Sunday, 6 May 2012

Toronto real estate firm buys historic Penobscot Building for estimated $5-million

Another major downtown Detroit skyscraper has been sold, and -- surprise! -- the buyer was not Dan Gilbert.

Triple Properties, the Toronto-based real estate firm that already owns the Silverdome in Pontiac, bought downtown's historic Penobscot Building last week for a price estimated to be in the $5-million range.

The seller was Capmark, an investment firm that obtained the title to the Penobscot in a foreclosure action against the former owner, the Northern Group.

"We have witnessed a tremendous amount of start-up activity in Detroit these days," said David Friedman, president and CEO of the Farmington Hills-based real estate firm Friedman that negotiated the sale by Capmark. "We look forward to this building once again playing a significant role in fueling future growth."

The 47-story Penobscot was built in the 1920s during the golden age of Detroit skyscraper building from a design by noted architect Wirt Rowland of the firm Smith, Hinchman & Grylls. The building has changed hands several times in the past 20 years.

Gilbert, founder and chairman of Quicken Loans, has engaged in a buying spree of downtown's historic office towers in the past year, snapping up the Chase Tower, First National, Dime Building, and others. But the Penobscot was not among them, although Gilbert's real estate advisers were among the potential buyers who scouted the Penobscot in recent months.

The building is about 45% to 50% occupied with tenants including Strategic Staffing Solutions and Wayne County Friend of the Court.

Bob Mihelich, a broker with Southfield-based CBRE who represents Triple Properties, said Triple's owner Andreas Apostolopoulos plans to offer office rental rates in the Penobscot of about $10 per square foot -- below the general market asking rate of $14 to $20 per foot.

"By doing that it would hopefully draw some people who either want to switch, move, or come downtown," Mihelich said Friday. "The idea is to lure people in with very attractive rental rates and then (Triple) will spend some money to dial up the suites."

The Penobscot is actually three interconnected buildings sharing the same name.

There are smaller buildings built in 1905 and 1916 joined to the skyscraper built in 1928. Until the Renaissance Center was built in the 1970s, the Penobscot was Detroit's tallest building.

The Penobscot is expected to require updating to its windows and other infrastructure.

A successful revitalization of the Penobscot would notch another positive step forward for downtown's financial district, which in recent months has seen several older buildings get new life through Gilbert's efforts to refurbish them and move in employees from Quicken and related companies.

Contact John Gallagher: 313-222-5173 or


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