New Center Gems
Redico expands portfolio with Fisher and Kahn buildings.
What’s the commonality between the young child cheering on the Detroit Pistons during the 1989 NBA championship at the Palace, the teenager experiencing the DSO’s magical version of Tchaikovsky Symphony No. 5 at the updated Orchestra Hall complex and the young adult inspired to stay in his hometown while taking in the soaring views of Detroit on the 10th floor of the Compuware Building, which has been called pivotal to the revitalization of Downtown Detroit?
All of these experiences take place at facilities built by Southfield-based Redico, a leading real estate development and investment company founded in the 1960s.
Redico has a growing collection of the rare buildings where deals not only get done, but also where memories are made.
This summer, Redico and New York City-based HFZ Capital Group won the auction for two of Detroit’s most historic buildings to add to their portfolio: the Fisher and Albert Kahn buildings located in Detroit’s New Center neighborhood. Both buildings were auctioned for $12.2 million and last sold for about $31 million in 2001.
Redico founder Robert Sosnick, who died in March 2000, was noted as the foremost office developer in Metro Detroit. By his early 50s, he had developed more than 2.5 million square feet of office space in Oakland County. He built Travelers Towers I and II in Southfield, Top of Troy and the Palace of Auburn Hills, measuring more than 1.5 million square feet.
Robert’s daughter, Karen Sosnick Schoenberg, is a board member and principal at Redico, with a specific focus on the firm’s strategic direction. As a vice chair of the Jewish Fund (started in 1997 with proceeds from the sale of Sinai Hospital) and a board member of City Year Detroit and the Jewish Federation of Metropolitan Detroit, Karen is advancing two worlds her family-first father prominently nurtured outside Redico’s steel-and-glass skyscrapers: her city and that of the Detroit Jewish community.
Through her extensive commitments, she has become one of the most influential leaders making a difference in Detroit. She’s a businesswoman on the leading edge of development both inside and outside of Detroit’s Central Business District as well as a philanthropist who has advanced the mission of the Jewish Fund to offer vital support to dozens of Detroit-based organizations, including Summer in the City.
Even before the Fisher and Kahn buildings acquisition, Redico developed well more than 3 million square feet in the city of Detroit, including One Kennedy Square, the Broderick Tower and the first Meijer store to open in Detroit, located at the corner of 8 Mile and Woodward Avenue. They are also the developers for a million square feet of the 157-acre State Fair development.
In an interview with the Jewish News, Schoenberg said: “I am so excited to be part of this renaissance and to bring these cherished buildings back to glory. It’s a community responsibility to bring some of the magic to these buildings. We all take this very seriously.
“I have early memories of walking through tunnels from one building to another and admiring the look of the lobby and ceilings. There’s a lot of memories here. I’d love to see us building this asset forever. Looking at our history, we do tend to hold on to things at Redico.
“We really like what’s going on in Detroit,” she continued. “If the value is good, we’ll always consider other deals. Our goal, the minute this deal closes, will be to move forward on development. Very firm plans will be developed over the next 18 months. This deal is absolutely a joint venture with HFZ. In addition, we’ve received interest from quite a few investors.”
Redico included noted local developers John Rhea and Peter Cummings on the investment side as well. Schoenberg mentioned that Redico welcomes other limited partners into deals; Rhea and Cummings are two of the most prominent developers in the Detroit development scene.
During the course of the interview, it was clear that Redico sees a lot to do in Detroit and a different landscape for investment activity.
“Now there are more investors coming to town, teaming with local partners,” she said. “It’s telling to get to the stage now where local partners are more actively collaborating with firms outside of Detroit to make things happen in the city. So much has happened Downtown, yet there’s great opportunity in locations well beyond the Central Business District right now, so we’re spotting opportunity and will continue spotting opportunity selectively as we see fit.”
Redico CEO Dale Watchowski and Redico Chief Investment Officer Dietrich Knoer were actively involved in the acquisition process.
“Of all the things we’ve done, this brings out the most pride, and makes me think of my father and the excitement that he would have,” Schoenberg said.
HFZ Capital Group
The acquisition of the Fisher and Kahn buildings is a joint venture between Redico and HFZ Capital Group, a mega-developer with a massive development portfolio of luxury residential condominiums in Manhattan. Formed in 2005 and led by Ziel Feldman, the firm is currently managing and developing more than 5 million square feet of Manhattan real estate and bringing nearly 2,000 residential units to market.
Ziel’s son, Adam Feldman, works on the acquisition side of the business and is the lead for the recent Detroit-based investment.
Adam Feldman, a 24-year old recent graduate of the University of Michigan, has been at HFZ for a little more than a year and is very excited about this asset as well as the potential in Detroit, specifically “the value opportunity of this transaction and the increased economic opportunities in the city tied to the M1 Rail; mass transit will be huge in the years ahead with many more people living downtown and commuting throughout the New Center area.”
The M1 Rail will offer public transit via streetcars on Woodward. It will go from Congress Street Downtown to West Grand Boulevard just past the New Center. It’s expected to launch next year.
“Another appealing economic development trend lies in the expanded reach of the Henry Ford Medical Center,” Feldman said.
HFZ and Redico are both talking to all sorts of people involved as they plan substantial upgrades for the facilities; the transaction is expected to close this month. The Albert Kahn Building and the Fisher Building — both designed by noted architectural firm Albert Kahn and Associates — are listed in the U.S. National Register of Historic Places.
On Oct. 1, 1961, the Fisher Theatre opened in the Fisher Building. David T. Nederlander and his sons, James and Joseph Nederlander, managed the Shubert and Riviera theaters and other theaters throughout the country. The Nederlander Organization, whose founder grew up in Detroit and which has strong roots in the city, would go on to become the most prominent producers of Broadway productions in America.
The “FIN 321” course at the University of Michigan deserves a surprising amount of credit for this recent transaction. It was in that course, where Adjunct Professor Steve Morris, managing principal of Axis Advisors, taught the intricacies of financial modeling to students at the University of Michigan’s Ross School of Business. One of his students was undergraduate Adam Feldman, who would find out about the deal from his former professor and go from student of real estate to co-owner of a Detroit gem in a matter of years.
Constructed for $9 million in 1928, Max Fisher and Louis Berry acquired the Fisher Building for a reported $10 million through Seyburn and Berry in 1962 and sold it for $20 million in 1974. Southfield-based FK Acquisitions LLC acquired the Fisher and Kahn buildings for around $30 million in 2001 but defaulted on its mortgage in 2014.
The changing ownership of the Fisher Building seems like a play we’ve seen before, but this time the story line of the city and its future is being watched by the world.
By: Adam Finkel | Special to the Jewish News