Empty buildings tax the tax roll

By: Terry Oparka | Troy Times | Published February 8, 2012


Vacancy rates for commercial and industrial properties in Troy continue to hover at 30 percent, and that’s not likely change anytime soon.

Troy City Assessor Nino Licari said the vacancy rate for industrial buildings is between 30 and 35 percent, and commercial buildings are 20 to 30 percent empty.

“It’s not getting any better,” Licari said.

He noted that Troy has more than 17 million square feet of available office space, which puts it behind only Detroit and Southfield.

The city’s tax base is currently made up of mostly residential property, 57.58 percent, with commercial property comprising 30.54 percent and industrial 11.88 percent.

Five years ago, commercial and industrial property taxes dominated the tax rolls and came in at 55 percent of the city’s tax base, Licari said.

“We were hoping for a quicker turnaround on vacancies,” Licari said. “This is much slower than we thought it would be.”

Also, rent is down overall, and companies are not getting what they used to, he said.

One bright spot is the retail property at Somerset Collection, which Licari said is doing very well.

While Somerset Collection spokesperson Ed Nakfoor said it’s against company policy to release occupancy rates, he noted that new tenants will arrive at the collection this spring and remodels continue at stores in the center. Giorgio Armani is set to open June 19, and Emporio Armani is set to open June 13, both in Somerset South and both firsts in Michigan, Nakfoor said. Another Michigan first, Aritizi, based in Canada, is set to open its doors at Somerset North April 1. Victoria’s Secret, Express and Bath & Body Works are undergoing remodeling, Nakfoor said.

He noted that the Christmas season drew many new people to Somerset who had never visited the center before.

“Somerset merchants did very well (for Christmas), the majority of them beating plan,” Nakfoor said. He said the standout categories were luxury accessories and apparel, personal electronic devices, athletic/outdoor apparel and accessories, children’s games, The Detroit Shoppe, and Somerset gift cards.

“The mood from our guests was so upbeat from Black Friday through New Year’s,” he said.

However, across the street, the former Kmart headquarters remains shuttered after Forbes Frankel Troy Ventures LLC, owner of Somerset Collection, purchased the 40-acre site in early 2010. Plans for a mixed-use retail and residential development on the site stalled due to a flattened economy.

In 2007, the Troy City Council approved the site for use under a planned unit development option that allows the developer higher density in exchange for providing other features, such as landscaping and green options. Planning Director Brent Savidant said the PUD stays with the parcel for five years. Savidant said that no applications have been submitted for the site to date.

Paul Evans, city zoning and compliance specialist, said that when the vacancies started to increase a few years ago, the city had already had processes, technology and staff in place to meet the challenge of addressing blight issues.

He explained that in 2004, the city decriminalized blight laws and made them civil infractions rather than misdemeanors, which means violators do not get a criminal record for blight violations. In 2007, staff stepped up education efforts on code enforcement on the city website, and in 2009 streamlined the municipal infraction process to significantly reduce court time and cost to the city and those cited for violations, Evans said.

He also praised city staff and said they work with laptops in real time in the field.

“Troy has clear laws, extremely knowledgeable and experienced code enforcement staff and a supportive local district court to effectively address all kinds of blight,” Evans said via email. “Since I started with the city in 2007, we have not yet been challenged with a blight matter we could not resolve.”