Thank you for sharing!

Your article was successfully shared with the contacts you provided.

DETROIT-Local commercial real estate leaders are divided on the future of the struggling markets, now that a major distraction is over. Mayor Kwame Kilpatrick is now out of office. As part of a deal to escape multiple charges, including assault and lying under oath, Kilpatrick plead guilty this morning to two felony counts of obstruction of justice by perjury and no contest to an assault charge, a move that forces him to resign, repay $1 million to the city, give up his law license and serve four months in Wayne County Jail.

The saga has lasted almost a year. Kilpatrick admitted this morning that he lied under oath about his relationship with his chief of staff, Christine Beatty, and to quash salacious text messages between the two that were subpoenaed in a city lawsuit, he settled the case without informing the city of a private agreement to keep the messages hidden. The no-contest plea has to do with Kilpatrick allegedly pushing a police official that had come to a relative’s house to serve a subpoena.

Detroit City Council President Ken Cockrel Jr. will reportedly take over as mayor. Kilpatrick will leave office within two weeks and move out of the Manoogian Mansion, and will face an Oct. 28 sentencing date on the obstruction charges. His chief of police, Ella Billy-Cummings, has already announced her retirement, and other Kilpatrick-appointed officials are expected to resign or be removed by Cockrel.

The case has attracted the public’s attention for about eight months, and most agree has tied up any efforts to move the city out of its troubled economy. Even Gov. Jennifer Granholm was involved, heading a hearing in Detroit on Wednesday that considered the forced removal of Kilpatrick. That hearing was canceled when the plea deal was announced.

Fred Liesveld, EVP and managing director of the local Grubb & Ellis office, tells GlobeSt.com this morning that while it would be nice to think that the mayor’s troubles are the cause for struggling markets, it really isn’t the case. “Sure, it probably slowed down some things, but Detroit’s going through a transition with or without the mayor,” he says. “Look at the shrinking auto industry, and the number of manufacturing jobs lost in Southeast Michigan. That’s played a more significant role in commercial real estate here. We’d like to think that the scandal is a bigger story, but it’s not, the credit markets have played a much bigger role than any scandal.”

It’s hard to argue with Liesveld. Detroit’s housing market is in the dumps, though many argue perception is having more of an impact than actual demand. The region has had many foreclosures, but is certainly not the national leader in lost homes, and has not suffered as much as some markets that had huge bubbles burst, such as Phoenix and south Florida. The auto industries have reported losses, but all have also put in place strong restructuring plans, though some of those plans included fewer jobs.

Mike Gerard, senior managing director of the local office of CB Richard Ellis, disagrees with Liesveld, saying that now projects can continue in Detroit. “It’s a sad day, in 300 years we’ve never had a mayor admit to a felony and resign,” Gerard tells GlobeSt.com. “However, we will immediately see a healing process, we have a lot of work to do.”

He says the scandal held up or destroyed many projects in the city, including a needed renovation and expansion of Cobo Hall exhibition center, and a second Detroit-Windsor tunnel. “There’s going to be a huge difference now, there’s been a lot of potential investment here that’s been on hold. Cockrel will start us moving forward on these issues again, issues that are vital to the success of the city. This has hurt us economically, but we can recover,” Gerard says.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.