Tuesday, March 31, 2015

Gilbert buys One Detroit Center; Ally Financial to consolidate regional offices into building

Posted By on Tue, Mar 31, 2015 at 2:01 PM

Quicken Loans founder Dan Gilbert has purchased One Detroit Center in downtown Detroit, the soon-to-be new headquarters for lender Ally Financial, which will consolidate its regional offices into the building by April 2016

The moves were confirmed by the Detroit Downtown Development Authority board Tuesday, which called a special meeting at 1:30 p.m. to vote on an incentive package for Ally, the former financial arm of General Motors.

The decision by Ally to consolidate its regional offices into a building in downtown Detroit, which MT first reported Monday night, was facilitated by a deal to provide 550 parking spaces for free. Ally is expected to sign a 12 year, nine month lease for approximately 321,000 square feet of space. Brian Holdwick of the Detroit Economic Growth Corporation told the DDA board One Detroit Center should be 100 percent occupied following the move. The move is expected to generate an investment of $50 million in the city. 

With the parking subsidy in place, Detroit is estimated to receive $1.4 million-$1.8 million in additional income tax revenue annually, said Holdwick. 

If the parking spaces are "not acceptable" to Ally, the DDA will provide "the financial equivalent of the spaces in a payment stream of $150 per space, per month," according to a memo issued to the DDA board by Holdwick on Tuesday.

"We had to make sure Detroit was competitive," said Tom Lewand, group executive for jobs and the economy in Mayor Mike Duggan's administration. Lewand also sits on the DDA board.  

Ally's largest presence is in Detroit, with 700 employees at its current headquarters, the Renaissance Center, as well as 600 more in regional offices in Southfield, Troy, and Auburn Hills. The DDA says it expects Ally will hire an additional 200 independent third party contractors as a result of the move.

Ally must continue to employ at least 1,200 employees to receive the parking subsidy, the DDA memo said. 

The deal will almost certainly be a thorn in the side of Oakland County Executive L. Brooks Patterson, who told an audience of business people last fall, "I'll fight to keep you in Oakland County. Are you listening Dan?" (Gilbert shot back, imploring Patterson to get "his facts correct.")

Patterson said on Tuesday, "Mr. Gilbert gave them an offer they couldn't refuse. We'll keep the light on for them." 

Media reports earlier this year indicated Ally was considering a move to Southfield

The DDA board approved the incentive package in a brief 20 minute meeting Tuesday afternoon. Afterward, a press conference was held at One Detroit Center with Gilbert, Duggan, and Ally CEO Jeffrey Brown. When the company moves in next spring, Brown said the building will be renamed Ally Detroit Center.

Gilbert said the deal was a win for the city of Detroit because Ally was close to moving elsewhere. 

"They were pen and paper close to going some place else," Gilbert said Tuesday. 

Crain’s Detroit Business first reported earlier this month Gilbert would prevail in the bidding war for One Detroit Center

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