Crain’s Detroit Business
Kirk Pinho
Now might be the time for the 670,000-square-footTowne Square office complex in Southfield to get its third building, which would make it one of the largest office complexes in metro Detroit.
Southfield-based Redico LLC — which manages and owns Towne Square, northeast of Northwestern Highway between Civic Center Drive and Lahser Road — is considering a 300,000- to 350,000-square-foot build-to-suit tower now that the two existing buildings in the complex have occupancy rates in the mid- to upper 90 percents, said Dale Watchowski, CEO, COO and president of Redico.
“The leasing pace has picked up, and it’s largely a reflection of an improving economy. Much of our leasing (at Towne Square) was done recently,” he said.
Redico has started marketing space at a third Class A Towne Square tower, which would need a lead tenant lined up before Redico decided to move forward with the building, Watchowski said.
He declined to say how much a new tower would cost, but said the company has “a very good idea of what it would be.”
Paul Choukourian, managing director of the Southfield office of Colliers International Inc., said construction costs would depend on factors such as the number of stories.
Paul Choukourian, managing director of the Southfield office of Colliers International Inc., said construction costs would depend on factors such as the number of stories.
For a building with more than eight stories, it would be $140 per square foot. That would make building costs between $42 million and $49 million.
Towne Square, which sits on 27 acres, has always been planned for three buildings, Watchowski said.
“If they are in the high 90s (occupancy rate) in their current buildings, then that’s a strong indicator to build,” Choukourian said.
Towne Square is also performing better than much of the 6.1 million-square-foot Southfield Class A office market. The vacancy rate in the fourth quarter last year was 25.5 percent, according to data from the Southfield office of Newmark Grubb Knight Frank. The average asking rent was $20.13 per square foot, according to NGKF.
The first tower, built in 1992, is 470,000 square feet. Its largest tenants are Southfield-based Signature Associates LLC (32,000 square feet), which handles leasing for the buildings; Southfield-based consulting firm Gabriel Roeder Smith & Co. (25,000 square feet); and the Sommers Schwartz PC law firm (25,000 square feet), according to research firm CoStar Group Inc.
The second tower, built in 2002, is 200,000 square feet. Its largest tenants are FirstMerit Bank (38,000 square feet); Southfield-based Telemus Capital Partners LLC (27,500 square feet); and the land development, surveying and engineering firm Atwell LLC (22,000 square feet), according to CoStar.
Terry Croad, director of the Southfield Planning Department, said site plans have not been submitted. Redico would need Planning Commission and City Council approval before it could apply for construction permits, Croad said.
“We could be under construction relatively quick, given that the site was originally planned for this use,” Watchowski said. “The construction period would be typically 12 to 18 months.”
