Three years ago, Peruvian developer Fernando Palazuelo broke ground on phase one of an ambitious plan to redevelop the Packard plant into a mixed-use site for office and commercial space, restaurants and an event and gallery venue.
“I’m committed to the success of this project,” Palazuelo said at the time. “I assure you, we will not fail.”
Now, with little since done to revive the massive east-side ruin that has long been a symbol of Detroit’s decay, Palazuelo appears to have scrapped that vision. The two 20-acre sites making up the property were made available on Friday for built-to-suit where a developer agrees to build space for a tenant to lease, said Larry Emmons, senior managing director for real-estate firm Newmark’s Southfield office.
“My job is only to find industrial tenants,” Emmons told The Detroit News. “We’re not trying to do redevelopment of existing buildings for multi-family units or multi-use.”
An email sent to Palazuelo’s Arte Express Detroit LLC was not immediately returned.
Site plans are being developed, Emmons said, and he and his partner have reached out to automotive suppliers, just-in-time deliverers, and other companies in need of space for warehouses and fulfillment centers. Some of the current buildings will be torn down.
“The owner is committed to preserving as much as the original building character as possible,” Emmons said. “He would probably maintain the administrative building, which has gone through a significant renovation. He is committed to maintaining the historical significance and historical presence of the site. He’s not going to let it be torn down and razed wholesale. You’ll still see some of the old Packard facility there.”
The plant was named after the defunct automaker that ended production in 1956. Dozens of smaller businesses worked out of part of the plant until the late ’90s. Then the city foreclosed on the property, and the facility began to be torn apart by scrappers and vandals, a physical manifestation of Detroit’s lost manufacturing industry.
But sitting immediately south of Interstate 94 at Concord Avenue and East Grand Boulevard, the plant is prime for high-end industrial space, Emmons said, especially as the auto industry sees transformation. Nearby Factory Zero — General Motors Co.’s rebranded Detroit-Hamtramck Assembly plant — is undergoing a $1 billion makeover to build electric vehicles.
Metro Detroit’s 402 million-square-foot industrial and warehouse market’s vacancy rate is at just 4.5% and average asking rents are nearing $6 per square foot, according to New York-based Newmark’s third-quarter report.
Emmons declined to share a target rent price, but said: “It’s not going to be cheap. It’s going to be a very high-end site.”
In 2017, the four-phase development plan was expected to cost $350 million and take up to 15 years. Palazuelo, who said he was financing the project himself, bought the complex from Wayne County for $405,000 at a tax foreclosure auction seven years ago. Little progress, however, has been made on his vision to transform the property from a dumping ground and playground for trespassers.
The plant’s pedestrian bridge over Grand Boulevard collapsed, and a man died last year while playing hide-and-seek in the building after possibly falling through an elevator shaft. The redeveloped administrative building at 1580 E. Grand, the most contaminated site, was expected to have tenants starting in 2020 and another building, a brewery, but no tenants are currently on the property, Emmons said.
The property is behind on city fines and taxes, Emmons confirmed. The city’s Department of Public Works did not immediately respond to request for comment. In 2008, Palazuelo had filed for bankruptcy after the Great Recession devastated the real-estate market
“He has told me he is going to pay up all the property taxes in arrears by the end of the year, so there’s still two months,” Emmons said. “He’s not going to lose the property.”