Developer plans$44 million hotel conversion of downtown Detroit building
A Detroit-based developer plans a 135-unit hotel in a largely vacant building it bought earlier this year.
Method Development LLC is proposing a redevelopment of the Merchants Building, located at 206 E. Grand River Ave. at Broadway Street, consisting of the hotel space a flag is not yet knownplus food and beverage and event space and a rooftop bar. Detroit-based Kraemer Design Group is the architect of record on the project.
It would be among the bevy of hotels at varying stages of development ranging from under construction to recently revealed in and around downtown. Among them are a $190.5 million plan by New York City-based Related Cos. and the Ilitch family’s Olympia Development of Michigan to build a 290-room hotel south of Little Caesars Arena and the under-construction Godfrey Hotel with 227 rooms in Corktown. Others include the AC Hotel by Detroit-based The Roxbury Group, which hasn’t yet started construction; the Edition Hotel that’s part of Dan Gilbert’s Hudson’s site development; and the Cambria Hotel by Detroit-based The Means Group, which is nearing completion. There are also discussions for perhaps two large hotels on the former site of Joe Louis Arena, which is currently under construction with a large apartment tower by Detroit-based Sterling Group.
The total investment on Method Development’s hotel comes in at $44 million, and includes the $5.9 million building acquisition cost, plus $21.5 million in hard costs and $16.6 million in soft costs, according to a Detroit City Council analysis of the project.
It is being financed with $16.7 million in equity plus $27.3 million in debt, the analysis says.
The development firm run by Amelia Patt Zamir and Rakesh “Rocky” Lala is seeking a 12- year Obsolete Property Rehabilitation Act, or OPRA, city tax abatement valued at $1.13 million, according to a Detroit City Council briefing memo.
Others impacted include Wayne County ($270,423); the Detroit Public Schools Community District ($438,779); the Downtown Development Authority ($31,339); Wayne Regional Educational Service Agency, or RESA ($184,017); Wayne County Community College ($109,283); the Wayne County portion of the Detroit Zoological Society levy ($3,365) and the Detroit Institute of Arts ($6,734), according to the memo.
The total value of the abatement is $2.18 million.
On Thursday morning, Patt Zamir said Method was not able to disclose a hotel flag or operator.
In a letter to the council, Lala said the Merchants Building requires new mechanical, electrical and plumbing systems; a new roof and windows; a facade restoration; new elevators; new fire and life safety systems; and a total renovation of the interior after being largely vacant for years.
The project would begin in December and take approximately two years to complete, the memo says.
The Merchants Building was built in 1922 by Otto Misch Co. and placed on the National Register of Historic Places in 1983.
An entity called Broadway Merchants LLC bought it in 1996, according to Wayne County land records. That entity is registered to Joan Primo in Bloomfield Hills. Method acquired it in June.
In 2014, Curbed Detroit reported the owners put the building up for sale for $4 million, but it never traded hands.
Source: Crain’s Detroit