New vision for Kmart’s old headquarters in Troy: But could it work?
As Kmart ends its story in Michigan and closes its last store here in Marshall, the former Kmart Corp. headquarters in Troy still sits awaiting its next chapter.
The property at 3100 W. Big Beaver Road, likened in the past to an assortment of brown shoeboxes sticking out of the ground, has been empty for 15 years. Its future is not yet clear — but experts say it could be a bright one, given the attractiveness of the site, high demand for new housing, a rebound in the retail market and an improving economy that could provide a better chance for redevelopment than when the site last changed hands more than a decade ago.
The sprawling 40-acre property sits across the street from the thriving luxury mall, Somerset Collection. They share the same owner: Southfield-based The Forbes Company. The developer purchased the site in 2009 for $17.5 million.
The Forbes Company declined to provide details about its plans, only saying that it has been in a master planning process over the last few years, “with the goal of guaranteeing that the site that sits at an important intersection in our region enhances the ‘Downtown Michigan’ experience found at Somerset Collection.”
The former headquarters for what once ranked among the nation’s top retailers is less likely to find new life as office space, experts say. Instead, the northwest corner of Coolidge and Big Beaver is more likely to find its future in becoming a walkable apartment and mixed-use development that would complement nearby Somerset.
Kmart, which had its beginnings as the Kresge company, moved from its former headquarters in Detroit to the Troy campus in 1972. The company merged with Sears and moved to Chicago in 2006, and the buildings have been vacant ever since.
“At the time, of course, Kmart’s moving had an impact on the local economy,” said Glenn Lapin, economic development specialist for the city of Troy. “Thousands of jobs left the area, and a landmark building on 40 acres in a prime area was vacated.”
In 2007, an idea was pitched for a $320 million mixed-use development — the Pavilions of Troy. But, Lapin said, “the Great Recession put a halt to those plans.” Since its purchase in 2009, Forbes has maintained the site.
The firm is current on its property taxes, paying the city $309,000 this year, according to city records, though the property’s assessed value has shrunk over the decades and, according to the city assessor, now stands at just over $6.1 million. ProPublica reported last year that the property’s assessed value once stood at $27.6 million. Forbes has not publicly announced plans to demolish the property, but Lapin said that given the building’s obsolete design and layout any potential future uses will likely require demolition.
Steve Morris, principal of Axis Advisors LLC, a commercial real estate service firm in Farmington Hills, says he can see the site’s future as residential.
“You’ve got two wonderful malls with a lot of retail, and you’ve got going east on Big Beaver lots of small retail shops and restaurants,” Morris said. “Ultimately what it’s good for? It’s good for apartments.”
Morris said The Forbes Company’s ownership of the site empowers it to control what happens near its upscale mall. He notes the company purchased the property during the Great Recession.
“The bottom line is it was available to be bought by anyone, and based on ups and downs of the economy was taken over to control it,” Morris said. “I guess they can afford to pay the taxes. At some time point it’s possible they may sell it to a developer for multi-family, and they would have the opportunity to control. They would have the opportunity to say if you want to buy from us, we have an agreement on price, you have to agree to build a quality, upscale residential project that would blend in well with our quality.”
Paul Choukourian, executive managing director-market leader for commercial real estate firm Colliers’ Metro Detroit offices, said the most likely redevelopment plan for the site would be focused on multifamily, given high demand and the relative availability of financing, with the potential for a retail component. He expects it will complement Somerset, or even potentially connect to it.
“It’s a very valuable site. You can’t find large pieces of property like that in the suburbs very easily, if at all, so the site itself is incredible,” he said. “I just think they’ve got plans to make big plans. When the time is right, they’ll either do an addition to the mall or they’ll do mixed use. It’ll complement what they already have.”
What is less likely, Choukourian said, is office space. Even before the pandemic, he noted, there was not much demand for new construction of offices unless it was a build-to-suit project for a specific user.
“I don’t think they’re going to have any challenges redeveloping it, and their company has a very good reputation. They’re very well-funded,” he said. “I think the only thing that’s held them back is just waiting to do the right project at the right time.”
Meanwhile, Lapin says the site would be appropriate for a mixed-use, higher density development “that encourages walkability and strong public amenities,” which would be consistent with the city’s master plan and Big Beaver corridor study.
“The city is prepared to work with the owner as soon as a plan is ready to be put forth,” he said. “City administration is in regular contact with the owner, and we have a very good relationship with them.”
Posted By: The Detroit News on November 28, 2021. For more information, please click here to read the source article.
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