Nearly three years to the day after ground was broken on Dan Gilbert's development on the site of the former J.L. Hudson's department store in downtown Detroit, contractors started pouring concrete to start above-grade construction on the northern portion of the 2-acre property.
In addition, more concrete information on the hotel operator is expected to be announced in 2021, Joe Guziewicz, vice president of construction for Gilbert's Bedrock LLC, told me Thursday afternoon during a media event marking the first grade-level concrete pour.
The exact scope of the hotel — how many rooms and whether there will be some form of branded residential component to it, for example — are not yet known as Gilbert's real estate development, leasing, management and ownership company talks with operators.
The overall development — the 680-foot tower on the southern wedge of the site and the 12-story so-called "block" building on the northern chunk — is expected to be complete at some point in 2024, although the block, consisting of a large office component, is likely to finish sooner.
The hotel industry has been devastated by the COVID-19 pandemic, which prompted travel restrictions, corporate and conference cancellations and a general malaise about straying too far from home. The industry reached its depths in the spring, with single-digit occupancy rates and plummeting revenue. Some of the best-known hotels in the region have been late on their mortgages, leaving their futures unknown, and some building projects have been pushed back.
However, the industry has rebounded slightly, although it is not expected to reach its pre-pandemic levels for some time. A McKinsey & Co. report says that likely won't be until 2023 or later, while STR and Tourism Economics expect that in 2023 or 2024.
That puts a 2024 Hudson's site hotel opening right around the time the hospitality sector is expected to fully recover.
A few key steps forward have taken place this year on the Hudson's project. First, what is now expected to be the final height — 680 feet — was revealed in March, and assembly of a pair of large cranes on the site began in July.
It's been a long slog to get to this point, however.
Once ground was broken on the site in December 2017, contractors tore out the underground parking garage and then started installing caissons, more than 150 in all — 53 to support the tower and 108 to support the block building, which will be separated by an activated alley.
But during the caisson drilling process, foundations of the old Hudson's department store building got in the way, causing more than 1,000 hours of what's known in the industry as obstruction time.
The project, which has been beset by those delays and redesigns scaling up and scaling back height and even for a time caused a sulfur odor downtown, has been pegged at $909 million. That estimate came more than three years ago; executives have declined to release a more current project budget.
Construction costs have soared during that time in large part due to a shortage of skilled-trades workers.
In addition, most commercial construction was suspended for weeks in the spring as the state locked down in an effort to stop the spread of COVID-19. Guziewicz said Thursday that there have been four workers on the site who tested positive for COVID-19 during the global pandemic, and they either had no symptoms or mild symptoms.
Gilbert has been working on the site's development in the years since he moved his approximately 1,500 Quicken Loans Inc. (now Rocket Companies Inc.) employees downtown about a decade ago.
Since then, the company has gone public and now has more than 17,000 workers in the city, and Gilbert's real estate-buying spree has involved him purchasing more than 100 properties in and around downtown — primarily buildings and parking decks — and proposing massive developments like the Hudson's project and others.
Southfield-based Barton Malow Co. is the Hudson's project contractor, while the architecture firms are Detroit-based Hamilton Anderson Associates and New York City-based Shop Architects PC.
The Hudson's site project is one of four Gilbert is working on totaling about $2.14 billion. Combined, they received a total of $618.1 million in so-called "transformational brownfield" tax incentives from the state.
The other projects are the $830 million Monroe Blocks immediately east of the One Campus Martius building, which has been stalled after a groundbreaking took place in December 2018; the $311 million redevelopment of the Book Tower and Book Building on Washington Boulevard; and the $95 million addition to One Campus Martius where Gilbert has Rocket Companies headquartered.
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Real Estate Insider: Expect Hudson's site hotel operator to be named next year, Bedrock exec says - Crain's Detroit Business
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