Karp finds a bigger pond
|By Lawrence Cosentino|
Lansing developer picked for $85 million project in Detroit
Detroit’s Capitol Park is a quiet triangle of benches and planters surrounded by grand old buildings that are better described as sky-ticklers than skyscrapers. They shelter, rather than loom, as people chat and feed pigeons in the modest-sized park.
Lansing developer Richard Karp can’t seem to get away from the state Capitol. In April, Karp won a bid to renovate three historic Detroit buildings in Capitol Park, where the Michigan State Capitol stood until 1847. A tiny metal replica of the Capitol, about two and a half pigeons long, still marks the spot.
It’s a big coup for Karp, who beat out major Detroit players like the Ilitches for the contract. Karp’s frequent partner in renovation projects, Lansing’s Kevin Prater, will team with him on the $85 million project, financed by a complex patchwork of loans, tax credits and neighborhood stabilization funds from HUD.
A consortium of local and state economic development agencies picked Karp, largely on the strength of two recent successes outside of Lansing.
Last year, Karp and Prater rehabbed the Standart-Simmons Building, a century-old warehouse in downtown Toledo, into 75 apartments, now 100 percent leased.
Before that, Prater and Karp transformed Flint’s 1920 Durant Hotel from an empty shell in January 2001 to a completed project, with 93 apartments and a grand ballroom, in August 2011.
Karp said the apartments in both projects are at full occupancy.
Capitol Park, bounded by Shelby, Griswold and State streets, was a bustling bus hub until 2009, when the Rosa Parks Transportation Center was built a few blocks west. Now the park is an oasis of tranquility a block from Woodward Avenue. Karp said there’s no space like it in the city.
“The buildings that ring us around here have six to 13 stories, and that’s a relatively comfortable space for humans,” Karp said.
The buildings slated for renovation include the United Way Building, a dignified 11-story slab on the park’s west side, and the gracefully angled Capitol Park Building, which spreads like an open book at the park’s south end.
The prize among the three is the Farwell Building, a classic Chicago-style 1915 commercial building that once housed high-end iron grillwork, Tiffany chandeliers and glass mosaics and Pewabic tiles.
“There’s not a lot left in the interiors,” Karp said. “Most of what we’re dealing with is historic facades.”
When the project is finished, Karp expects about 250 high-end apartments and 75,000 square feet of office space to mix comfortably with low-income housing that’s already here. The Griswold Building, a large block of low-income senior apartments with Art Deco flourishes, borders the east side of the park. In a cream-colored building to the west, next to the Farwell, window plants and hipsters strumming guitars can be seen in the windows.
“They’re not legally rehabbed — no permits pulled or anything — but people are living there and they’re adding to the culture and the flavor that’s down here,” Karp said, referring to the hipster hangout.
At $85 million, the Capitol Park project is more than twice as big as anything Karp has done before, but he prefers to look at the job as three separate buildings, each costing less than $30 million. “So this is right in our wheelhouse,” Karp said. (The Durant Hotel in Flint cost $41 million and the Standart project cost $20 million.)
Karp has been eyeing Detroit’s neglected gems for years, but he said it’s surprisingly hard to find a willing seller. Occasional payoffs like casinos or a Super Bowl, he said, keep owners waiting for a “big payday.”
“So people sit on these vacant buildings, and they just crumble away,” he said.
Meanwhile, a series of big rehab projects in Detroit’s midtown and downtown are filling fast, with waiting lists announced for each new project. Karp expects much of the demand for the Capitol Park apartments from Wayne State University students and employees of latter-day Detroit-o-philic companies like Quicken Loans, which has recently moved hundreds of new workers into the area.
“Having a billionaire like [Quicken CEO] Danny Gilbert running around, spending money like a drunken sailor, buying buildings left and right, doesn’t hurt either,” he said.
No wonder Karp sounds like he has blasted through a mined-out cave into the mother of all lodes.
“We’ve kind of run out of things to do in Lansing,” he said. “The scale of projects we do don’t exist there, unless we do new construction.” In 2005-’06, Karp and Prater set the keystone of downtown Lansing’s resurgence with an $8 million renovation of the 1915 Arbaugh Building into lofts and office space.
Last Thursday, on a weekly visit to the site, Karp looked across the sheltering box canyon of Capitol Park. A little girl danced in the shade, scattering the pigeons. In the middle distance, just south of the park, the towering Deco David Stott Building loomed like an Olympian gateway to the mighty architectural works of downtown Detroit — rehab heaven.
“There’s 15, 20 years of work to do here,” he said, and disappeared into his truck.