A company controlled by the Apostolopoulos family, of Toronto, has purchased the landmark Penobscot Building, Detroit's third-tallest office tower, for $5 million. The price, which comes to $5 a square foot, is tiny compared with the $200 level that buildings on average are selling for nationwide and even well below the $28 range that downtown Detroit buildings fetched last year, according to Real Capital Analytics.
There is a good reason why Detroit office buildings are so cheap: The city's downtown market has a vacancy rate of 26.5%, one of the highest in the nation. The city has made some strides fighting a decadeslong flight of businesses and residents to the suburbs, but significant challenges remain in the wake of the auto-industry bankruptcy filings and restructurings. The city's unemployment rate was 15.8% in April, compared with the seasonally adjusted national rate of 8.1% for April, and Detroit's population dropped by one-quarter to 713,777 in 2010 from 951,270 in 2000, according to the Bureau of Labor Statistics and the Census Bureau. Meanwhile, in April the city took a controversial step to stay solvent when it agreed with the state to share financial power.
And in the latest news on the consent agreement dispute: Well, the challenge by the attorney isn't going forward. Maybe the mayor or City Council will pursue it, who knows. But no one can argue that there's a fiscal emergency happening. And fake accusations of racism won't help.
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