The center of gravity in downtown Detroit is shifting about a mile north as General Motors prepares to give up its view of the Detroit River to move to central downtown, in a historic change for the auto giant and the city.
One Detroit history and development expert calls it the major real estate story of the year.
GM CEO Mary Barra told a crowd of local dignitaries and reporters Monday afternoon that GM will relocate its global headquarters in 2025 from the Renaissance Center on Detroit's waterfront to billionaire Dan Gilbert's new Hudson's Detroit building on Woodward Avenue. GM will be the anchor tenant of the building and have a 15-year lease at the Hudson site.
The move is a major score for Gilbert, but leaves many unanswered questions over the future of the RenCen, which GM bought for pennies on the dollar in 1996 without needing a mortgage to do so. In moving, GM walks away from unneeded office space, but it takes on the cost of rent. GM did have operating costs, such as taxes, utilities and janitorial expenses at the RenCen.
GM President Mark Reuss said GM would incur costs in the move, but declined to provide specifics or say how much rent GM will pay. GM owns five of the seven towers at the RenCen, and Barra assured the crowd that GM would work with developers on possible uses for the RenCen once GM vacates it, but she said the Hudson building is, "a very historic site for Detroit and one that's very personal to me," adding it is a "new city landmark."
"It's important to all of us at GM that we continue to call Detroit our home for a long time to come," Barra said.
GM to move people from RenCen and Warren
Hudson's Detroit is the new 1.5 million-square-foot development by Bedrock, the real estate firm of Gilbert, chairman of mortgage lender Rocket Companies Inc. The project’s skyscraper topped out last week at just over 681 feet, making it the second-tallest building in Detroit, behind the central tower of the Renaissance Center.
But this move is a significant downsizing in the automaker's square footage. Reuss said GM will occupy the top two floors of the building, but commercial real estate brochures show each floor is just under 50,000 rentable square feet. At the RenCen, GM has access to 2.3 million square feet in office space.
"We don't know exactly how many people we're going to take from the RenCen, from Warren and populate this, because we're architecting the offices," Reuss said. He added that the GM corporate staff will be moving — top executives, along with finance, communications, legal staff and human resources.
Electric vehicles, like the Hummer EV, are parked outside of General Motors' new global headquarters at Hudson site, that was announced during a news conference held at the Hudson site in downtown Detroit on Monday, April 15, 2024.
GM has had four different headquarters locations within Detroit in its 115-year history, and Barra said the Hudson building is "a perfect fit."
"We'll be the signature tenant of this state-of-the-art building," Barra said. "We'll have space to display our vehicles and host events with all the modern amenities you'd imagine from a developer like Bedrock."
The Hudson’s site consists of two side-by-side buildings: a 12-story “office block” with over 500,000 square feet of office, commercial and events space, and a 45-story skyscraper that is expected to house an ultraluxury Edition Hotel and about 100 condos and apartments. The Hudson’s site project broke ground in December 2017, and the buildings could be substantially completed by the end of this year.
The development is on the site of what was once the world's tallest department store, but Hudson's closed its downtown location in 1983, and the building was imploded in 1998, leaving a vacant surface lot until Gilbert started his project.
GM will occupy the top two floors of the office building and have a publicly assessable showroom, Reuss said. He said GM does not anticipate receiving any tax incentives to make the move, but he did not rule out incentives connected to RenCen redevelopment.
Former Detroit Free Press business columnist and reporter John Gallagher has covered the city extensively and wrote the book, “Reimagining Detroit: Opportunities for Redefining an American City.” Gallagher called Monday’s news, “The major real estate story of the year.”
General Motors is moving its global headquarters to the newly completed Hudson's site in downtown Detroit on Monday, April 15, 2024.
“It’s great for Gilbert’s building. It immediately gives it that star billing,” Gallagher told the Free Press. “The question was: How are they going to fill that up? But by having GM world headquarters there, that makes it the most desirable building in Detroit.”
GM’s move solidifies central downtown with “perhaps a few thousand” GM employees filling it and bringing added revenue to the businesses along Woodward, Gallagher said. The added foot traffic will help Midtown and Corktown liven up as places to live and recreate, he said.
But the home run for the Hudson leaves a big question about the future of the RenCen, he said.
“What happens to the RenCen?” Gallagher asked. “GM still owns it, but I am not sure what happens to it. The waterfront itself is far enough along that this will not hurt the waterfront at all.”
Barra promised that GM will partner with Bedrock, the city of Detroit and Wayne County to "plot a new path forward" for the RenCen over the next year or so.
Duggan promises a future for RenCen
GM has had its headquarters at the RenCen since 1996. That's when the automaker purchased five of the seven towers there for $73 million, according to the Detroit Historical Society. GM occupies four of the towers, with the Marriott in the fifth. Farmington Hills-based Friedman Real Estate said it bought the RenCen's 500 and 600 towers in December for an undisclosed price from a New Jersey utility company that had owned them for years.
"We'll explore new ideas for the complex, including the possibility for commercial, residential or mixed use, and we're grateful for collaboration with a visionary like Dan who has had such an impact on the resurgence of downtown Detroit in recent years," Barra said.
Bedrock has purchased around 100 downtown buildings, starting in about 2010. Gilbert moved his mortgage operations downtown and has set about renovating buildings, adding residences and curating retail operations in the city core.
Detroit Mayor Mike Duggan said that it was about six years ago when Gilbert first proposed pitching Barra on moving GM headquarters to the Hudson building.
Gilbert said, "From the beginning, we understood the significance of Hudson's to our city, which is why we designed it to be more than just a building. We built these buildings to be a destination celebrating Detroit over the past century and strengthening that momentum for generations to come.
"Most importantly, we wanted to be a place that would attract the best companies and the best talent from all over the world. Who knew we would attract the one from around the corner here?"
Bedrock's founder, Chairman Dan Gilbert announces General Motors is moving its global headquarters to the newly completed Hudson's site in downtown Detroit on Monday, April 15, 2024.
He added: “GM represents more than just a new office anchor, it solidifies the company’s commitment to the city they have called home for more than 100 years. The building will have it all: state of the art exhibition and meeting spaces, luxury hotel, living amenities, exciting restaurants and bars and destination shopping. Hudson’s is located right here in the heart of downtown sitting along iconic Woodward Avenue, America’s first paved road.”
Duggan promised that the parties will find the right solution for the long-term use of the RenCen.
"We have the right leaders," Duggan said. "It's gonna take some time, we're gonna get the right result. But we are going to make sure that as GM comes here for celebration, we also have cause for celebration at the Detroit Renaissance Center."
Renaissance Center in Detroit on Monday, April 15, 2024.
Gallagher said if Bedrock takes over the RenCen in some way, whether Bedrock buys it from GM at some point or takes over management, it may be good news for the iconic riverfront complex.
Gallagher said of Bedrock: “They’re pretty smart guys, so they might manage that building better than GM can. If you look at what they did downtown with all the shops and restaurants they curated up and down Woodward … if I was betting on the future of the RenCen, I’d bet on Bedrock more than GM.”
Steve Morris, with Axis Partners in Farmington Hills, said apartments are probably not an option, given the high costs of adding plumbing to each unit. Further, demand for apartments in Detroit has slowed.
Office space is an option, but Detroit already has high vacancy rates and demand is low, Morris said.
The vacancy rate for office space in downtown Detroit was 19.4% in the first quarter of this year, up from just under 13% in late 2019, according to past market reports from the Newmark real estate firm.
According to Axis, the city’s central business district has 232 million square feet of office space, but just over 4 million of that total is vacant, and another 334,000 is subleased space that is also available and less expensive.
The RenCen already has a hotel, but Morris said it’s possible to add another. Medical offices or facilities are another possible option, but would be expensive to build.
The RenCen is arguably Detroit’s most recognizable building, and GM’s brightly lit logo at its top serves as a beacon along the city's skyline, reflecting Detroit's spirit. When the logos went dark in November 2023, it sent social media into a frenzy with speculation that GM had abandoned the building. But as the Free Press reported, GM was replacing the lighting as part of routine maintenance at the time.
GM has used the logos atop the RenCen to both celebrate and mourn with the city.
In August 2018, the automaker and its luxury brand Cadillac paid tribute to Motown legend Aretha Franklin after she died by lighting the top of the building pink with the word "Respect." The pink referenced her hit song "Pink Cadillac" and "Respect" was the title of her classic 1967 hit. In 2011, GM saluted the Red Wings after they won a playoff game by changing the top of the RenCen to the red-and-white Wings' logo. That same year, an old English "D" topped the RenCen for the Tigers' Opening Day. After Prince died in 2016, GM lit the top of the RenCen purple to honor the musician.
Most recently, GM animated the lights at the top of the building to include a lion's tail on it in support of the Detroit Lions' playoff run in January.
GM's mandate was helping businesses at the RenCen
Since the COVID-19 pandemic, the daily population of workers at the RenCen has been dwindling as many of GM's employees, who once occupied the offices there, worked from home. Earlier this year, GM mandated its workers come in on Tuesday, Wednesday and Thursday of each week, which has helped boost foot traffic in the RenCen to help restaurants and other businesses that rely on office workers for daily business.
View of the Renaissance Center and Detroit Princess Riverboat from the Detroit People Mover in downtown Detroit on Wednesday, Sept. 20, 2023.
Steve Ali, owner of Salsarita's Fresh Mexican Grill located in the RenCen’s food court on the lower level, said the reports Monday that GM planned to move from the RenCen was “a shock, to say the least.”
Last month, Ali and other restaurant owners in the food court told the Free Press that business had slowly started to pick up with GM’s mandate that people work from the office three times a week.
“I was hoping I’d see a gradual improvement over the year with the number of tenants in there,” Ali told the Free Press on Monday. “I didn’t see this one coming. This doesn’t put us in a very good position. This is very shocking and disappointing. I am not sure where it’s going to leave us — even if they redevelop it, it will be a very long time before it’s a viable four towers again.”
But closer to the new building, the news was met with enthusiasm. Mootz Pizzeria + Bar is a restaurant on Library Street behind the new Hudson’s tower. Walter Gregorio, Mootz’s director of operations, called GM’s move “fantastic.”
“I think it’s fantastic for GM,” Gregorio said. “GM is getting a new spot and it is great for us.”
Tony Sacco, Mootz owner and partner, added that GM’s move is “going to help the core downtown.”
Reduced number of workers at the RenCen
Exactly how many GM employees are still assigned to work at the RenCen these days is unclear and GM is not saying. In October 2022, the Free Press reported that about 5,000 employees were assigned to work at the RenCen, even though many continued to work remotely.
GM's website said in early March that 857 employees were working at the RenCen. At the time GM spokeswoman Tara Kuhnen said that number had not been updated to reflect increases since implementing the return-to-office policy in January, but she declined to provide an updated figure. According to a screenshot of GM's website dated Oct. 3, 2023, which was obtained by the Free Press, GM listed 1,320 employees assigned to the RenCen then.
Kuhnen confirmed a "small number" of employees have been transferred to other locations within southeast Michigan in recent years as the business and hybrid work arrangements evolved, but she declined to provide specific figures.
