One upside to a faltering real estate market is a plethora of good buys on property. General Motors took advantage of that fact by purchasing its Renaissance Center headquarters in Detroit for $626 million in cash. For another $200 million it picked up a couple of office buildings in Pontiac, too.GM spokeswoman Renee Rashid-Menem told The Associated Press that the company's lease was up for renewal on May 1, but they saw a good opportunity to get a deal on the place. She went on to say that as the real estate market improves, the company could sell the property and return to a lease arrangement.
Here's an interesting piece of trivia many outside the Detroit area may not know. Henry Ford II and Ford's real estate division built the Renaissance Center in 1977. General Motors claimed it as its HQ in 1996 and in 2005 completed a $500 million improvement project.
[Source: AP via Yahoo Finance]
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Reader Comments (Page 1 of 2)
Doug @ May 9th 2008 5:12PM
"Here's an interesting piece of trivia many outside the Detroit area may not know."
I was born and raised in the Detroit area (I-94 and Chalmers) and I didn't know that. I bet that'll save them loads of money on rent in the long run!
Kristina @ May 9th 2008 5:55PM
I was too very surprised that they were renting!
http://www.azautophile.com
Flashpoint @ May 9th 2008 7:23PM
Reminds me of the OCP building in ROBOCOP.
Nice to have a building you can work at in the nations crime capital.
Jvijil @ May 9th 2008 5:13PM
wow first $200 million for american axle then $850 million on properties.... GM must have A LOT of money stored up
bilbo baggins @ May 9th 2008 5:17PM
And who would've thought FORD built the GM headquarters. Well well...and what a pretty building it is too. Kinda like the BMW head quarters , when you see it you know its BMW same's for this building.
I wonder if ford ever thought they shouldn't have sold it!
sk @ May 9th 2008 5:48PM
Not the same as the American Axel deal, its still in the books for $850 million.
brian @ May 9th 2008 9:03PM
You OBVIOUSLY have no idea how corporate finance operates. Even more obviously, GM did not finance this purchase with cash. Just shut up, they know what they are doing.
Jvijil @ May 10th 2008 12:26PM
well sorry im not a mr.big shot who comes onto blogs to make fun of someone
Matt @ May 9th 2008 5:44PM
wow born and raised in the D as well and did not know that.
TriShield @ May 9th 2008 5:47PM
If anyone ever visits Detroit or goes to the area for the Dream Cruise definintely check out Ford and GM headquarters if you get the chance. The RenCen has a lot of interesting exhibits, a university inside and a mall. Ford's HQ has the Henry Ford museum and historic village loaded with artifacts the man collected during his time, it's quite impressive.
Doug @ May 9th 2008 6:33PM
I wish I could've had the chance to eat on the top floor of the Ren Cen when it used to be a restaurant. My parents went once, but I was too young. :'(
Chris @ May 9th 2008 7:13PM
In a manner of speaking yes, but you probably don't know what it is. GMU is for GM employees only for continuous learning.
http://www.gm.com/corporate/careers/life_at_gm.jsp?p=gmu
GMI (General Motors Institute, now Kettering University) was the GM owned private university in Flint until 1982 when it became a separate entity. http://en.wikipedia.org/wiki/Kettering_University
Scott @ May 9th 2008 9:09PM
Doug - The Coach Insignia is now on the top floor of the RenCen. It doesn't spin anymore though.
http://www.mattprenticerg.com/urc/coach.asp
Xcountryflyer @ May 9th 2008 6:03PM
Even though it costs money upfront, cheaper to buy than to rent long term.
toronado455 @ May 9th 2008 6:03PM
I was amazed to learn that GM was renting the Renaissance Center and that they had only been there since 1996.
I wonder what their deal is with the GM building in NYC?
sdcarnut @ May 10th 2008 1:45PM
Ive ate there a few times and it was always a blast to see unmaned purses, when ladies sat down they would put there purse on the ledge and the restaraunt would spin and the ladies would loose there purse . lol It was also fun to watch the large glass balls on the ceiling moving around due to the bldg movements !
rouse42 @ May 9th 2008 6:39PM
July 1 2008
GM reports quarterly earnings.
loses 7.2 billion dollars.
Top 5 execs get 17% increase in base salary.
GM lay's off 19500 workers in 5 plants.
LOL.
why not the LS2LS7? @ May 9th 2008 6:50PM
The 7.2 billion was mostly write-downs. Their operating financials were actually okay and definitely better than they were a few years back.
goofygrin @ May 9th 2008 6:50PM
Rent has a different capitalization for tax/income purposes versus ownership (which is why some people advocate leasing vs. buying vehicles for business purposes). I'm not an accountant, but for a business, leasing makes a lot of sense financially.
Now if you can get the property cheap, then go for it :)
criticalninja @ May 9th 2008 8:29PM
Yet another "one-time charge" for GM...I'm sure we'll see this again also on their next quarterly report ("Excluding the one-time purchase of the RenCen, GM lost only...for the second quarter of 2008.)
I love the spin we get from the Big 2.5 every quarter...they make everything sound like it's peaches and cream as the billion dollars losses pile up...these guys ought to run for public office...I hear Detroit is looking for a new Mayor.