GM Hires JLL to Reap Millions in Site Sales

While a spokesman for the automaker wouldn't confirm the JLL hire, he tells GlobeSt.com that there is a significant amount of surplus property that could be sold. "We will continue to explore options to sell," he says. "Generally speaking, due to the circumstances we are facing right now, we certainly want to look at maximizing the company's liquidity position. We're in the midst of what is arguably the worst financial crunch since World War II." The company reportedly could raise another $253 million by selling properties overseas, including a Saab plant in Sweden and GM's office on Sandyford Business Estate in Dublin.

The firm recently divested its Oklahoma City assembly plant to the city, which was able to give it over to Tinker Air Force Base, which will expand onto the site. He also says his company hopes to have a deal closed by the end of the year to sell a former assembly plant in Doraville, GA. "We're actively working that property," the spokesman says.

He says early this year, the company paid off a $626 million loan to own outright the headquarters complex, which was formerly known as the Renaissance Center, along the Detroit River. The company spent more than $1 billion to renovate the Downtown landmark, which includes four 39-story business towers, with GM occupying three of them and the fourth leased as multitenant. The complex is about 90% occupied, and includes a 70-story Marriott hotel tower.

"We made it very clear…we would certainly explore options to tap into the equity of the building, but there's nothing to report yet," the spokesman says. The company made a presentation to the Detroit Fire and Police Pension Board two months ago, where an SLB figure of just more than $500 million was brought out, but the board "never really responded" to the presentation, the spokesman says.

However, most commercial real estate experts around Detroit say there's no way any company can or will buy the RenCen in today's market, especially with Downtown office vacancy hovering around 30%. Mark Woods, VP and managing director of operations at Signature Associates, has spent many years dealing with automakers over land, including 10 years as VP of Ford Motor Co.'s real estate subsidiary, Ford Land. He tells GlobeSt.com he believes automaker executives are all "smart guys" who are suffering from the perfect storm of financial, real estate and business climate collapse.

"They're going to figure out a way to get through this cycle with or without a government rescue, even if that means cutting back to 15 million units, or whatever the volume is…there's just too much capacity. The business climate will get better," he says. When asked about selling the RenCen, he says he agrees with the rest of the experts. "It won't happen," Woods says.

A JLL spokeswoman tells GlobeSt.com that she cannot comment on any GM hire. The Chicago company has done work for GM before, including a 120,000-square-foot lease in March at Citigroup Center in New York City. Also, in April, the automaker selected JLL with a 2007 Supplier of the Year award.

The automaker has recently admitted to the bankruptcy consideration, but reportedly said the option just isn't viable, in part because a filing would mean almost certain doom. Whereas many companies, even those with many properties such as Kmart, can restructure after bankruptcy, the Big Three believe that consumers will not buy a car from a company that files. Rod Anderson, a partner in Holland & Knight's bankruptcy practice in Tampa, says consumers will likely overreact if one of the Big Three has to admit defeat. "Big players like the car companies need cash to file, and no one is lending now anyway. If the filing affects your product, you can lose everything before restructuring can happen. You need cash flow, and bankruptcy doesn't solve that," he tells GlobeSt.com.

On a positive note, if GM can sell a plant here or there, communities have had a good track record of turning these sites around, especially with help from the companies themselves. Midlink Business Park, a former GM plant in Kalamazoo that was vacated in 1999 and is now owned by Hackman Capital Partners, has leased up most of the two-million-square-foot complex. "We only have about 200,000 square feet left to lease," says Ron Kitchens, CEO of Southwest Michigan First. A 600,000-square-foot lease to Kaiser Aluminum early this year really helped, he says.

"Our strategy was that we made a commitment five-to-six years ago that we weren't going to participate in the state's downturn," Kitchens says. His non-profit group has made 900 visits to companies to try to convince them to locate in the Kalamazoo area, though he says GM was a little difficult to get going on the Midlink site. "It's not their fault, they're in the car business, not the property business. It was a little slow getting them to pay attention to our issues, we had to wade through a bureaucracy," Kitchens tells GlobeSt.com.