As recently as five years ago, the small neighborhood of buildings south of 14 Mile Road and west of Crooks Road in Royal Oak was a place for manufacturing, industrial machining and heavy equipment storage.
An eclectic mix of businesses is now recycling the properties for new uses while maintaining the area’s industrial look and feel.
A furniture store, an art gallery, an architecture firm and Saab Cars North America‘s headquarters are among the retailers, professional services and creative companies now populating the buildings along Delemere Boulevard and Nakota Road. The area has had $18.5 million in building sales during the past six years, according to CoStar Group.
“These aren’t sterilized buildings off in some industrial park; it’s a thriving neighborhood of businesses,” said Alan Davidson, a photographer who has redeveloped two industrial buildings in the area and now leases space to eight businesses.
He compares the area to the rail district in Birmingham along Eton Street, where industrial buildings have been redeveloped for law firms, retailers and other businesses.
Davidson rented space for his photo studio in the rail district for 20 years, but as it grew in popularity, so did the rent. When he was looking for a new studio in 2008, he found the area along Nakota.
He bought a building formerly used by T&G Boring for $500,000 and spent another $100,000 renovating it. The building is now fully occupied, with rental rates ranging from $500 to $4,100 per month.
The industrial charm, he said, helped get the space leased quickly.
For example, the floor in one part of the building is permanently stained orange from the industrial work that once occurred there.
When Josh Hunnicutt was looking for a space to move his out-of-the-ordinary personal training business, the floor was a selling feature.
“The oil had just worked itself into the floor; it’s not the kind of thing you normally come across,” said Hunnicutt, owner of New Species Crossfit, at 2675 Nakota Road.
As a gym where bench presses and curls have been replaced by swinging a sledgehammer and rolling a giant tire, Hunnicutt said the industrial look is perfect.
Ability to have a massive amount of space is what drew Ferdinand Hampson and the Habatat Galleries, a company that sells glass art and arranges shows around the world. With roughly $5 million in annual sales, Hampson said, the company needs lots of space to store art and stage exhibits before showing them at galleries around the country.
He moved the 40-year-old company to 4400 Fernlee Ave. in 2001 and was able to afford 13,000 square feet of space.
“In the past, we’d need to rent space around us,” he said. “We found this, and we use every bit of it.”
In those days, the neighborhood was purely industrial.
“At that time, we were the only business in the neighborhood with a retail component,” Hampson said.
The building at 4400 Fernlee was a clear shift from industrial to art. And those kinds of shifts may be the only hope for some of the older industrial buildings in metro Detroit, said Matt Farrell, executive principal with Birmingham-based Core Partners LLC.
“In that area, you’ve got a unique collection of buildings built from the 1960s to 1980s that have run their course,” he said. “They have low ceiling heights and aren’t really suitable as modern industrial buildings. But as prices have come down in the last five years, people can pick these buildings up at favorable prices and afford to convert them to alternate uses.”
Prime example, Farrell said, is the Saab headquarters building at 4327 Delemere.
Farrell represented Birmingham-based Ronnisch Construction, which acquired the building and redeveloped it. Ronnisch was then able to lease the building to Saab when the company was looking for a local headquarters.
Though it’s nontraditional, so too is the history of Saab, said Alan Lowenthal, general counsel for the company.
“We pride ourselves on being different,” he said. “And this neighborhood aligns itself well with that philosophy.
“The alternative is to be in a six-story office building, and that’s just not us. There’s a wide variety of businesses located near us, and we enjoy being here in such an eclectic neighborhood.”
Saab’s lease immediately acted as a catalyst in the neighborhood, said Glenn DesRosier, senior vice president with Farmington Hills-based Friedman Integrated Real Estate Solutions.
DesRosier has listed buildings for sale and lease in the neighborhood and recently brokered the purchase of a building at 2715 Nakota.
“Saab is the highlight of that neighborhood,” he said. “They immediately increased the values of property. It’s a draw. It’s a well-known company and a beautiful building.”
The neighborhood’s proximity to I-75 and I-696, as well as the Troy and Birmingham office areas, also makes it attractive.
By Dan Duggan, Crain’s Detroit