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RenCen Looking More and More Like a Ghost Town

Cost-cutting by automaker could cripple Detroit.

by on Sep.23, 2009

Even if GM stays put, the Renaissance Center is starting to look a little empty.

Even if GM stays put, the Renaissance Center is starting to look a little empty.

When it was first built, three decades ago, Detroit’s Renaissance Center was intended to signify Motown’s long-awaited turnaround.  Instead, it could soon signal the economic collapse of the troubled city.

Rumors that General Motors might abandon the headquarters building it acquired in 1996 have been circulating ever since the automaker started considering bankruptcy, early this year, and senior officials refused to rule out such an option after emerging from court protection, in July.  Such a move might save hundreds of millions of dollars in operating costs, never mind the higher taxes GM employees pay to work within Detroit city limits.

The most likely alternative, corporate insiders suggest, would be to pack up and leave the 7-building complex, along the Detroit River, and relocate to the now under-utilized GM Technical Center, a dozen miles to the north, in the suburb of Warren.  Local officials have been actively campaigning to convince the automaker to make such a move.

But even if the heart of General Motors stays put, it appears the RenCen is slowly being emptied out, several sources confirm for TheDetroitBureau.com.  As part of its reorganization plan, GM agreed to abandon four of its North American brands.  That, alone, means a lot of empty space in the corporate complex.

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Pontiac is being closed, and substantial cuts have already being made to the once popular division’s staff – along with the broader cuts made in GM’s white-collar workforce, much of it once based in downtown Detroit.

Saab has been sold off to a consortium led by the Swedish supercar maker, Koenigsegg, which plans to move out of the RenCen, as well, most likely to a suburban site near Royal Oak, Michigan.

Plans to sell the Hummer brand to a Chinese buyer have run into some snags, but whether the deal eventually goes through or collapses – which may lead GM to simple abandon the brand – a senior source at the troubled American maker says that what will be left of the Hummer brand team also will leave the Renaissance Center.

And it is highly unlikely that much, if any, of the Saturn brand’s staff would remain at the office complex once entrepreneur Roger Penske completes the purchase of that nameplate.

Even now, confirmed two sources, there are “whole floors” of the RenCen emptied of anyone but the ghosts of GM past.

Whether to pull out entirely might seem to make sense from a purely financial standpoint, added one insider, though he cautioned the savings might not be as large, nor come quite as quickly as some outsiders have projected.

And the decision to go or stay is likely not going to be made entirely on its economic merits.  The RenCen is not only a symbol of Detroit’s tattered pride, but a critical chunk of real estate in a market where there is already far too much unused office space available.  “I can’t imagine anyone finding a new tenant that could take the buildings over,” said one source, asking not to be mentioned by name.

Combine the loss of prestige and millions of dollars in property and income taxes and GM could deliver a blow the city simply couldn’t recover from.  With a massive budget gap looming, new Mayor Dave Bing has been threatening to take steps ranging from reductions in weekend bus service to eliminating thousands of city jobs.

Some have even proposed that the City of Detroit simply abandon as much as 40 square miles of property, about 30% of its total.

There has been heavy lobbying by city and other regional leaders who hope to convince the Obama Administration to keep General Motors put downtown.  As the majority shareholder in the “new” GM, the White House could push the decision either way.

But even if GM maintains its corporate headquarters downtown, there’s little doubt the sprawling Renaissance Center will be looking a bit more like a ghost town in the wake of the automaker’s reorganization.

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2 Responses to “RenCen Looking More and More Like a Ghost Town”

  1. SR Bloxham says:

    What is the actual history of the RenCen?
    A friend, years ago, was the leasing agent when it opened and she was with Ford. I remember meeting with Ford people at the RenCen in 80 or 81.
    How did GM come to occupy it?

    On the broader subject: When the inevitable happens to the Detroit City Government,(insolvency) isn’t the only logical outcome going to be to disolve the city as a legal entity and let the surrounding better administered cities absorb whatever sections are adjacent? Detroit has had enough chances to fix itself. Enough is enough. The long suffering citizens of Detroit deserve something better.

    • tdb says:

      I recall my first visit to the Renaissance Center, shortly after it opened, for a 1977 convention of the Society of Professional Journalists, shortly before I graduated college. I was surprised by the shoddiness of the hotel furnishings (and, even then, from a student’s eyes).

      The entire complex was a grand dream made possible, in large part, by Henry Ford II, who saw it as a way to revive the city and civic pride. But the actual design reflected the general fear folks had about the city, with a massive concrete berm, out front, and plenty of other design features that seemed almost to say, “Go away.”

      The original, five towers were designed by the architect Portman, who also did smaller versions in Atlanta and LA. But the larger RenCen design, with its lack of straight lines and zig-zag paths, was ridiculed from the start. He fired back, in an interview (ca 1983 or ’84) insisting it’s the public’s fault and that people should “fix on landmarks,” so they could readily get from Point A to Point B. In fact, a friend, at the time one of the senior managers of the center, confided with me that Portman got lost on the way to the interview, and was 15 minutes late.

      Ford posted a number of departments to the RenCen, but never made the full commitment to move, even when the company briefly discussed the need for a new HQ. As Ford began reassigning folks back to Dearborn, MI, in the mid-1990s, RenCen began feeling pretty empty. And the financial situation got worse by the year.

      In 1996, with its own fortunes seemingly on the mend, GM surprised everyone by announcing plans to buy the RenCen, and for an absolute pittance. Sorry, can’t find my notes, but I believe it was for just $200 million, which Rick Wagoner noted was a fraction of the cost of a new Class-A headquarters — even with the $100s of millions GM planned to invest to make RenCen’s design more effective. Indeed, it’s a lot easier navigating the center now, and with the old concrete berm gone (and the glass-enclosed Winter Garden staring out on the Detroit River), the facility now almost feels like a part of the city. Almost.

      As to the possible insolvency of Detroit, there is next to a zero chance that the city itself would be broken up and parceled out to its neighbors. The alternative scenarios are numerous. One of the more interesting is the idea that as much as 40 square miles of the total 138 under city governance might effectively be abandoned. Note that much of that land is already a dead zone, with abandoned factories or, in some cases, old neighborhoods with one or two occupied homes left in use. The argument is that it would be easier to buy out those folks remaining and re-settle them, then effectively turn off services in the abandoned zones, letting them go back to seed — or park or farm or…

      We’ll see.
      Paul A. Eisenstein
      Bureau Chief, TheDetroitBureau.com