain laser focused on implementing our EV product o ensive and our Dare Forward 2030 strategic plan.”

Employees who are laid o will receive severance and other job transition assistance, the company said.

“ is isn’t going to be the last,” a person briefed on the matter told Automotive News on March 22. “ ey are going to be doing this in waves so they can game the WARN Act.”

e federal Worker Adjustment and Retraining Noti cation Act requires 60-day advance public disclosure whenever companies lay o at least 500 employees within a 30-day period.

Philip Nussel, Nick Bunkley and Kurt Nagl contributed to this report.

that 62% of retailers reported a decrease in sales from December.  e latest gures put the monthly MRA Retail Index at 48 — the same as January. e February 2023 Retail Index was 59.7.

activity. e seasonally adjusted performance index is conducted by the Michigan Retailers Association with the Federal Reserve Bank of Chicago’s Detroit branch.

Around 49% of retailers surveyed reported a decrease in February sales from January.

Michigan Retailers Association Retail Index

e 100-point index provides a snapshot of the state’s overall retail industry. Values above 50 points generally indicate positive

About 55 retailers participated in the February survey, according to MRA spokesperson Andrea Bitely.

MRA President and CEO Bill Hallan said the numbers are typical of the winter months.

“Sales for 2024 have so far been at, hitting the same mark in January and February. e immediate post-holiday season numbers are

typically soft, as weather warms, we are expecting shopping to heat up as well,” Hallan said in a statement. “Retailers have strong levels of product on shelves, and are increasing promotional activities to bring customers into their stores and websites.”

Despite a string of low returns, retailers are optimistic about the coming months.

About 74% of retailers surveyed believe their sales will increase through April. Around 15% expect their sales to take a dip while 11% anticipate no change in their sales. at results in a 67.3 prediction index rating, which is a bump from the previous month’s 63.6.

“Spring and summer vacations are on the horizon for many Michiganians, and with that comes the need for new clothing, shoes and other travel essentials,” Hallan said in the statement. “We encourage folks making those purchases to Buy Nearby to help keep their money in Michigan.”

Michigan retail sales are working their way up but national sales were solid in February.

U.S. retail and food services sales for February were almost $701 billion, according to U.S. Census Bureau gures. at represents a 0.6% rise from January and a 1.5% bump from February 2023.

Amenities drive of ce leasing and rents

When it comes to o ce space, it helps to have all the bells and whistles.

Large buildings with more perks have fared far better than those without over the course of the COVID-19 pandemic, according to a study released last month by Chicago-based brokerage house JLL, which has a downtown Royal Oak local outpost. e pandemic decimated the o ce market not just in Detroit and its suburbs, but around the country.

To wit: JLL found that highly amenitized Class A buildings with 100,000 square feet or more nationwide have had some 23.3 million square feet of net absorption, while Class A buildings without those such amenities lost about 53.4 million square feet of leased space.

Those figures add some ammunition to the claim that users have been embarking on a socalled “flight to quality,” which is office landlord-speak and developer-speak for: Tenants want nice things. And even though they may be downsizing their footprints, they are seeking buildings with amenities that o er a draw to their workers.

Steve Morris, a longtime tenant rep broker who is managing principal of Farmington Hills-based Axis Advisors LLC, said that while ashy amenities won’t necessarily cause an o ce user to move, they can certainly help cement a decision.

“It’s frosting on the cake,” Morris said.

JLL describes a highly amenitized building as one with 10 or more amenities, plus one of a dozen speci c o erings: Roof or sky terrace; courtyard with outdoor seating; a tness center with shower facilities; LEED certi cation; car charging stations; an atrium with reception area; dry cleaning service; food court or food hall; day care; conferencing facility; tness center; food service or restaurant; or banking or convenience store.

And landlords can charge a premium for them, JLL research shows.

For instance, usable outdoor space generates serious rent premiums. A rooftop terrace can command a 5.2% rent premium and a courtyard with outdoor seating can command a 3.5% premium, per JLL research.

Henry Ford Health expects to save $30M with pharmacy warehouse

Automated facility distributes medicines to system’s centers

By Dustin Walsh

A largely unmarked building near Detroit’s New Center neighborhood is covered in anti-climb fencing, wrought iron with pointed spires.

Inside is a warehouse lled with drugs carrying an estimated wholesale value of $12 million. Not cocaine or MDMA or weed, but amoxicillin and prednisone and stool softeners.

e operation is the newly opened Centralized Pharmacy Services Center for Henry Ford Health.

e largely automated facility distributes common nonnarcotic medicines to the system’s ve metro Detroit hospitals and 40-plus ambulatory medical

centers with hundreds of outpatient clinics — and marks the rst health system-owned centralized pharmacy center in the country, said Rox Gatia, vice president of pharmacy for HFH and architect of the center.

“As pharmacy plays a larger and larger role in hospitals, there just isn’t enough pharmacy workforce to go around,” Ga-

tia said. “Formerly, each hospital ordered their own drugs and managed their own distribution, and it was ine cient. is strategy creates a safer, more efcient hub and spoke model.”

Gatia said the system reduces redundancies and is projected to save the health system $30 million in the rst ve years of operations.

Reducing errors and increasing visibility

e center, which is the result of a $16.6 million investment from HFH, operates much like an Amazon ful llment center.

Hospitals and clinics send their drug orders to the center.

e system then sends a tote down the more than 800 feet of conveyors to a workstation that’s coordinated for each health care location.

An employee scans the tote and is shown a list of what drugs are needed. They then fetch the drugs from the labeled shelving; pack the drugs into the tote; and send it down the line. A staff pharmacist gives a final check of the order and the tote is then sealed, labeled and placed on a pallet for shipment.

See

Luxury high-rises could bene t affordable housing

Nick Manes

While a ordable housing remains much needed in Detroit and beyond, a new report underscores the importance of higher-end, market-rate housing. e report, “How new apartments create opportunities for all” released last month by the Federal Reserve Bank of Minneapolis, highlights the “chain” effect that the development of new

higher-end housing plays in the broader market.

Simply put, those new luxury apartments popping up in and around Detroit play a critical role for a ordable housing, both at the time the units are developed and down the line, the report’s authors said.

“While these new units are typically occupied by households on the higher end of the income spectrum, the chain of residential

moves brought about by their construction bene ts many more households,” the report says. “Today’s lower-priced rental housing was often the new, expensive rental housing of yesteryear. And it doesn’t take decades for new apartments to put downward pressure on rents elsewhere in a metropolitan area.”

While city o cials and developers in Detroit have pushed to make a ordable housing a priori-

ty, a handful of fully market-rate developments have also popped up. e city requires developers who obtain public nancing for their projects of at least 20 units to set aside 20% of the units as below market rate for the term of the tax abatement.

But housing projects such as the 500-unit Residences at Water Square high-rise on the west

Rox Gatia, vice president of pharmacy for Henry Ford Health, stands inside the new $16.6 million Centralized Pharmacy Services Center. The largely automated facility, located near Detroit’s New Center Neighborhood, distributes common non-narcotic medicines to the system’s facilities around metro Detroit. | PHOTOS BY

Kirk Pinho

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Don’t forget lessons of Detroit’s credit woes

The city of Detroit got a dose of excellent news recently when Moody’s Investors Services upgraded the city’s bond rating to investment grade.

It is the rst time the city has had an investment-grade rating since 2009 and marks a signi cant milestone in Detroit’s 10-year nancial recovery through bankruptcy.

“ e city’s nancial ratios are robust after a decade of solid nancial performance,” Moody’s said in announcing the action on March 22. “City management has adhered to strong governance practices and Moody’s expectation is that such momentum will continue.”

It is vital to the health of the city and indeed the region and state that Detroit stay the course when it comes to scal responsibility.

Mayor Mike Duggan has not said whether he will seek a fourth term next year. Should he choose to step aside, as many speculate he may, his successor must follow his lead in safeguarding the city treasury.

It’s a long, hard road to earn ratings upgrades. Downgrades can come swiftly — as Detroit knows all too well.

Moody’s did not mention Duggan by name in its announcement of the rating upgrade, but, to be sure, he looms large over this story.

Duggan rst won election in November 2013, four months after Detroit, then under the control of a state-appointed emergency

manager, led for bankruptcy. In the month prior to the ling, the city’s credit rating with Moody’s hit an all-time low.

Duggan took o ce in January 2014 and the city exited bankruptcy in December of that year.

e city’s credit rating has been upgraded 10 times since the low point, including the latest two-notch move, bringing it to investment status. Duggan called a press conference to herald the achievement, and rightfully so.

“Everybody in America is now recognizing the city of Detroit’s nancial comeback,” Duggan said.

Moody’s o ered a positive outlook over the next 12-18 months with the new rating,

saying revenue growth is expected to absorb rising costs and tax values should keep going up. e city’s tax base has doubled over the past ve years, Moody’s said.

e rating agency, meanwhile, was cleareyed about the city’s ongoing headwinds, notably its concentration in auto manufacturing and social challenges such as high unemployment and poverty, and “negative population trends.”

“ e city has an economically sensitive revenue structure and limited ability to raise revenue to comfortably absorb rising expenditures from in ation and pent-up spending demands,” Moody’s said. “Despite those credit pressures, Detroit’s tax base valuation doubled over the past ve

LARRY PEPLIN

years and ongoing development and appreciation of residential values will provide another boost in scal 2025.”

A higher bond rating means Detroit’s debt will be more attractive to investors, lowering the city’s borrowing costs — which is doubly important in our new era of higher interest rates. But, to be clear, while this upgrade — to Baa2 from Ba1 — is very signicant, the city has plenty of room to improve.

e Detroit News reported that Cincinnati and Miami, for example, both have credit ratings that are six steps higher than Detroit’s, while Indianapolis enjoys Moody’s highest credit rating of Aaa, as does Oakland County, Detroit’s neighbor to the north.

e city also has room to improve with the other major rating agencies. Last year, S&P upgraded the city to BB+, one notch below investment grade, while Fitch rates the city as BBB, considered “good credit quality,” but still well below the top.

It’s been a di cult journey since thenancial depths of the bankruptcy and Duggan, with his leadership team and City Council allies, deserves to savor the moment.

Future city leaders will be well-served to study what it took to get this far. We would also urge them to take a page from Duggan’s nancial playbook, understanding that conservative scal stewardship is essential for providing services that residents and businesses need to thrive.

Population council’s report falls short on speci c plans

The report put out in December by the Growing Michigan Together Council received much fanfare. Media stories were voluminous, and legislators rushed to invite council members to share their ndings in public hearings. e report was praised as a “long-term plan of action,” “a set of guiding principles” “a set of actionable recommendations” that are “catalysts for change.”

e council’s report has faded from public view somewhat since then, and Gov. Gretchen Whitmer rarely mentions the report or the council. One of the council’s cochairs even admitted the plan probably won’t grow the population. Is this whole e ort going to turn out to be a dud?

A close reading of the report suggests the answer is yes. e best way to show the inadequacy of the report is to dissect one of its main recommendations. is will require summarizing several pages of the report, but bear with me, as this reveals the slippery way the Growing Michigan Together Council manages to say a lot about a lot of things without saying anything relevant to the state’s population crisis.

A key strategy in the report is to “establish

Michigan as the Innovation Hub of the Midwest and America’s Scaleup State.” Questions like, “What’s an innovation hub?” and “What does a scale-up state do?” might naturally pop to mind. But neither of these terms is de ned in the report, which will make it hard to know if the state succeeds. e report is full of nebulous objectives like these.

e report explains why these strategies are necessary. But in doing so, it just raises more questions. “States with robust innovation ecosystems become magnets for both businesses and talent, driving population growth,” the council says. Fair enough, but which states? And what is a “robust innovation ecosystem?” What types of businesses and talent does it attract? e report provides no other information.

e council notes that 5,600 more college graduates leave Michigan than move here annually. Readers are to infer from this, presumably, that becoming a scale-up state has something to do with migration patterns of recent college graduates. But the report explains nothing more about this. It also says the state’s “low labor force participation rate” harms Michigan’s chance to become

an innovation hub. But again, it never connects the dots on how a higher labor force participation will make Michigan into a scale-up state.

e next section is titled “What we can do,” which sounds promising for readers interested in the policy particulars. ere are two recommendations: “develop an economic growth plan” and “attract and retain young talent,” and each idea has two full pages devoted to it. But both fall well short of giving meaningful information for policymakers.

e closest the report gets to explaining the economic growth plan is to list a handful of “elements … that are ripe for short-term implementation.” ese are, unfortunately, little more than collections of buzzwords and vague catchphrases. For example, the plan should include “strategies that catalyze more regionally driven innovation districts framed by anchor institutions and highwage, high-growth industries.” It should implement “expanded capacity in Michigan’s business incubation and accelerator network to support business scaling.” What any of this means in practice is anyone’s guess. is new economic growth plan must be “bold,” “robust” and “coordinated.” It should use a “customer service approach that removes barriers.” But what counts as bold or robust? Who needs to coordinate?

And which barriers need removing? e report doesn’t say. e plan should also provide “stability” and “predictability” and “have a sustainable governance and funding model.” Sounds good, but the report is silent about how to accomplish these objectives.

Massachusetts, Silicon Valley and Austin have already achieved the growth Michigan seeks, according to the report. ey used “deliberate plans” that allowed them to grow incomes, attract talent and improve quality of life. But all we learn about these other plans is that “public-private partnerships [were] integral to their success.” Surely there’s more to the story than that.

After all this, it is easy to lose sight of the report’s chain of logic — that the purpose of the economic growth plan is to make Michigan into an innovation hub and scale-up state. e report never explains how the economic growth plan will produce that result.

e economic plan was only half of what the council recommended to make Michigan into an innovation hub. e other was to attract and retain young talent. e report is a little more concrete with this recommendation, but it is still insu cient for policymaking purposes.

See VAN BEEK on Page 10

Michael Van Beek is research director for the Midland-based Mackinac Center for Public Policy think tank.

Draft, Lions’ success raise Detroit’s pro le

Hundreds of thousands of visitors will be in town the weekend of the NFL Draft. In addition to nancial bene ts, the attention could change the narrative of how outsiders view the city.

Anna Fifelski

All eyes will be on Detroit for the 2024 NFL Draft from April 25-27 and the city is preparing in big ways.

From installing public art — 20 colossal cleats have set their their stance downtown — to spending millions of dollars on a facelift around the city, expectations — and budgets — are high.

But the biggest payout for Detroit from the NFL Draft may be more than nancial.

After decades of drought for the Detroit Lions, this past December they won their rst divisional title in the NFC North since 1993 and then entered the playo s; sitting one win away from a chance to play in the Super Bowl.

Attention on Detroit was building, both in-person and on a national scale.

As the Detroit Lions' season progressed, hotel occupancy rates increased 10.3% on the weekends that the Lions played at Ford Field, said

Chris Moyer, senior director of communications for Visit Detroit.

During the two playo games at Ford Field, hotel occupancy increased 37.6% compared with the same weekends in January 2023. Moyer said Visit Detroit projected the economic impact of the two playo games as "north of $70 million." Which only includes the city of Detroit, not the metro area which also hosted playorelated events.

Moyer believes the Lions’ success

in the NFL playo s will not only contribute to strong turnout for the NFL Draft, but a changed narrative for how outsiders view the city.

“ e Lions have become America's team,” Moyer said. “And we believe that with the Lions’ success, and 90 million people watching those two playo games and seeing the city of Detroit in a new light, tens of millions of people will watch the Draft and see

See DRAFT on Page 10

“This is going to be an event that people are going to want to say they went to. Whether they go on Thursday night, Friday or Saturday, it is an event that years from now people are gonna say, ‘Oh, I remember what a great time I had at the NFL Draft in Detroit.’ ”

Chris Moyer, senior director of communications for Visit Detroit

DRAFT

the city in a new light: as a place that has incredible vitality; that has businesses that are thriving, and has entrepreneurs and citizens that are part of the heartbeat of American innovation and culture.”

Last year for the NFL Draft, Kansas city saw a total economic impact of $164.3 million, with $108.8 million created in direct spending and $55.5 million in induced/indirect impact, according to a news release by Visit KC, Kansas City’s hospitality sales and marketing organization.

e Kansas City NFL Draft also amassed 54.4 million viewers on television and streaming platforms as well as produced a projected $11.2 million in local taxes and $4.8 million in state taxes, according to data compiled by Visit KC.

Moyer said Visit Detroit won’t be making a projection on the success of the Draft in Detroit, but is con dent that the numerous free events taking place downtown will draw “hundreds of thousands of Detroiters, Metro Detroiters, Michiganders, and visitors from all 50 states and around the world.”

ere’s not much comparison for the amount of visitors Detroit will have for the Draft. Most similarly, Moyer said Detroit saw about 500,000 visitors the weekend of Taylor Swift’s Eras Tour concert at Ford Field in June 2023. e Draft, he anticipates, will have “three or four times” that.

However, any nancial impact

Detroit sees from the NFL Draft will be short-lived, Mark Rosentraub, the Bickner Endowed Professor of Sport Management and director of the  Center for Sports Venues & Real Estate Development at the University of Michigan School of Kinesiology, said. “( e Draft) is a short term, one o event, but it’s so small, it’s not going to account for a lot in terms of the amount of money. It’s a good thing, but it’s not a game changer,” Rosentraub said. “A Draft is a lot of fun, it’s a great, great thing for Detroit. ere’s going to be a small bene t for downtown, but it’s not going to be a dramatic massive event. It’s not the Olympics, it’s not even a Super Bowl, but that doesn’t mean it’s not a good thing.”

Rosentraub estimates that Detroit will see a similar, if not larger, economic impact than Kansas City due to the Detroit Metropolitan area’s economy being larger than Kansas City’s.

Regardless of the short-term economic impact, Rosentraub said there’s a large social bene t to the

city hosting the NFL Draft — from the entertainment to a collective interest from a large group of people.

“I think people almost overromanticize it,” Rosentraub said. “In and of itself, this is a wonderful event. People are going to have a great time. It’s going to be great publicity for the city. And those things should be enjoyed and celebrated, but don’t make it out to be something more than it is. It’s not a massive economic impact.”

Moyer said he hopes the NFL Draft will act as a “springboard” for Detroit to attract more big events, investments, visitors and even residents.

“Detroit has a very strong claim to be the best professional sports city in the United States,” Moyer said. “ is is going to be an event that people are going to want to say they went to. Whether they go on ursday night, Friday or Saturday, it is an event that years from now people are gonna say, ‘Oh, I remember what a great time I had at the NFL Draft in Detroit.’ ”

Detroit unveils 20 colossal cleats for the NFL Draft

Detroit will be decking out the city with giant cleats for the month of April in preparation for the NFL Draft on April 25-27.

e art installation project, a collaboration between City Walls — the city’s mural initiative program — and Spacelab Detroit, a shared o ce and coworking space, is called DCLEATED.

e cleats were fabricated by Detroit-based Prop Art Studios — the artist behind the larger-than-life Lions jersey on the Spirit of Detroit — and clear-coated by Double Jay’s Collision, also based in Detroit. City Walls put out a call for 20 artists to customize the colossal cleats back in December.

At an unveiling event on March 21, artists and their charity partners shared completed versions of their cleat-shaped murals, which were to be installed beginning last week and will be on display for the month of April.

VAN BEEK

From Page 6

“As we prepare to host the NFL Draft, we have the unique opportunity to highlight the incredible talent Detroit artists have in a very grand way,” Harriett Carter, vice president of partnership and services at Visit Detroit, said.

Artists were given budgets of $1,250 for each mural, which included any costs associated with artist’s fees, artist’s assistant costs, artist’s studio costs, materials and supplies, speci ed consultants and community engagement participation, according to the news release.

Detroit City Walls is setting up an online auction that will allow people, public organizations or the nonpro ts to bid on the cleats.

All funds raised through the online auction will be donated to the nonpro t that the cleat artist is partnering with. e auction will go live on April 1 and will conclude following the Draft at an event sponsored by the Detroit Medical Center. e cleats will be taken down at the end of April.

Whether

lose, you've go dential help t

college students get more “exposure to real-world, on-the-job experience.” How this will help create an innovation hub or scale-up state is not explained. e state should also “develop a state-led support service that streamlines processes for employers and immigrants.” How this will help create a hub of innovation is left to the reader’s imagination.

ready to play, relax or make it a night unlike any other, MGM Grand Detroit satisfies any desire.

Michigan can attract talent with “novel incentives” and “targeted marketing.” A few other states already do this, such as Alabama, Maine and West Virginia. e report provides no evidence that these policies grew these states’ populations. Of these three states, only Alabama is particularly healthy, at 15th place nationally in population growth. Meanwhile, the two fastest-growing states — Idaho and Utah, both of which are growing at double-digit rates — are not mentioned at all. at’s an odd omission in a report whose stated purpose was not to create new agencies or promote hip industries but to grow Michigan’s population.

e most detailed policy recommendation in this section is to pay people to live and work in Michigan with taxes taken from the other people living and working in Michigan. One wonders how successful the state can really be if it has to bribe people to be here. A more sustainable and long-term strategy would address why not enough people want to move here in the rst place. e previous section on economic growth plans even warned against short-term, gimmicky strategies like this.

e report also recommends

A nal element of attracting talent, according to the council’s report, is just a matter of public perception. e state should use a “targeted national marketing campaign to shape the perception of Michigan as the Midwest Innovation Hub and America’s Scaleup State.” Maybe it’s not so important that the state become an innovation hub, just that it appear to be one. is is just one of the three strategies listed in the report. e others follow a similar pattern: establish a big but vague goal (“build a lifelong learning system” and “create thriving, resilient communities”) and then recommend a handful of halfbaked and inadequately described policies. e Growing Michigan Together Council implies that its ideas will somehow grow the state’s population, but it provides no supporting evidence and produces few useful recommendations. No wonder policymakers may have already forgotten the council and the report.

Anna Fifelski

As the Detroit Lions’ season progressed, hotel occupancy rates increased 10.3% on the weekends that the team played at Ford Field. | KURT NAGL

One of the 20 larger-than-life football cleats.

Celebrating Crain’s Newsmakers of the Year

Crain’s Detroit Business hosted its annual Newsmakers of the Year luncheon at MGM Grand Detroit on March 21. e event featured a keynote conversation between Crain Communications President and CEO KC Crain and Henry Ford Health President and CEO Bob Riney, Crain’s Newsmaker of the Year for 2023, along with remarks by other honorees. | PHOTOS BY BRETT MOUNTAIN

Crain Communications President and CEO KC Crain (left) interviews Henry Ford Health President and CEO Bob Riney on stage during the Newsmakers of the Year luncheon at MGM Grand Detroit.

Teresa Woodruff, former interim president of Michigan State University and one of Crain’s top newsmakers for 2023, addresses the reception.

Attendees gather for Crain’s Newsmakers of the Year luncheon on March 21 at MGM Grand Detroit.

Henry Ford Health President and CEO

Bob Riney (seated) greets an attendee at Crain’s Newsmaker of the Year luncheon.

Crain Communications President and CEO KC Crain greets the crowd at the Newsmakers of the Year luncheon.

Henry Ford Health Executive Vice President and Chief Financial and Business Development Of cer Robin Damschroder listens to remarks.

BANKS

High vacancy rates may mean that the owner of the building has trouble paying their bills. e other complication, Gordon said, is rising interest rates as loans reset at rates harder for building owners to stomach.

“When you combine higher interest rates and lower occupancy, what you get is less cash coming in because you have empty space,” Gordon said.

But that hasn’t stopped small and mid-sized banks in Michigan from investing billions into the industry. Far from it, in fact.

For the top 20 Michigan-based banks with the highest concentration of commercial real estate or CRE loans, more than $1 out of every $2 they have lent out has gone to borrowers for properties used for retail, o ce, industrial and multifamily space, to name just a few.

at’s more than double the concentration for the top 20 banks in the country overall, topping individual banking giants like JPMorgan Chase & Co. (4.2% of some $3.9 trillion in assets) and Bank of America Corp. (6.2% on $3.2 trillion in assets).

Despite the softness in the o ce sector and stress other larger banks have taken from their exposure to commercial real estate — in particular, New York Community Bancorp Inc. and subsidiary Flagstar Bank NA — that doesn’t necessarily mean those Michigan-based banks are destined for rocky days ahead.

“ e larger banks typically have less CRE exposure because JPMorgan has credit cards and consumer loans and more business exposure,” said Terry McEvoy, a bank analyst with Little Rock, Ark.based nancial services rm Stephens Inc.

“Don’t get freaked out because of a smaller bank’s high concentration in commercial real estate,” McEvoy said. “It’s just, by nature, their business model. When you think about it, community and local banks provide a lot of support to just that — the community. at’s strip malls, restaurants, one- or two-story o ce buildings. Many of those loans are not showing signs of stress and are performing quite well.”

More CRE loans

e top 20 largest banks in the U.S. have a commercial real estate exposure of about 20.4% and about $8.9 trillion in assets, according to data Stephens compiled for Crain’s. In Michigan, locally owned banks have about twice that amount of commercial real estate loans.

Michigan banks with the highest CRE exposures have about $7.9 billion in loans out for those uses, out of $14.8 billion in total loans.

Individual bank exposures vary, ranging from Huron Valley State Bank, based in Milford, with 68.2% of its $232 million in assets down to Honor Bank in Benzie County’s tiny Honor — population: 337 as of 2020 — with 44% of its $377.2 million in assets for CRE.

For the top 20 Michigan banks with the highest commercial real

estate exposure, more than $1 of every $2 loaned out of $14.8 billion in assets was for CRE loans.

e top 10 banks based in Wayne, Oakland, Macomb, Washtenaw and Livingston counties have $8 billion in loans, with nearly 43% tied to commercial real estate.

e state’s most CRE-concentrated lender, Huron Valley State Bank, maintains “pretty consistent” underwriting standards both “in good times and bad times,” said Steve Peacock, executive vice president and senior lender.

“We do prudent loan to values, we deal with customers that we know that have a lot of outside strength, that if there’s some problems that they’d be able to support that,” Peacock said.

Huron Valley also diversi es its lending portfolio, Peacock said, and takes care to stay away from markets experiencing stress — ofce, for example.

“Our outlook is that we stick to our market, territorially, and we still see a lot of opportunity,” Peacock said. “We do a lot of light industrial, we do a lot of local retail, most of it is owner occupied that we work on. And at this point, we probably won’t be as robust as last year, but we don’t see that it’s really a downturn … All things being equal, we look for a fairly steady year this year.”

Pandemic impacts

e commercial real estate market has faced myriad challenges in a host of sectors as the COVID-19 pandemic upended the industry.

Most pointedly, however: o ce space.

e momentum that had been building in metro Detroit throughout much of the 2010s came to a screeching halt with the onset of the global health crisis. e metro Detroit o ce vacancy rate was 14.82% at the end of 2019, according to data compiled by the local o ce of New York City-based brokerage house Newmark. Well o the national rate of 9.41%, but coming o another year of mostly declining quarterly vacancies seen in the lead-up to the shutdown.

As office workers were sent home and buildings were emptied during the pandemic, spaces previously bustling with em -

ployees were suddenly vacant and many landlords were left in the lurch. Today, the vacancy rate is 22.11% in metro Detroit and 13.45% nationally, according to Newmark.

And when building occupancies dropped, so did their values. Banks in some cases — not all — looked at the sector as increasingly risky, and coupled with higher interest rates to combat in ation, o ce loans have become more di cult to come by.

Prudent local lending

Jonathan Gray, president and CEO of Blackstone Inc., said during an address at the NEXUS conference in Orlando, that some failing banks like First Republic ended belly-up because of a “mismatch of assets and liabilities.”

“ ey had 20-year loans and 20-second deposits,” Gray said, according to a Private Debt Investor story.

But local banks by and large have been more prudent in their lending.

Data provided by East Lansing-based Community Bankers of Michigan shows that nonperforming assets — essentially, loans not being paid — are relatively small. Two-thirds (49) Michigan banks report nonperforming assets comprise less than 0.5% of their loan totals, while the rest report they make up 2% or less of their totals.

Joshua Bernard, principal of South eld-based Bernard Financial Group, piggybacked on what Gray said, noting that we “can’t necessarily assume that they all made 20-year loans just because they have a lot of real estate exposure.”

“There are plenty of local community banks and regional banks that made good, appropriately termed and credit-structured loans,” Bernard said. “There are obviously some that did not, and time will tell.”

For local Michigan banks, commercial real estate loans are often for bread-and-butter projects, not splashy high-rise o ce or residential towers.

For example, Craig Johnson, executive vice president and chief lending o cer for Fenton-based e State Bank, said the bank has

writing guidelines we’ll continue to lend money.”

Concerns about commercial real estate lending all circle back to credit quality. Michael Tierney, president and CEO of Community Bankers of Michigan, said credit quality at banks headquartered in Michigan is “very strong.”

“It’s not the value of the real estate that drives whether or not (banks) have a credit issue, it’s the economic viability of the business that you have as a client,” Tierney said. “And the Michigan business category is pretty strong …. Frankly, I’ve been in the business for 47 years and it has never been better than it has been the last couple of years.”

Data from QwickAnalytics State Performance Trends from December 2023 reveals a mixed picture of asset quality. Across all 73 banks in Michigan included in the data, there is about $250 million tied up in nonperforming assets or NPAs.

48 o ce loans totaling about $62 million, for an average of just about $1.3 million. ere have been no workout arrangements needed on its CRE loans, which account for 48.2% of its $1.74 billion in assets.

“What’s really the concerning sector, which are the larger multitenant, non-owner-occupied properties in major metropolitan areas, or in the suburbs of the major metropolitan areas,” Johnson said. “Our exposure in that sector is much smaller. While we do have a couple relationships in multi-tenant, they’re not $30 million or $50 million transactions, or 100,000-squarefoot footprints. ey are much smaller, much more manageable.”

Like all banks, The State Bank is looking to minimize its risk. The State Bank’s policy for a non-owner occupied real estate loan includes 25% equity on the property and a stringent application.

“ ere are certain sectors we’ve never touched: land development, spec housing, we’ve never done that,” Johnson said. “Owner-occupied o ce we would look at, but we’re not looking at any of the non-owner occupied o ce sector at this point in time.”

Contrasting business models

Regional banks and community banks have di erent business models, said Cindy Livesay, executive vice president and chief credit o cer of Bank of Ann Arbor, which is why small and mid-sized banks have a reputation for commercial lending.

Bank of Ann Arbor has 16 locations in Southeast Michigan and a commercial real estate lending mix of 44.8% — a percentage that CEO and President Tim Marshall is comfortable with.

“We stay close to our values. We don’t paint any black box that (says) we’re not going to do this or we’re not going to do that,” Marshall said. “We evaluate each individual opportunity on the merits that they present, and we haven’t closed our doors. We’re not going to close our doors, we’re going to continue to support our clients that operate in this space based on the merits of the project that they present. And if it hits our under-

According to the data, 3%, or $10 million, of nonperforming assets are 90 or more days past due. A higher percentage in this category suggests a higher level of delinquency. Nonaccrual loans sit at 65% or $160 million, indicating a signi cant portion of loans facing repayment challenges.

Fewer failures in Grand Rapids

e “fundamental strength of credit quality in CRE has kept delinquency rates in check,” a Goldman Sachs report from June 2023 said. As a result of more stringent lending practices, credit quality may be stronger now than in the years preceding the Great Recession in 2008.

Mark Augustyn, chief commercial banker and co-founder of Mercantile Bank, said the bank has had to learn to withstand different economic conditions, including the Great Recession and the COVID-19 pandemic. Its current CRE mix sits at 36.9%.

Grand Rapids-headquartered Mercantile has had decades to re ne its loan portfolio, which Augustyn said has shifted due to downturns in the economy, but has also been de ned by the struggles west Michigan communities faced during those periods.

“We formed Mercantile Community Partners, which does construction of low-income tax credit projects, which was something that didn’t exist at that bank, does not exist extensively throughout the market, and it was a need that we saw within the market,” Augustyn said.

Grand Rapids banks, however, have not been impacted the same way banks in other cities have in response to commercial real estate loans failures related to COVID-19 pandemic fallout, Augustyn said.

According to 2023 Census data, Kent County, which houses Grand Rapids, saw an in-migration of 2,434 people between 2022 and 2023. e Grand Rapids-Wyoming-Kentwood Metro Area saw double that at 5,665 new residents.

“San Francisco, New York, Chicago, and these major cities where they saw some ight of people moving out of some of those huge cities, well they’ve been moving to Grand Rapids,” Augustyn said.

Detroit Riverfront have eschewed public nancing and are seeking rents far above what is normally charged in the city.

Detroit Mayor Mike Duggan has said such projects are needed.

“ is apartment building is a high-end development and it really is for people who are paying a very large amount of rent,” Duggan said of the Water Square project — which sits on the former site of the Joe Louis Arena — at a February opening. “And the city that we want to build is a city where there's room for people of all incomes. ere should be residences for people who are high income and there needs to be residences for those of lower income.”

e report from the Minneapolis Fed says that for every 100 new market-rate units that open, the development of those units leads to 70 new vacancies in lower-income neighborhoods.

“ is process of new construction encouraging mobility across the income spectrum is one piece of a phenomenon known as ltering,” reads the report. “ eories connecting ltering to housing a ordability are generally accepted among economists. For example, economic theory predicts that housing units should be relatively more a ordable when the housing supply increases, as it does when new apartments open.”

e ndings included in the

Minneapolis Fed report are in line with a 2019 study done by the Kalamazoo-based W.E. Upjohn Institute for Employment Research, as Crain’s reported at the time.

e average rent for a one-bedroom apartment in Detroit stands at just less than $1,300 per month, down 14% from a year ago, according to Rent.com. Average rent for a studio apartment is about $1,100, up 10% from one year ago. Vacancies are minimal, with occupancy at about 94.5% in the region, according to a third-quarter market report last year from real estate rm Berkadia.

Data from the city's Housing and Revitalization Department show that Detroit housing ocials and a cadre of developers, since 2018, have created more than 2,000 housing units for a variety of income levels and "preserved" more than 9,500. ose units are priced at below-market rate levels of between 30% and 80% of the area median income, according to city data shared with Crain's late last year for a previous report.

at means a single person would need to earn between $19,890 and $53,040 to qualify for one of those units, according to state data.

e AMI in Detroit, however, makes for a fraught topic because those gures factor in higher incomes from around Southeast Michigan and therefore skew that gure upward for city residents, as Crain's has previously reported.

AMENITIES

From Page 4

And not all amenities, even similar ones, are equal. While a full-service tness center with shower facilities can generate a 2.9% premium, a simple tness center without those shower facilities only generates 0.5%. Similarly, a simple restaurant or generic food service only bolsters rent by 0.1%, but something more like a food hall or food court can generate a 1.4% rent premium, JLL says. JLL isn’t the only one to look at this issue. Cushman & Wake eld, also based in Chicago, found in a pandemic-era study tenants were wanting space with more amenities even prior to COVID-19. In 2018 and 2019, 90% of the o ce

WAREHOUSE

From Page 4

Shipments occur once per day, ve days a week by a contractor.

e totes are hand-delivered to the locations, which are labeled for exactly where to go; such as Henry Ford’s Detroit hospital, fourth oor, operating room one.

To further reduce error and improve safety, the totes are color-coordinated for the type of drugs. Chemotherapy drugs go in a red tote; hazardous materials go in a yellow tote. All others go in a gray tote.

e center also handles all of the cold storage vaccines for the health system.

Prior to opening the center, each individual hospital handled its drug inventory with manual counting of stocked medicines, meaning there was no systemwide visibility into its drug stocks. Standardization and coordinated processes didn’t exist, Gatia said.

Automation at work

e new system is also largely automated, eliminating hand counting medicines, with approximately 90% of the orders coming into the center originating from the automated system instead of human. For instance, if one of the 400 Pyxis MedStation cabinets, where nurses and doctors get drugs on the hospital oor, is running low on Moxilin antibiotic, the system automatically sends an order to the center.

e center also standardizes the drugs themselves, ordering any particular drug from the same drugmaker, ensuring the

product looks the same across the system to reduce the chance of human error for nurses and doctors.

Since its opening on Oct. 9 last year, the center has processed more than 15,000 orders, Gatia said.

And the drugs that leave the center are ready to use. If a non-sterile drug requires mixing or formulating, it’s done at the center, reducing the opportunity for human error in the high-pressure hospital environment, Gatia said. e center has had zero errors since opening.

Gatia said the automation means pharmacists and nurses and other clinical employees don’t have to spend time worrying about the medicine supply chain and can be redeployed to patient care.

He couldn’t estimate how many fewer employees are involved in the center versus when the system had disparate pharmacy operations, but the center employs fewer than 50 employees.

“Patient care was ultimately our catalyst for transforming the pharmacy practice,” Gatia said.

A platform for expansion of pharmacy services

HFH isn’t alone in consolidating pharmacy operations.

In September last year, Baptist Health, a nine-hospital system based in Louisville, announced its plan to construct a $40 million centralized pharmacy center.

e 90,000-square-foot center is projected to open in June with the capabilities of lling 14,000 pharmacy orders per day. Gatia said HFH’s center can handle up to 15,000 orders per day.

Baptist Health’s center is expected to employ 200, according to e Oldham Era.

HFH’s center is only in phase one of operations with plans to expand in the near future.

e next phase involves expanding into sterile compounding and distribution to its retail pharmacies in the region, Gatia said.

e system has another 45,000 square feet in the building to expand.

Gatia said the center will also serve as a training ground for the pharmacists of the future with a planned residency program at the center.

absorption was in Class A buildings which tend to have splashier amenities, per the Cushman & Wake eld study.   Newer buildings overall could expect a 16.4% rent premium, with older buildings renting for $51.84 per square foot per year, and newer buildings post 2007 rented for $60.34 in 2018-19. In 2020-21, that premium more than doubled to 35.2%, from $46.82 per square foot per year for old buildings $63.27.

In the wake of a still-struggling o ce market attempting to heal from the wounds caused by the COVID-19 pandemic, building owners are pulling out all the stops.

“Landlords are doing whatever they can” to lure tenants, Morris said.

The Hudson’s Site tower in downtown Detroit, where Bedrock is planning nearly 100 condo units | DEAN STORM/CRAIN COMMUNICATIONS

Medications destined for a hospital inside the new $16.6 million Centralized Pharmacy Services Center for Henry Ford Health System | NIC ANTAYA

CONSTRUCTION COMPANIES CRAIN’S LIST

ResearchedbySonyaD.Hill:shill@crain.com|ThislistofgeneralcontractorsisacompilationofthelargestsuchcompaniesinWayne,Oakland,Macomb,WashtenawandLivingstoncounties.Itisnot acompletelistingbutthemostcomprehensiveavailable.Crain'sestimatesarebasedonindustryanalysesandbenchmarks,newsreportsandawiderangeofothersources.Unlessotherwisenoted, information was

with

with the address and top executive of their main Southeast Michigan of ce. NA = not available.

Want the full Excel version of this list — and every list? Become a Data Member: CrainsDetroit.com/data

company history: $4 billion to electrify Orion Assembly, $2.6 billion for a new Ultium battery plant near Lansing and $2.2 billion for an EV conversion of Factory Zero in Detroit and Hamtramck.

Just half a year ago, the supply base was forming up around those plants according to plan, with suppliers announcing multi-million-dollar investments in factories to feed parts to GM. at all changed when reality hit.

Factory Zero, where the Hummer EV pickup and SUV as well as the Silverado EV are made, has been plagued by production trouble and res. GM announced in October it would delay production until late 2025 at Orion Assembly — where it said it would build the Silverado EV and GMC Sierra EV — “to better manage capital investment, while aligning with evolving EV growth.”

GM’s change of course to x production issues and handle slower than expected EV growth had a ripple e ect on its suppliers. By the end of last year, they were all rethinking investments. Some projects halted, and others have moved forward with uncertainty.

“Pretty much every supplier has invested some form of capital in some EV program,” said Steven Wybo, senior managing director at Birmingham-based Riveron Consulting LLC. “But for Tesla, every single EV product is underperforming right now — and even some Teslas.”

e mounting risk of EV programs has compelled some suppliers to request volume guarantees or other protections in customer contracts. ey are rarely granted, and if suppliers don’t like it, automakers have plenty of other places to take the business, said Mark Wakeeld, partner and managing director at global consulting rm AlixPartners.

“If you quote it in a way that protects against some of that variation or uncertainty of volumes, you’re generally going to be higher priced and then not win the business,” Wake eld said. “It’s a really tough situation to be in as a supplier.”

GM declined to discuss its business with suppliers or detail conversations taking place around risk mitigation, but the company did con rm it is engaging with suppliers on the issues.

“As a result of Orion’s retiming, suppliers who provide parts to the plant will need to adjust their planned start of production,” spokesman Kevin Kelly said in an email to Crain’s. “We are in regular dialogue with our suppliers on issues like these and will continue to share updates with them as needed.”

Contract with GM

Piston Automotive, owned by former Detroit Pistons guard turned auto supply titan Vinnie Johnson, has been contracted by

GM to operate a value-added assembly plant on the former Palace of Auburn Hills site, which would create nearly 1,000 jobs, sources con rmed to Crain’s a few weeks ago.

at project has been years and many iterations in the making. After the arena was imploded in 2020, the site was initially envisioned as a research and technology park.

In spring 2023, site plans revealed GM’s intention to build a 1.1 million-square-foot supplier plant due to capacity restraints at Orion Assembly. By late summer, GM cut the project’s footprint by more than a third. Groundbreaking is now expected in May, nearly a year later than expected.

e $278 million investment in the plant is being made by Piston and the developer Schostak Brothers & Company Inc., according to a news release last month from the Michigan Department of Transportation, which is supporting the project with a $2.5 million grant for road improvements.

ment. JB Donaldson did not return requests for comment.

Magna facility in Auburn Hills

Magna Seating announced a year ago a $100 million just-intime seating plant with 500 new jobs in Auburn Hills to Supply GM.

Magna spokesman Dave Niemiec told Crain’s last month that project is moving along as planned. Once constructed, the building would be leased to Magna by the development group made up of South eld-based General Development Co. and Farmington Hills-based Friedman Real Estate.

As a result of the prolonged retooling downtime at Orion Assembly, which resulted in hundreds of GM workers being laid o , Magna and other suppliers have also been forced to make cuts.

Lear plant?

“Pretty much every supplier has invested some form of capital in some EV program.”

Steven Wybo, senior managing director at Riveron Consulting LLC

It is unclear how much money each company is spending for the project. Schostak plans to lease the building to GM with licensing agreements to the supplier, according to documents submitted to the city last year.

Piston declined to comment. Schostak did not return inquiries.

Gestamp plant in Macomb County

About 30 miles east, Spanish automotive supplier Gestamp plans to build a new 460,000-square-foot plant in Chester eld that would employ 390 workers and supply Orion Assembly.

Company o cials brought the project to the township in late summer and said workers at the factory would weld steel blanks to make assemblies for vehicles. After GM announced its production delay, however, the project was put in jeopardy.

Work on the site is now underway. Jonathon Palin, township planning director, said last month that permits were secured and construction has started.

e cost for Farmington Hillsbased JB Donaldson Co. to erect the shell of the build-to-suit factory is $42.5 million, according to the township. Buildout costs were not disclosed.

It is not clear who bears the brunt of the risk should a project fall through. For instance, if Gestamp or Piston were to pull the plug due to uncertainty over GM’s EV volumes, who’s left holding the bag depends on how the contract is written, an industrial real estate expert told Crain’s. at’s where contract protections are vital, even if it irritates a customer.

Gestamp declined to com-

While Magna moves forward with its project, Southfield-based competitor Lear Corp. has taken the opposite approach. e supplier of seats and e-systems announced in late 2022 that it would invest $80 million into a battery parts plant in Independence Township after winning a contract to exclusively supply battery disconnect units on all GM trucks and SUVs on the Ultium platform.

Buildout of that plant was to have started last spring, but the township hasn’t heard from the supplier in over a year, according to a township o cial.

Lear cut capital expenditures by $50 million last year, and the company is having serious discussions with customers about EV volume issues, executives told investment analysts in February on an earnings call.

“Certainly as volumes are lower, we’re having discussions with all of our customers about the impact on xed overhead and the investments that have been made previously that will result in higher prices until those volumes come back,” CFO Jason Cardew told analysts.

GFX project status unclear

Windsor-based Ground E ects Ltd. said it is planning a spray-on bedliner factory in Orion Township for electric trucks coming o the line at nearby Orion Assembly.

e project, expected to create 250 jobs, received preliminary approval from the township’s planning commission last September, when the company told o cials it was in a hurry to get into production in sidestep with GM.

A month later, the automaker announced it would delay production. It’s unclear where the GFX project stands as a result.

e company could not be immediately reached for comment. Crain’s inquired with the township for more information.

FERRARI

From Page 1

And her daughter picked up a pen.

In the development community, Ferrari is known for pursuing complex challenges as a managing partner of Ypsilanti-based Renovare Development: developing a series of mixed-use projects around the state centered on bringing much-needed missing middle housing, along with partner Shannon Morgan, to areas like Ypsilanti and Munising.

And for co-founding an e ort to get more women of color into real estate development, an industry long dominated by white men.

“She’s a leader in the industry, no doubt about that,” said Karen A.D. Burton, co-founder, CEO and community manager for SpaceLab, a

Detroit-based co-working space company.

Ferrari, Burton and others also co-founded the Women’s Sustainable Development Initiative in 2021. at organization, along with Lansing-based a ordable housing developer Cinnaire Solutions, created the Women Empowered to Build program, which is training its rst cohort of women developers from around the state.

But it’s Ferrari’s creative works — drawn from her personal life — that have been bringing in the accolades: She’s won awards for her short- lm screenplay, “South for Winter,” inspired by the time leading up to and immediately following her mother’s ruptured brain aneurysm 26 years prior that left her in a wheelchair and medically dependent the rest of her life.

Ferrari has also been at work on a

novel inspired by her daughter, as well as other screenplays based on personal experiences, such as a grandmother with Alzheimer’s or a trip to Chicago.

“She has a lot of interests and whatever she decides she wants to pursue, she goes in wholeheartedly,” said Burton, who started Noir Design Parti with Saundra Little of Quinn Evans Architects and cohosts a podcast with her called “Hidden in Plain Site” about Black architects in Detroit and Michigan.

Driven to leave a legacy

Ferrari, an attorney by training who grew up loving movies, learned about life’s nitude as a 10-year-old elementary school student. Her father, Lewis, an assembly line worker, contracted cancer and died at age 41, she told Canvas

PEOPLE ON THE MOVE

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Rebel magazine last year.

It was a lesson Ferrari was given, though did not need, repeatedly over the subsequent years, as her mom survived a bout with colon cancer in 1994-95, then the ruptured aneurysm in 1996 and COPD in 2011.

In some ways, it was those formative experiences — as well as the adoption of her daughter — that provided her a sense of immediacy; a drive to see things to the nish. It’s translated into her work in real estate development, screenwriting and drafting novels, as well as deploying skills she’s learned over the years to help other women get into the eld.

“Finishing those projects,” she said of some of her writing e orts, “become more imperative because you want to provide a way for your child to know you, in case anything

ever happened to you.”

A memento, of sorts.

Building for today

Ferrari wants to leave a lot of them.

Professionally in the build environment, she and Renovare have tens of millions of dollars in the pipeline.

In Ypsilanti, Renovare has nalized its $14 million in nancing for the Dorsey Estates development south of Depot Town at Park and High streets, just east of the Huron River, on the site of a former Boys and Girls Club building.

ere, half of the 43 units are being developed for those who are earning 40%-80% of the Area Median Income, a federally designated metric. It’s expected to take about 20 months to complete.

MARKETING / RESEARCH

Gus Andreasen has joined Taft as a partner, specializing in private equity and corporate transactions, including restructuring, distressed transactions, mergers and acquisitions, and private securities offerings. He offers strategic guidance to boards and senior management on various business, corporate governance, nancial, and transactional matters. He has been recognized as a top lawyer within the legal community and earned the Martindale-Hubbell® AV Preeminent® Peer Rating.

LEGAL

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Ian Larkin has joined Taft as a partner in its Mergers & Acquisitions practice group. Larkin’s practice focuses on mergers and acquisitions, entity reorganizations, commercial lending, real estate, and a variety of general business matters for public companies, closely held businesses, and large private entities. He also counsels commercial clients on matters vital to their business such as contracts, distribution agreements, and supply agreements.

Thomas Walters has joined Taft as a partner, focusing on complex commercial litigation. Walters has substantial experience prosecuting and defending business litigation cases, including automotive supply chain controversies, manufacturing disputes, real estate development and leasing, construction-related con icts, sales representative commission claims, business stakeholder separations, and intellectual property matters.

Taft

Taft

Joseph DeVito has joined Taft as a partner, advising clients across several industries, including automotive, industrial, health care, and more. DeVito’s practice focuses on corporate nance, M&A, private equity, commercial real estate acquisitions, leasing and nancings, international business transactions, securities and healthcare transactional matters. He is recognized as a top lawyer within the legal community and has been named “Deal Maker of the Year” by various M&A publications.

Bill Lentine has joined Taft as a partner, focusing on the often overlapping areas of business, tax law and trust and estate work.

Drawing on his knowledge of federal and state tax rules, he will counsel clients through succession planning, exit strategies, management planning, and tax tactics. He is involved in various professional organizations, including the American Institute of Certi ed Public Accountants and the Michigan Association of Certi ed Public Accountants.

Evonne Xu has joined Taft as a partner, counseling clients across the world on corporate matters of all sizes, including mergers and acquisitions, joint ventures and alliances, nance, and stock acquisitions and sales. She also counsels commercial clients on important matters such as contracts, real estate transactions, distribution agreements, licensing agreements, and supply agreements. She is uent in English and Chinese.

Marx Layne & Co. Marx Layne & Co., a Michigan-based public relations and digital media agency, has promoted Lana Mini to senior vice president. With more than 30 years of communications experience, Mini has expertise in media relations, media training, strategic digital media marketing, and crisis communications. Mini serves clients in the areas of automotive, arts & culture, restaurants and hospitality, nonpro t organizations, real estate, nance, special events, senior living, health and wellness and more.

CallHarbor callharbor.com

CallHarbor, a Michiganbased leading provider of cloud-based communication solutions, announces the successful acquisition of PBX Systems, a key player in telecommunications. This strategic move solidi es CallHarbor’s position in the evolving market. The acquisition enhances their ability to serve diverse business needs, part of their strategy to offer tailored solutions.

CEO Frank Kadaf emphasizes the milestone in their growth journey and commitment to empowering businesses with innovative tools. This aligns with the trend of businesses adopting cloud-based communication platforms, positioning CallHarbor as a leader in meeting modern enterprise needs.

On the west side of the state, Renovare has nalized its nancing on a mixed-use project in Benton Harbor that would add 30 duplex units of workforce rental housing at up to 120% of the AMI and another eight units of for-sale housing it’s working on with Habitat for Humanity as well as the Whirlpool Foundation. e project is to also include family amenities like programmable green space and an early childhood education center, plus grocery and child care space.

Housing crisis in the U.P.

But 400 miles to the northeast of Ypsi and 440 miles north of Benton Harbor, in the Upper Peninsula, Ferrari and her team at Renovare are making another big splash near Pictured Rocks in Munising, where new housing hasn’t been built in decades.

Not only has the need for housing for seasonal workers increased as tourism has grown,  Ferrari said, but also those who are there long after those there to marvel at Lake Superior and its craggy lakeside cli s depart: the paper mill workers, the prison workers, the hospital workers.

“ ey will have hundreds of candidates apply for positions, but none of them will accept because there’s no housing for them to go into,” Ferrari said.  at $25 million e ort, called Munising Marketplace, is expected to bring a new three-story apartment building at East Superior and Birch streets to the city’s downtown. All 39 of the units would be set aside for those making 60%-120% of AMI.

In Alger County, home to Munising, 60% of AMI for a two-person household is $36,360 per year, while 120% is $72,720. For a four-person household, those gures are $45,420 and $90,840, respectively.

Upper Peninsula o cials’ concerns about the housing crisis have ballooned in recent years, with 59% of o cials surveyed saying there is too few single-family homes, and 61% saying there aren’t enough multifamily units — the highest rates in the state.

Case in point: e state says that in 2021, the vacancy rate of available housing units in Alger County was just 1.5% and new residential unit permits the last decade or so can be measured in the dozens. Seniors, which make up more than a quarter of the population, are more likely than the broader Alger County population to be cost-burdened, whether they own or rent.

“ ey have been the poster child of the Pure Michigan campaign for many years and saw an explosion in tourism growth during COVID,” Ferrari said. “It has leveled o a bit, but it’s still growing and, just like every other community in Michigan, they are struggling with housing their workforce.”

e popularity of the Pictured Rocks National Lakeshore has soared in recent years, in part spurred by the COVID-19 pandemic. According to the National Park Service, Pictured Rocks saw just shy of 528,000 visitors in 2014. Less than 10 years later, there were

more than 1.31 million visitors in 2021. at fell to 926,000 in 2022 — yet still a more than 75% increase from eight years prior.

e Munising Marketplace will include a Michigan Works employment center on its ground oor that would also coordinate with other state agencies, a daycare business and a grocery store that would help replace an IGA grocery store that shuttered in recent years, leaving residents with few convenient options.

Also as part of the project, the Renovare team has put a separate property, the nearly 10,000-squarefoot former re hall, under contract with its owner for repurposing into a brewery/distillery, event and retail space.

“Folks are going on a boat ride to see Pictured Rocks and then they’re leaving because there isn’t enough in town to keep them there overnight,” Ferrari said. “ is is part of what this site is the No. 1 redevelopment priority for the city, because it’s so visual. It’s right across the street from the boat docks.”

Making waves

Munising Marketplace would also have the distinction of becoming the rst project in the Upper Peninsula to receive nancing through the state’s transformational brown eld program.

e program, instituted in 2017, provides developers pursuing large projects — the necessary amount of investment required to qualify for the incentive increases based on the population of the community — with a more robust series of tax captures and refunds, primarily from the state, compared to a more traditional browneld incentive.

To date, transformational browneld packages have been awarded to projects by Dan Gilbert’s Bedrock LLC real estate development company in Detroit, as well as the Ilitch family’s Olympia Development of Michigan and Detroit native and New York City-based megadeveloper Stephen Ross’ Related Cos. in the District Detroit area. e Gilbert incentive totaled $618.1 million on $2.14 billion in new construction and redeveloped buildings, while the Olympia/Related totaled $615 million on $1.53 billion across 10 new and redeveloped buildings.

In addition, a $231.7 million transformational brown eld package for a series of new and redeveloped buildings around the New

In part, that’s where the Women’s Sustainable Development Initiative comes into play.

Creating space for women

Ferrari, also a former co-chair of the Michigan chapter of the in uential Urban Land Institute, got together with Burton, the SpaceLab founder who is also an architect and consultant with A/E Collaborative LLC and Noir Design Parti; Rachele Downs, vice president in the Royal Oak o ce of JLL and founder of Downs Diversity Initiatives LLC; Lisa Berden, an attorney with Troy-based Linchpin Legal PLLC; and Brinda Devine, founder of P8 Real Estate Solutions LLC, based in Detroit.

Center area is working its way through the approval process. e Michigan Strategic Fund has not yet signed o on the package.

e transformational browneld program, which was expanded last year, can be a bit daunting for rural communities, Ferrari said, and she hopes that the changes encourage more developers in smaller cities to explore its use.

“ ere are a lot of rural communities that I think aren’t aware of this tool, or if they are, it seems just too complicated to use,” Ferrari said. “But changes like this will open access to a lot of rural communities that don’t have the same jobs that the city of Detroit and the city of Grand Rapids do. So we are behind it 100%.”

e changes signed o on last year double the program cap from $40 million to $80 million a year in post-construction tax captures, and $800 million to $1.6 billion overall, Crain’s reported last summer.

Male-dominated eld

Ferrari, an Oakland University graduate, broke into commercial real estate by happenstance. She was working as a consultant, monitoring worker exposure to certain chemicals and attending law school at Wayne State University at night.

By 1995, she branched into environmental consulting on real estate projects, working with one of the preeminent names in browneld and other incentives, Richard Barr, currently a partner at Detroit-based law rm Honigman LLC.  After a while, Ferrari started taking ownership in real estate projects and eventually started branching out on her own, forming Renovare Development with Morgan in 2019, dedicated to social-impact development focusing on Opportunity Zones.

And in a real estate development industry overwhelmingly dominated by men — white men, at that — there were challenges getting o the ground, particularly in securing initial equity investors.

“Finding balance partners, guarantors, when you’re rst starting out is really challenging for female developers, and a lot of women start with smaller projects that they can personally collateralize and secure,” Ferrari said. “So you don’t see a lot of female developers doing what we did, which was start out with higher sights, looking at larger projects.”

Ferrari has been devoting time outside of commercial real estate to other projects that also exist within the four corners of a page — namely, her short screenplay, “South for Winter,” as well as her children’s book, “ e Last Platypus,” illustrated by a woman from Pakistan and printed by a woman-owned company in Saline.

For Ferrari, the screenplay, which has been in the works since she was in her 30s, success on the e ort was completing it and submitting it to a lm festival. But she didn’t stop there, after starting to win awards, and hopes to eventually get the screenplay produced.

e developer also has two other screenplays in the hopper, plus her children’s book.

“We saw a need in the commercial real estate ecosystem to help emerging women real estate developers get resources and funding and things that aren’t always readily available for women in the industry,” Burton said.

Together, the ve of them formed the Women’s Sustainable Development Initiative, a nonpro t 501(c)(3) working to “accelerate the success” of women developers working on developments in low-income communities and building ESG — the buzzword for environmental, social and governance components — into their projects.  ere are about 80 women on a distribution list, and about 15 or so are regular participants in monthly meetings, Burton said.

In particular, Ferrari said, one of WSDI’s key missions comes in the form of helping foster ideas on how to raise early equity and answer questions that, as she says, “are not taught at Ross,” referring to the prestigious University of Michigan business school named after the New York City-based developer and Detroit native.

“If you’re looking to raise equity to launch your business, it’s a no man’s land,” Ferrari said, and then paused.

“Or no women’s land,” she said.

Creative pursuits

Outside the four corners of things like pro formas and letters of intent,

It was in the Kresge Court at the Detroit Institute of Arts where Ferrari was able to keep her head down and focus on “ e Last Platypus,” a tale of a young girl who doesn’t t in with the people around her, which has not yet been published.

Andy Gutman, president of Southeld-based commercial real estate rm Farbman Group, is also a songwriter and the author of children’s books, who like Ferrari also drew inspiration from his daughter. He called Ferrari “very talented” and someone who has racked up many accomplishments in her career so far.

He said that for a long time in his career, he kept his more business-oriented side separate from his creative side. But after a while, both started to blend together as he “embraced both.” at facet of his personality, Gutman said, has helped forge better business and client relationships.

“It creates a connectivity with people that I never imagined,” Gutman said.

And for Ferrari, it provides a nice counterweight to the rigors of her day job.

“It really balances out the long lead time in real estate for wins,” Ferrari said. “We get small wins along the way. Public meetings, public approvals, award letters for nancing. ere really are long periods of waiting in commercial real estate. So to have something doing so well from the creative side, that’s really nice.”

A rendering of Renovare Development’s multifamily housing project in Benton Harbor

BARRY J. POLZI N A RCHITECTS INC.

He founded what’s now the state’s biggest software, video game rm

Brad Wardell, 52, founded Stardock Corp. in 1991 as an undergraduate student at Western Michigan University. Decades later, it is the largest software and video game development company in Michigan. Later this year, Stardock will release the fourth version of its simulation game, The Political Machine, as well as an expansion for Galactic Civilizations IV and additional downloadable content. The company has over 30 games on the market as of 2024 and, due to its success, has owned its own building in Plymouth since 2006 after moving out of a leased space. | Anna Fifelski

What was the goal or dream behind founding Stardock?

I founded the company back in the early ’90s when I was in college at Western until I could find a real job. I never did get a real job, I ended up doing this as a career. It started out with me in the dorm room at Western and then when I graduated it seemed like I’d have to move to some other state and I didn’t want to move, I like Michigan. I wanted to stay here but I wanted the technology company, so I said “I’ll just do it here and see if I can build up here.”

How has Stardock evolved since its founding?

We have made software and done things that people today take for granted. One of our jokes has been, “We’re the most famous company you’ve never heard of.”

We’ve been around for 30 years. Stardock almost always acted as a think tank. And the challenge we always ran into is that we could come up with cool stuff, but we couldn’t ever get to quite the critical mass and people in Michigan. And so whenever we were successful enough that we amassed enough capital, we would then go and start a new company where there were other lots of engineers. So we have started out companies in Maryland and Texas and the West Coast … but now because of COVID and hybrid work, we don’t have to do that. Now, we can invest directly into Stardock here in Michigan because it doesn’t matter if we can’t necessarily get a person to move to Michigan right away, though eventually, they tend to.

Can you speak on the inspiration behind creating The Political Machine?

So we originally came with the idea for doing a political strategy game back in 2000 and we thought “Well, Bush and Gore would be too boring.” We didn’t think anything interesting would happen in that election so we were like, “Well, we’ll put this off until later.” Yeah, that was a mistake.

In 2004 is when we first did

“It started out with me in the dorm room at Western and then when I graduated it seemed like I’d have to move to some other state and I didn’t want to move, I like Michigan. I wanted to stay here but I wanted the technology company, so I said ‘I’ll just do it here and see if I can build up here.’”

it. And the idea was “I bet that we could make a really interesting game if we actually built a really sophisticated simulation.” Now, we didn’t think we could monetize it as an educational tool or even as a thing we could sell to political campaigns because it’s actually extremely accurate in predicting election cycles. It has only gotten a few states wrong in every election.

In 2004, we got every single state correct except Ohio.

What is the technology behind developing a simulation game like The Political Machine?

Because we don’t work off of polling, the way it works is that certain demographics of people vote a certain way. So I can pretty much walk up to someone, ask them what their job is, and a couple other things just going by demographics, and say, “I know who you’re going to vote for.”

Then it’s about turnout. All we have to do is feed (the demographics) into the system, how much there are in each state and project how

important the different issues are — which vary, and there’s some subjectivity in that — and the game can predict at the state level. It may not be an exact percentage, but because of the way our electoral college works, it’s good enough.

Where do you get all this data?

It’s all public. Even just from the Census. This is all public data. All you do is feed it in and the AI just figures it out.

What’s the process of launching a new version of The Political Machine?

The first thing is we have to go in and update all of our demographic data. Where do people move? Grabbing all the census data from the last election. What has changed?

Once you have that then the next most challenging thing — and this is where you get into a little bit about subjectivity — is, what are the issues? Because those demographics also care about different issues in certain amounts.

Once you do that, then

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we go into things like “Well, what are some of the new game features our players are wanting?” So this time around, this is our biggest update to the game we’ve ever made by far.

The first period takes almost a year of … just updating all the stats we got. Then you have a few months to spec out the design, what are the new features we want? Like the aforementioned primaries, having political debates, that sort of thing. The engineering work and UI design of how we want to present that and we also have to update the graphics, make it prettier each time.

And then you have the period where we beta test, which isn’t so much about finding bugs, it’s about uncovering any accidental biases. And we usually know we’re right when our beta testers simultaneously think the game has bias for Republicans and Democrats and they’re arguing with each other. That’s when we know it’s right. When all of our customers are unhappy, we know the game is ready.

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