New Buds in Royal Oak

By Andrew Dietderich & Jennette Smith

Southeast Michigan had better plug its ears: Developers and city officials in Royal Oak expect the city’s boom to become deafening as it stands on the verge of a third renaissance.

That’s despite the fact that the sluggish economy has slowed the city’s evolution in the past few years, enough to make signs advertising new projects and boarded-up windows as much a part of the landscape as the 20- and 30-somethings that cram the city’s sidewalks and bars.

But things may be turning around.

Pointing to the new downtown Barnes & Noble, acceptance into the Oakland County Main Street program, movement on a number of proposed residential properties and the possibility of establishing a business-improvement district, Royal Oak officials and developers are convinced that the city’s landscape once again is on the verge of change.

This time though, the evolution will be centered on taller buildings, more retail and higher density.

“We had said all along that what’s going to make people believers are shovels in the ground,” said Gerard Dettloff, Royal Oak’s downtown manager. “When they broke ground on some of these new projects, it renewed credibility, especially when you consider we’re in slower economic times.”

Dettloff said he has noticed apprehension lifting from investors and developers who have in the past taken a wait-and-see approach to Royal Oak.

The reasons?

An improving economy, revised plans that are less risky for investors and strong interest in living in downtown Royal Oak.

The Main Place development is a good example.

Anchored by the Barnes & Noble bookstore, the development also will include an American Home Fitness equipment retailer, Atlanta Bread baked goods shop and Nik’s Blowfish, a Japanese steakhouse and sushi restaurant.

Nik’s Blowfish has a liquor license, said David Strosberg, president of Chicago-based Morningside Group.

Morningside and Chicago’s HSA Commercial are partners in the Main Place development. The companies are also partners in SkyLofts, a 70-loft and retail development planned on Main Street between Fourth and Fifth streets. SkyLofts is just north of Main Place.

Strosberg said SkyLofts would have about 20,000 square feet of retail space. SkyLofts will offer lofts for sale for $220,000 to $650,000 catering to different types of buyers.

“Our buyers to date have included everything from recent college graduates to people in their 50s whose children have left their home and are looking to simplify their life,” he said. So far, SkyLofts has sold more than 25 percent of its units from a nearby sales office. The lofts are scheduled to be ready in fall of 2003 when the eight-story building is complete, Strosberg said.

Strosberg said he decided the time was ripe to offer a more urban living and retail environment in Royal Oak, similar to Chicago.

“Royal Oak went from a sleepy, blue-collar town to an entertainment mecca,” he said. “It was obvious it had potential in addition to that for becoming a retail hub … and the housing component is extremely important.”

Another example?

A 12-story, $22 million condo/retail project on Washington Avenue called The Fifth.

A project planned by Royal Oak-based Chrysos Development L.L.C., it originally was a hotel/condo project called the Royal Grand.

But Jack Hanna, president of Chrysos, said he couldn’t get the financing for the project because investors and banks were leery of plopping a hotel in downtown Royal Oak.

“When we started marketing the project, there was a tremendous amount of interest in the condos, especially from mobile people who have other homes in Florida or out west,” Hanna said. “But when we started talking hotel, the sources of financing became very negative.”

So the project was scrapped in favor of the new one, which includes 40 condos ranging from 1,000 square feet to 2,500 square feet, an 80-car parking garage and 4,500 square feet of retail on the first floor.

Hanna said he expects construction to begin by the end of this year and the project to be completed by the second quarter of 2004.

Work has begun on other sites.

The former Erb Lumber site at Lincoln and Main streets has site-plan approval for a mixed-use project of as much as 66,000 square feet.

Reynold Hendrickson, vice president of Edgemere Enterprises, said Edgemere is preparing the site for development but seeking a buyer to take over and actually develop the site. Bloomfield Hills-based Edgemere has hired Southfield-based Signature Associates-Oncor International to find prospective buyers. Hendrickson said he wants to open the bids he receives on the property in August.

“As soon as someone buys this, they can come right out of the ground,” Hendrickson said. The mixed-use site-plan approval allows for combinations of residential, office and retail. Hendrickson is completing underground utility work and paving the parking lot.

The most notable long-term project is the seven-story office building and seven-story hotel at Main Street and I-696 that Schostak Bros. & Co. Inc. is planning. Schostak took over as developer of the long-delayed project last year.

Cindy Ciura, vice president of corporate marketing for Schostak, said the company is negotiating with a hotel operator but doesn’t have a signed deal yet. She also said Schostak has a number of office prospects it is talking with.

Tim Twing, director of planning in Royal Oak, said Schostak won site-plan approval in April for the 180,000-square-foot office portion of the development, under the name Woodward Gateway L.L.C. A plan for the hotel has not been submitted, he said.

Despite the fact that several projects like these are moving forward, many are still years away from completion.

So, instead of waiting for the city’s development, Dettloff said, the city was interested in becoming part of the Main Street Oakland County project.

Participating cities go through evaluations of downtown organization, design, promotion and marketing and business development and receive recommendations.

Main Street Oakland County is a program run by Oakland County’s Planning and Economic Development Department in collaboration with the Washington-based National Main Street Center, part of the National Trust for Historic Preservation. Cities are part of the program for three years. Other cities in the program now include Walled Lake, Rochester, Ferndale and Pontiac.

Royal Oak was selected to participate in the project June 19.

“Someone asked me why Royal Oak would want to be in the program, look at all the stuff that’s happened down here … and it is a great downtown,” Dettloff said. “But you can’t just rest on that, you’re always looking for ways to improve, and we thought this is a very successful program when used successfully, so why wouldn’t we make that attempt to get on board with it?”

At least one broker has his own idea of what Royal Oak needs: more office space and business-friendly parking policies.

Bob Sheldon, president of Berridge & Morrison, a commercial brokerage based in Royal Oak, said he believes the last element that would help to further balance out the city’s downtown is more office space.

While visiting shoppers and downtown residents help support retailers, more office workers downtown during the day would help retail even more, he said. Berridge & Morrison recently leased a renovated 12,000-square-foot office building at 206 W. Sixth near Washington.

Additional office space could include more renovations like this one or adding floors to buildings. New significant office construction is also possible on some sites, such as the Schostak site, Sheldon said.

To date, shoppers have supported retailers such as home furnishings stores and art galleries in addition to the food-focused shops and restaurants. The Barnes & Noble will be a major boost to more downtown browsing, Sheldon said, but more people living and working in Royal Oak would support even more variety.

“With the residential and the office, there would be a bigger demand for male and female specialty clothing stores,” he said.

Andrew Dietderich: (313) 446-0315, adietderich@crain.com

Jennette Smith: (313) 446-0414, jhsmith@crain.com