TROY, MI-Though designed for thousands of office workers, a partnership of developers plan to demolish the 900,000-sf vacant, former Kmart headquarters complex on Big Beaver Road, to make way for a $300-million mixed-use project that would include 290,000 sf of retail, 300,000-sf office space, a 250-room hotel, a theater and 750 multifamily residences, likely condos that will include 150 senior housing units. The project could become the downtown that the city of 80,000 people has been searching for since dropping plans to build a city center around the city hall complex east of I-75 at Big Beaver Road.

The partnership to build the Pavilions of Troy includes Richardson Development Group Inc., based in Reston, VA; Boorn Partners based in Cincinnati and New York City-based BlackRock as the owner of the land. Hunter Richardson, principal with the self-named firm, tells that the civic downtown plans were doomed from the start. “That area is public land, it just can’t happen with government in the mix. This really requires private development.”

A better redevelopment location can’t be found in Troy. Since the migration of some of the 5,000 Kmart headquarters employees to the Sears HQ in Hoffman Estates, IL after the merger in 2005, the odd, pod-like office complex on the north side of Big Beaver, west of Coolidge Highway, has been the pink elephant in the area where many don’t want to accept that the state’s strongest office market, the Troy area, is going soft.

Instead, Richardson says this location is what drew the partnership to the site–to feed off of the nearby Somerset Collection mall. “I would classify the retail that we will attract will be comparable and complimentary to Somerset, with tenants of the same caliber. The difference is going to be that while Somerset is a destination, we are going to be a shopping, entertainment and dining district.”

He says there hasn’t been any tenant negotiations yet, but the partnership will be shopping the plans at the upcoming International Council of Shopping Centers convention in Las Vegas starting next week. The property is currently zoned for office use, but Richardson says he hopes the city will agree to PUD zoning for the 40-acre site. The property would then be built out during the next five to seven years, he tells, with a 2008 groundbreaking and the opening of the first phase in 2010.

Richardson says the group is not afraid of the struggling Michigan economy. “In real estate, you have to be selective, and especially in Detroit at this time,” he says. “It can’t be just that you get a good price, you can be given property and still have it not work. We think there’s a market opportunity at this location,” he says.

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