Dive Brief:
- Development is booming around the new Red Wings arena site, with a mix of retail, office, multifamily and hotel space scheduled for completion in time for the 2017-2018 NHL season, Crain’s Detroit Business reported.
- Olympia Development of Michigan, which is owned by Red Wings owners Mike and Marian Ilitch, estimates the total investment in the five-neighborhood area at $1.2 billion, up from the initial figure of $650 million. Those numbers include the cost of the arena, and Olympia officials said 75% of the total investment will be private money.
- The latest cost estimate for the 20,000-seat arena itself is $627.5 million, and taxpayer bonds will cover $250 million of the cost.
Dive Insight:
Olympia executives cited "overwhelming demand" for housing, office and retail, plus improvements to the arena, as the reasons for the more than $500 million increase in investment in the 50-city-block area dubbed District Detroit.
The neighborhood, with the arena at its center, will include dozens of projects that Olympia said will create hundreds of thousands of square feet of retail and office space and approximately 1,000 multifamily units on 19 separate sites, including student housing for nearby Wayne State University. Olympia said $30 million has already been spent on the infrastructure around the arena.
The development plans also include an additional 500,000 square feet of office space. The U.S. office market, according to real estate firm JLL, is in growth mode, and Detroit’s 14.2% vacancy rate is in line with the national average.
Olympia said Detroit, which hasn’t seen significant development in 30 years, will probably need some time to get used to the scope of the project and the benefits residents will see.
Of course, there are critics of the Ilitch plan, primarily around financing of the arena. The city had initially earmarked downtown property taxes, now being used to fund part of the arena, for Detroit Public schools.
