Back in 2016 Quicken Loans founder Dan Gilbert discussed the need for an increase of 10 million square feet of office space in Downtown Detroit. If the four new downtown projects by his real estate arm Bedrock Detroit are any indication of his determination, Gilbert has no qualms doing it all on his own. $2.1 billion in construction costs will see the skyline drastically change in the next five years as office buildings, residential apartments, mixed-use space, and the new tallest building in Michigan rise up.
Corp Magazine estimates the Hudson’s Site and Monroe Blocks (both new developments), the addition to One Campus Martius, and the rehab of the Book Building and Tower to total out to 3.2 million square feet of space, including over 1,500,000 square feet of office space. We at Think313 wanted to know how much revenue in property taxes these developments would bring to the city of Detroit so we asked Mr. David T. Miller, Associate Broker and Principal at Signature Associates, to point us in the right direction. Although he said it would be impossible to find a concrete answer until the buildings were completed and the city had the opportunity to appraise them, he estimated that the office space could feasibly be taxed at a minimum of $4 per square foot. At that rate, the 1.5 million square feet of new office space created by these four Bedrock projects will provide at least $6 million in new tax revenue to the city.
Of course we haven’t appraised the buildings ourselves and this is purely guesswork but if we cheat a bit and apply this rate to all 3.2 million square feet of new Bedrock development, we’re looking at at least $12.8 million in yearly tax revenue. And if Gilbert gets his desired 10 million square feet of new office space, Detroit can expect at least $40 million in new property tax revenue per year. The way things are going, it’s not a question of if this will happen but when others will join Gilbert (and the Ilitches) in donning hardhats downtown.
By Jared Hoffman
Research Associate, JMJ Phillip Group