General News

Penobscot Building in Detroit Losing Tenants, Facing Lawsuit

September 1, 2020

DETROIT, MI – The 47-story Penobscot Building, 645 Griswold Street in downtown Detroit, opened in 1929 and was once the city’s tallest, but today it is garnering more attention for neglect, receiving “the third-most blight tickets of any building in the city since 2019,” Crain’s Detroit Business reported on August 30.

An elevator fire on January 17 was just one instance mentioned in the Crain’s Detroit article to highlight the neglect of the building by the Toronto-based ownership group, Triple Properties Inc., whose managing member is Steve Apostolopoulos.

The fire “was just the most publicly noticeable manifestation of years of what some say is deferred maintenance, making it one of the last major buildings in the central business district to get a serious renovation during the decade-long historic renovation and building boom in the city's core,” Crain’s Detroit reported, adding that “The Penobscot, has lost two major tenants and has been socked with no less than 161 tickets totaling over $92,000 in blight violations this year alone, with the city threatening a nuisance abatement lawsuit if the Toronto-based ownership group, Triple Properties Inc., doesn't fix the neglected portions of the building.”

“One of the tenants that vacated, Strategic Staffing Solutions LLC, has sued Triple Properties in Wayne County Circuit Court, claiming it sent its landlord approximately 70 written notices with building maintenance issues between May 2018 and August 2019 alone,” Crain’s Detroit reported, adding that the issues included "repeated and severe issues involving water leaks, heating, cooling, insect infestations, broken and/or malfunctioning elevators, lighting, construction noise and dust, plumbing, electrical wiring and structural issues."

Triple Properties, in its response, “denies that it breached its lease agreement and says that Strategic Staffing Solutions ‘was at all times fully aware that the building was not a 'new build' and reaped the benefit of that fact by negotiating a square foot rental rate of approximately $10 per square foot below market rental rates in the city of Detroit,’ and that ‘there have been significant improvements in and to the building, and the overall condition of the building, since Triple Properties took ownership,’" Crain’s Detroit reported.

Crain’s requested an interview with Apostolopoulos, but when he requested emailed questions, the business magazine declined.

Detroit’s Buildings, Safety Engineering and Environmental Department chief enforcement officer Jessica Parker said that “the city has been ‘engaging the owner’ and that Triple has been working on some of the repairs, including fixing elevators, cleaning and removing debris from unoccupied floors and ‘locking down’ vacant spaces,” Crain’s Detroit reported, adding that “some of the blight violations earlier this year were for things like not having a certificate of compliance, interior debris, and unsafe and unsanitary conditions.”

Parker told Crain’s Detroit, "As of recent, he is trying to come into compliance and working with inspectors … We have a property owner that is not ignoring us. They are calling us and contacting us. They are walking us through. We want to do it the easy way, not the hard way, but if you're going to ignore us, we'll do it the hard way."

“Triple Properties, which is run by the Apostolopoulos family, paid just $5 million cash for the nearly 1 million-square-foot building in 2012, at the height of Dan Gilbert's building buying spree,” Crain’s Detroit reported, adding that “at about $5 per square foot, the Toronto family came in at the very bottom of the market, snagging a distressed asset that needed a lot of work.”

At the time, Andreas Apostolopoulos, then-president and CEO of Triple Properties, told Crain's that his company was "going to put some money into the building and try to attract more tenants. If I can come in and buy that building for $4 a square foot, then lease it for $10 a square foot or more, that's just good business."

Lynnette Boyle, principal of Detroit-based Beanstalk Real Estate Solutions, told Crain’s Detroit, "We have waited to see what the current owner is going to do with that building for years. Many people were really excited when he purchased it because he was going to renovate it. There is a lot of disappointment with the lack of action, but we remain hopeful that if the current owner can find the right investment opportunity with other developers, he still wants to do something with that building."

"It can't go down. We can't let the Penobscot fail. It's too much of a landmark," Boyle said, Crain’s Detroit reported.


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