Quicken may lease, buy Detroit site
Louis Aguilar / The Detroit News
Quicken Loans Inc. may lease or buy a building in Detroit instead of constructing a new corporate headquarters, a top company official said Thursday, and the company will relocate fewer workers downtown than city officials originally hoped.
A decision has not been made but Dan Gilbert, founder and chairman of the nation's largest online mortgage company, hopes to make an announcement in the coming weeks, said Matt Cullen, president and chief operating officer of Rock Enterprises, an umbrella group for Gilbert's businesses.
Quicken's relocation from suburban Livonia is one of the most anticipated commercial real estate moves for downtown Detroit in the past few years. It's expected to provide a dramatic boost to the burgeoning residential and retail sectors in the city's core. The city and state put together more than $200 million in incentives over 20 years to lure Quicken, which was being wooed by several suburbs and states.
Quicken, including its Rock Financial Michigan unit, has outgrown its headquarters and the lease on its Livonia building is about to expire.
"Dan remains committed to Detroit," Cullen said. "We haven't put a date on the announcement but we still want to do it by the end of the year, and frankly, big decisions still need to be made."
That includes whether to build a headquarters on one of two city-owned sites reserved for Quicken -- the former J.L.Hudson's department store site on Woodward Avenue or the former Statler hotel site in Grand Circus Park -- or to lease or buy a building. Before the mortgage meltdown, Quicken was focused on constructing a new building.
The most rumored option is for Quicken to move into the former headquarters of Comerica Inc. known as One Detroit Center, at 500 Woodward. The 43-story building has 394,500 square feet of vacant office space, according to CoStar Property data. "That's a beautiful building," Cullen said. "There are a few buildings that could meet our criteria."
Several commercial real estate analysts say putting together the financing to build a headquarters during a global recession is too tough. It's too soon in the process to know how much a new Quicken headquarters could cost. The two most recent buildings built downtown have cost millions to construct. The Compuware headquarters, which opened in 2003, cost $350 million and the second new building, One Kennedy Square, cost $54 million when it was built in 2005.
Private owners of downtown buildings would likely offer huge incentives to attract Quicken, making it a far less expensive to relocate to an existing building, several developers said.
"I always found it hard to believe Quicken could build new," said Mark Talley, a vice president in the downtown office of Grubb & Ellis, a commercial real estate firm.
"Some of that is due to the overall economic situation. But some of that also is due to the business they are in. They are a mortgage company and everyone in that business has taken a hit, often a major hit."
Gilbert has said in the past that Quicken and Rock didn't make subprime loans, though it did make so-called "alt-A" loans to borrowers with less-than prime credit.
And early on in the mortgage crisis it shifted rapidly to "plain vanilla" type loans for sums less than $417,000 that were bought by Fannie Mae and Freddie Mac, according to Gilbert.
But Quicken, which normally resells its loans quickly after making them, began to have a backlog of unsold loans that reached $100 million last year.
Cullen said Quicken will not bring 4,000 workers downtown as city development officials originally hoped, but he declined to say how many would be relocated.
Still, Quicken's intent on moving downtown will be a great economic lift for the city, said George Jackson, president of the Detroit Economic Growth Corp., the quasi-public agency that promotes city development.
"Whenever they move here, it will be very good news and it will have immediate and long-term positive impact for downtown and the city," Jackson said.
You can reach Louis Aguilar at (313) 222-2760 or firstname.lastname@example.org.