Could Fisher or Kahn buildings be primed for multifamily conversion?

Posted on June 17, 2015

With the Fisher and Albert Kahn buildings in Detroit’s New Center headed to auction in just five days, chatter is ramping up about who will be in the running to buy them — and what will be in store for the combined 925,000 square feet of office space.

What I’m hearing from multiple sources is that the national and international investors eyeing the two properties are viewing at least one of them as an easy target for a multifamily redevelopment.

Locals, I’m told, envision them remaining as office space.

If either the Fisher or Kahn (or both) end up turning into apartments or condominiums, they would be tapping into a market that many feel is underserved.

For example, Chicago-based Capri Investment Group LLC has been seeking investors for a $200 million fund to invest in multifamily real estate greater downtown Detroit’s 7.2 square miles.

In an offering packet, the company talks about the “substantial unmet demand for high-quality housing in Detroit’s urban core.”

But the fate of the 635,000-square-foot Fisher and the 290,000-square-foot Kahn is contingent on who ends up with the title.

Perhaps the most interesting question to ponder: Where would the building(s) office tenants go if apartments or condos are in the pipeline there?

The auction, which begins Monday and ends Wednesday, is drawing heavy interest from local, national and international investors, who are expected to pay between $20 and $30 per square foot. That could make the purchase price as high as $27.8 million.

FK Acquisition LLC, the registered agent of which is Andy Farbman, CEO of Southfield-based Farbman Group, defaulted last year on a $27 million mortgage, prompting Miami Beach, Fla.-based special servicer LNR Property Inc. to take title on the buildings earlier this year.

Farmington Hills-based Friedman Integrated Real Estate Solutions LLC is coordinating the properties and has the management contract for them.

The auction also includes more than 2,000 parking spaces spread out over two parking decks and three surface parking lotsfi