Friedman buys two Detroit towers amid downturn

Michigan-based real estate firm Friedman Real Estate bought two towers of downtown Detroit’s iconic Renaissance Center.

The company, headquartered in Farmington Hills, acquired for an undisclosed sum the 500 and 600 towers from a New Jersey utility company, with plans to maintain them as office spaces, the Detroit Free Press reported. 

The two towers, standing at 21 stories each, are part of the RenCen complex, which originally opened in 1977 with four 39-story office towers surrounding a central 73-story hotel (now a Marriott). 

The remaining five towers are owned by General Motors, which is headquartered in the center.

Tower 500 is fully occupied by Blue Cross Blue Shield of Michigan, while Tower 600 is mostly vacant and available for leasing. 

According to Jared Friedman, executive managing director of Friedman Real Estate, both towers offer Class A- office space, and each tower has over 300,000 square feet and has gone through renovations in 2011.

Friedman said he’s confident in the Detroit office market, but his firm faces the challenge of filling the vacant Tower 600 in a post-pandemic world.

The downtown Detroit office market has had a rise in vacancies and a decline in leasing prices, reflecting broader trends seen nationally. The vacancy rate reached 19 percent in the third quarter, up from about 14 percent a year earlier, with an average asking lease price of $23.28 per square foot gross, down 4 percent, the outlet reported, citing data from CBRE. 

Companies, influenced by remote and hybrid work policies, have downsized office spaces, resulting in increased availability and bargaining power for tenants.

Looking ahead, the completion of Dan Gilbert’s Hudson’s site office building in 2024 is expected to introduce an additional 400,000 square feet of new Class A office space to the market.

— Ted Glanzer