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Sat. Jul 13th, 2024

Detroit RenCen’s Future Leans To Demolish Most Skyscrapers

By meerna Jul12,2024
Detroit RenCen’s Future Leans To Demolish Most Skyscrapers

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High-profile discussions involving General Motors, Dan Gilbert’s Bedrock real estate firm, at least two architectural firms and construction companies over what to do with the Renaissance Center have key decision-makers increasingly considering at least partial demolition of the structure that has dominated the Detroit skyline for half a century.

Discussions are preliminary, with studies underway on the best future use for the riverfront property after GM moves into Detroit’s new Hudson’s building in downtown. But according to several people familiar with the matter, early thinking suggests demolishing most of the seven towers and leaving one or two to preserve part of the city’s skyline. The tower or towers that remain in Detroit’s most recognizable building complex would then be renovated and put to new uses beyond the offices and retail they currently house, two people told the Detroit Free Press.

People familiar with the discussions spoke to the Free Press on condition that they not be identified because of the sensitivity of the topic and the fact that decisions are still being made. But they said the logic behind the demolition lies in the fact that the tall cylinders are an outdated structure, filled with a maze of corridors and glass walls that are inefficient in their function. Trying to renovate the towers, for example for housing, would be expensive, difficult and nearly futile.

People have said that building something new on the site to replace the demolished towers would be a very real possibility. What will go there is still a matter of debate.

“We want it to be a connecting space between the city and the riverfront,” one person told the Free Press. “The RenCen was built to be an island unto itself. Now we know we need this area as a gateway to the city. The best way to do that is to tear it down. People are saying, ‘You’re going to change the entire Detroit skyline.’ Well, are we going to leave it empty to preserve the skyline?”

Gilbert’s Call Option

RenCen, a focal point of the Detroit skyline since it opened in 1977, has been GM’s global headquarters since the company bought five of the seven towers in 1996. But in April, GM announced it would move its headquarters to Gilbert’s Hudson’s Detroit building on Woodward Avenue in 2025. GM will be the building’s anchor tenant and will have a 15-year lease.

GM and Bedrock have asked the state of Michigan to pay “hundreds of millions” of dollars in economic incentives to help pay for partial demolition, new construction and renovation of any remaining towers on the site, according to one source. The governor’s office did not immediately respond to a request for comment.

It was revealed this week that a limited liability company affiliated with Bedrock has an option to buy the original five-tower RenCen complex from GM, as well as acres of parking lots east of the complex.

The agreement, known as the “put-call agreement,” was signed April 15 by GM’s CEO and Bedrock’s CEO. It gives Bedrock the right to buy the properties and GM the right to require Bedrock to buy them.

However, such a sale is not inevitable under the terms of the terminable agreement. The agreement was filed with the Wayne County Register of Deeds and first reported by Crain’s Detroit.

Bedrock did not comment for this story. GM declined to comment, but a spokesman for Detroit Mayor Mike Duggan issued a statement Thursday regarding the possibility of demolishing RenCen.

“The mayor has made it clear from the beginning that all options for the Renaissance Center site will be actively explored,” Duggan spokesman John Roach said. “We will not have a situation like we had with the Hudson or Michigan Central, where key sites have sat vacant for 40 years because community leaders have not made realistic decisions. All options are being explored, but no decision has been made.”

In a press release issued by GM on April 15 when it announced its planned move to Hudson’s Detroit, it wrote: “The decision to explore the redevelopment of the Renaissance Center comes at a time when the office market is undergoing a transformation. The post-pandemic work environment has changed the way office space is used. A recent CBRE survey found that 80% of current office tenants have adopted or will adopt a hybrid work model. Repositioning the Renaissance Center to reflect these changes will require an experienced real estate developer like Bedrock.”

RenCen today

RenCen officially opened in 1977, when four 39-story office towers were built surrounding the central 73-story hotel, now a Marriott.

In 1996, GM bought five of the seven towers for $73 million. GM occupies four of them, and Marriott the fifth.

The other two 21-story office towers opened in 1981. Known as Towers 500 and 600, they were recently sold in December by the New Jersey utility company that owned them for years.

The Tower 500 building is fully occupied by Blue Cross Blue Shield of Michigan under a recently signed 15-year lease; its new ownership has not been publicly disclosed.

Tower 600 is said to be only about 10% leased and is owned by various investors, including Farmington Hills-based Friedman Real Estate, which also manages the tower.

Atop the RenCen, under GM’s supervision, are three video display boards that GM has often illuminated in unique ways for special occasions, including rainbow flags in June for Pride Month. In January, during Detroit Lions games, GM added a digital lion tail to its logo atop the RenCen.

But RenCen’s weekday population has plummeted amid the COVID-19 pandemic and the continued popularity of remote and hybrid work. As the Free Press first reported, in a company-wide email to employees on Dec. 5 of last year, GM CEO Mary Barra made clear that she wants white-collar workers to be at their desks at GM facilities on Tuesdays, Wednesdays and Thursdays of each week “at a minimum.” GM’s new policy went into effect Jan. 8, and RenCen has seen an increase in the number of GM employees at lunchtime, at least on the days they are required to be in the office.

However, the overall headcount at RenCen is believed to be lower than it was before COVID because GM has moved some Detroit workers to its Warren offices in recent months. The reduced foot traffic has made it harder for many businesses to expand there, the Free Press reported.

Demolition: Costly and complicated

Serious discussion about tearing down the Detroit icon shouldn’t come as a complete surprise. In May, Barra suggested as much during a discussion before the Detroit Economic Club.

“We’ll look at what’s the best use for that building or that property,” Barra said. “We’re committed to doing what’s right. It’s such a great property. I’m confident we’ll find a good solution.”

Moderator Rhonda Walker, an anchor for WDIV-TV, asked Barra, “Does any of your thought processes lead you to tear down the building?”

Barra said: “We’re first looking at what can be done and what would be the right application for the company. We have a year to do that, so that’s what we’re focused on.”

Two people familiar with the ongoing talks say a decision on RenCen’s fate is unlikely to be announced until early next year.

More: Bedrock buys part of Detroit’s Millender Center from GM

More: GM’s move to Hudson plant in Detroit could result in ‘double increase’ in subsidies

For demolition advocates, the logic behind it is simple: RenCen is really hard to repurpose. Partly because it’s an outdated design. One person said the cylinders, encased in glass, aren’t energy efficient, so all the towers would need new insulation and glass, which would be “a really expensive renovation.” That person also said it’s like remodeling an old house into a doctor’s office; it doesn’t quite work and is inefficient.

Of course, the cost of demolition alone would be “tens of millions” of dollars, the person said, because taking down multiple towers at once, especially given their proximity to the Detroit River, would require complex engineering. But it can be done, it just would be expensive and complicated, the person said.

Contact Jamie L. LaReau at [email protected]. Follow her on Twitter @jlareauan. Read more about General Motors and sign up for our automotive newsletter. Become a subscriber

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