Peruvian developer Fernando Palazuelo. http://url.ie/11nyq
The Peru-based developer attempting to resurrect the former Packard Plant says it has secured financing and tenants to start construction this spring on renovating the first hollowed-out building at the sprawling factory complex on Detroit's near east side.
The developments are a step forward for an ambitious renovation of one of the world's best-known industrial eyesores — a grand plan that has drawn both hope and skepticism.
Arte Express Detroit LLC, the local holding company of Peruvian developer Fernando Palazuelo, will begin construction of office, commercial and event space in the 121,000-square-foot former Packard administration building along East Grand Boulevard after the top two floors are cleared of debris and contaminants, according to project manager Kari Smith.
Smith expects to the close on financing of $17 million-$21 million from unspecified lenders for the project within the "next two months."
"A lot of it will be private equity," Smith said. "And people are often surprised by that."
The committed tenants for the now-windowless four-story building include Silveri Architects, Environmental Consulting & Technology Inc., Testing Engineers & Consultants, Sterling Security and the Detroit Training Center, a nonprofit job training organization.
Construction is expected to last through the end of 2018 with the tenants moving into the space by the first quarter of 2019, Smith said.
Architect Marco Silveri said he and his wife, Cynthia, plan to move their three-person architectural firm from Ferndale to the Packard Plant to get closer to their Midtown clientele.
"Because it's part of our business, we're excited to be associated with and located in such an important project of that type," Silveri said.
Silveri said architects he's met from around the world know about the Packard because of its revolutionary early 20th century design for automobile production and later because it became a symbol of Detroit's decades-long decay.
"There aren't a lot of places for an architect to set up shop that is immediately recognizable by anyone," Silveri said.
Bringing the former Packard Motor Car Co.'s administration building back to life is the first phase of Palazuelo's multimillion-dollar bid to resurrect one of Detroit's most infamous industrial eyesores.
"I believe in the plan, I believe in the project," said Eric Williamson, owner of Southfield-based Sterling Security. "I believe it's going to be something that happens."
The first phase includes rehabilitating the bridge over East Grand Boulevard that was once part of the Packard Plant assembly line.
For the past two years, the graffiti-tagged bridge has been wrapped by a giant picture showing an image of what the bridge looked like in the 1930s — and how it will look once it is restored. The bridge will become a pedestrian crossing to the south side of the 3.5 million square foot complex, Smith said.
The Detroit City Council has already granted the developer a 12-year freeze on the taxable value of the property, basing it on the current decrepit condition of the buildings.
Smith said the first building will serve as a "pinnacle" for renovating the Packard's other buildings, though she acknowledges the first phase of the redevelopment likely won't be a moneymaker.
"This building is the first building of several, so we're not expecting great revenue from this building," Smith said. "We're expecting a lot to go out for this building."
Removing debris and asbestos is already complete on the first two floors, but was halted for the winter because of the harsh conditions of working in the open-air building with no windows, Smith said.
Since purchasing the Packard plant over three years ago, Palazuelo has spent about $4 million securing the complex, clearing debris, overgrown trees and removing dangerous pillars from one collapsed floor.
Like the rest of the complex, the administration building was stripped of its fixtures, metal pipes and marble floors years ago by scrappers.
"All we have is the shell of the building," Smith said.
Albert Kahn Associates Inc., the Detroit architectural firm founded by Packard Plant designer Albert Kahn, conducted a structural analysis of the plant and found 90 percent of the buildings are viable for renovation, Smith said.
Smith credits the steel-reinforced concrete construction invented by Kahn's engineer-brother, Julius Kahn, for the much of the Packard plant remaining intact.
Julius Kahn's design reinforced each column in the plant with eight sections of 1-inch thick steel rebar wrapped in a metal coil and cast in concrete and stone, Smith said.
"They're hard to demolish, very expensive to demolish, which is why they have withstood because the expense was too much for the city of Detroit, pre-bankruptcy, to demolish these buildings," Smith said. "And we're glad that they didn't, because these buildings are viable and we'll bring them back to life."
Work in phases
Smith, an architectural historian and historic preservationist, has a personal connection to the first Packard building that will be renovated.
Her grandfather, Russell A. Smith, worked for the Packard car company from 1927 to 1952, ending his career as the automaker's executive steel buyer.
"His office was in this building, which makes it even more important for a historian to have that family connection," She said. "It really draws you emotionally into the project more."
Sterling Security is already providing on-site 24-hour security at the Packard Plant and plans to house a complexwide camera surveillance system and back office operations in the Packard administration building, Williamson said.
The company has five security guards who patrol the grounds and surrounding streets in white Ford Fusions. The first floor of the administration building will be largely used for art galleries and event space, Smith said.
"We have a lot of different organizations who'd like to rent space," Smith said. Arte Express Detroit has purchased vacant lots along East Grand Boulevard that will be used to build three parking lots, Smith said.
The second phase of the Packard plant redevelopment include "a recreational component," which Smith declined to divulge specifics.
"Phase 3 is a our residential component, which will be artist live-work space," she said.
Smith said Arte Express has a timeline of completing the second and third phases by 2021.
Arte Express is running its Packard Plant redevelopment operations out of the former Packard marine engine plant at 1600 E. Grand Blvd., which is owned by AmeriSource Industrial Supply Co. and is next door to the Packard building slated for rehabilitation. Two of the committed tenants, Environmental Consulting & Technology Inc. and Testing Engineers & Consultants, have existing offices in Detroit.
Testing Engineers & Consultants, plans to move out of its five-person office on West Fort Street to space in the Packard, where the company is consulting the owner on asbestos and environmental cleanup and other engineering work.
"We've had a good relationship with them and it seemed a like a good fit to be there once it's up and running," said Carey Suhan, vice president of the Troy-based engineering firm.
Esto's Garage, a southwest Detroit catering company, also has committed to leasing space on the first floor next to an area designated for a coffee shop in Arte Express' architectural drawings.
Esteban Castro, owner of Esto's Garage, said he's going to have a kitchen inside the Packard building and then park his food truck in a former loading dock that faces East Grand Boulevard.
Castro does catering part-time. He works full time in the engineering lab at the Detroit Diesel plant as he slowly ramps up his catering and food truck business.
"I've put my chips on this building," Castro said. "It will be a great part of the city's story."
Palazuelo's plans for restoring the long-neglected Packard Plant has drawn skepticism from local real estate developers, particularly because the complex is more than three miles away from the resurgence in greater downtown Detroit.
Castro said he's become a believer in Palazuelo's seven- to 15-year rehabilitation plan, which has suffered setbacks since the native Spaniard purchased the Packard Plant in late 2013 for $405,000 at a Wayne County tax foreclosure auction.
"Everything is thoughtful about this project," Castro said. "This isn't Twitter. This is like the real world. It will take time."
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