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Video game developers on brink of film credit win - Greenleaf Trust-ag

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									September 12, 2011                                                                           CRAIN’S DETROIT BUSINESS                                                                                                               Page 3




                                                            Video game developers                                                                                          Inside
                                                                                                                                                                           Heat assistance freeze sends
                                                                                                                                                                           chill through agencies,


                                                            on brink of film credit win
                                                                                                                                                                           Page 6
                                                                                                                                                                           House OKs new rules on teen
                                                                                                                                                                           workers’ hours. Capitol
                                                            Legislation, court ruling may score incentives                                                                 Briefings, Page 41
                                                                           BY NATHAN SKID                         video game developers were shut out unless
                                                                                                                  they owned the intellectual property and distri-
                                                                         CRAIN’S DETROIT BUSINESS
                                                                                                                  bution rights.
                                                                                                                                                                          Company index
                                                               A win in court and friendly legislation soon         Senate Majority Leader Randy Richardville,           These organizations appear in this week’s Crain’s
                                                            may make it easier for video game developers          R-Monroe, has introduced Senate Bill 569,              Detroit Business:
                                                            to become eligible for film incentives.               which would drop the requirement. And a                Ajax Paving Industries . . . . . . . . . . . . . . . . . . . . . 10
                                                               Most of the at-                                    game developer, Scientifically Proven Entertain-       Association of Businesses Advocating Tariff Equity . . . 6
                                                            tention surround-
                                                            ing film incentives
                                                                                   LET GAMES BEGIN                ment LLC, has won a court order against the re-
                                                                                                                  quirement, although the decision is being ap-
                                                                                                                                                                         Bailey Schmidt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                                                                                                                                         Barbara Ann Karmanos Cancer Institute . . . . . . . . 27
                                                            has focused on Video: Behind the                      pealed by the state.                                   Beaumont Hospitals . . . . . . . . . . . . . . . . . . . . . . . 29
                                                            movies, but video scenes at game maker,                 “Michigan needs to be competitive with oth-          Center for Michigan . . . . . . . . . . . . . . . . . . . . . . . 45
                                                            game production crainsdetroit.com/video               er states in retaining and attracting new indus-       Coalition to Keep Michigan Warm . . . . . . . . . . . . . . 6
                                                            was among the in-                                     try,” Richardville wrote in an email to Crain’s.       Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . . 6
                     NATHAN SKID/CRAIN’S DETROIT BUSINESS   dustries Michigan wanted to draw when the in-         “It is important that we work to attract and re-       Crittenton Hospital Medical Center . . . . . . . . . . . . 37
Nathaniel McClure moved Scientifically Proven               centives were created in 2008.                        tain new and technologically focused industry          DeNovo Sciences . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Entertainment LLC from California to Farmington                But when the Michigan Department of Treasury                                                              Detroit Department of Homeland Security . . . . . . . 44
Hills, hoping to make use of Michigan tax credits.          drew up rules to implement the incentives,                                            See Games, Page 42     Detroit Department of Transportation . . . . . . . . . . . 4
                                                                                                                                                                         Detroit Edison . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
                                                                                                                                                                         Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         Flagstar Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
                                                                                                                                                                         Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         Fuller Central Park Properties . . . . . . . . . . . . . . . . 42
                                                                                                                                                                         Gene Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
                                                                                                                                                                         General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         Greenleaf Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                                                                                                                                         Henry Ford Center for Integrative Wellness . . . . . . 34
                                                                                                                                                                         Huron River Ventures . . . . . . . . . . . . . . . . . . . . . . 11
                                                                                                                                                                         International Automotive Components Group . . . . . 21
                                                                                                                                                                         Kellogg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         Mercy Place Clinic . . . . . . . . . . . . . . . . . . . . . . . . 28
                                                                                                                                                                         Michigan Accelerator Fund I . . . . . . . . . . . . . . . . . 11
                                                                                                                                                                         Michigan AFL-CIO . . . . . . . . . . . . . . . . . . . . . . . . . . 1
                                                                                                                                                                         Michigan Department of Transportation . . . . . . . . 10
                                                                                                                                                                         Michigan Film Office . . . . . . . . . . . . . . . . . . . . . . 42
                                                                                                                                                                         Michigan Hematology Oncology . . . . . . . . . . . . . . . 29
                                                                                                                               Team Detroit CEO Satish Korde
                                                                                                                                                                         Michigan Infrastructure & Transportation Assoc. . . 10
                                                                                                                               expects to apply to Ford lessons he
                                                                                                                                                                         Michigan Public Service Commission . . . . . . . . . . . 6
                                                                                                                               learned in the real and virtual worlds.
                                                                                                                                                                         Michigan Restaurant Association . . . . . . . . . . . . . 41
                                                                                                                                                                         Napoleon B. Jordan Center for Health Care . . . . . . 34



                                                                                                                               Adman has                                 National Network of Depression Centers . . . . . . . . 26
                                                                                                                                                                         Patriot Services . . . . . . . . . . . . . . . . . . . . . . . . . . 45
                                                                                                                                                                         Perrigo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         Pixel Velocity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44



                                                                                                                               Ford’s world                              Pixofactor Entertainment . . . . . . . . . . . . . . . . . . . 42
                                                                                                                                                                         RPM Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
                                                                                                                                                                         Scientifically Proven Entertainment . . . . . . . . . . . . . 3
                                                                                                                                                                         Shepherd Intelligent Systems . . . . . . . . . . . . . . . . 11



                                                                                                                               in his hands
                                                                                                                                                                         St. Joseph Mercy Health System . . . . . . . . . . . . . . 32
                                                                                                                                                                         St. Joseph Mercy Oakland . . . . . . . . . . . . . . . . . . . 28
                                                                                                                                                                         Strive Recreational Therapy Services . . . . . . . . . . . 31
                                                                                                                                                                         Stryker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                              JOHN SOBCZAK
Drew Schmidt (left) and Peter Noonan of Bailey Schmidt Inc. handled leasing at the Greenleaf Trust Building in                         BY JAMIE LAREAU                   Surnow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
                                                                                                                                         CRAIN NEWS SERVICE              Synova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Birmingham, now fully leased at rental rates near $36 a square foot — double the average for metro Detroit.
                                                                                                                                                                         Team Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                                                                                                  Satish Korde is a Renaissance          The Heath and Warmth Fund . . . . . . . . . . . . . . . . . . 6



Greenleaf fills quickly at top rates                                                                                           man charged with helping Ford Mo-
                                                                                                                               tor Co. complete a renaissance of
                                                                                                                               its own.
                                                                                                                                  Korde, 61, the new CEO of Team
                                                                                                                               Detroit, Ford’s advertising agency,
                                                                                                                                                                         TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                                                                                                         UAW Retiree Medical Benefit Trust . . . . . . . . . . . . 30
                                                                                                                                                                         UM Comprehensive Depression Center . . . . . . 26, 31
                                                                                                                                                                         United Auto Workers . . . . . . . . . . . . . . . . . . . . . . . . 1
                                                                                                                                                                         University of Michigan-Dearborn . . . . . . . . . . . . . . 45
Birmingham success gives hope for similar projects                                                                             is a chemical engineer by training.       Urban Land Institute . . . . . . . . . . . . . . . . . . . . . . . 15
                                                                                                                               Yet he has spent 30 years in the ad-      Visteon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                BY DANIEL DUGGAN                                   “It sends a message that there’s demand for high-           vertising world, mainly in re-            Warm Training Center . . . . . . . . . . . . . . . . . . . . . . . 6
                CRAIN’S DETROIT BUSINESS                        quality office space, and tenants will pay a premium           search and marketing. He has              Whirlpool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                                                                for it.”                                                       traveled the world and is at home
   Just over one year after the Greenleaf Trust                    Greenville, S.C.-based Ogletree, Deakins, Nash,             in the virtual world of social me-
Building in Birmingham was completed, the office                Smoak & Stewart PC and Finnea Group LLC have                   dia.
and retail space is completely leased.                          signed leases for office space in the building, joining           Ford needs all areas of Korde’s         Department index
   And not only does the building hold the honor as             the building’s anchor tenant, Greenleaf Trust, to fully        expertise. The automaker has re-
the only speculative office building developed dur-             occupy the 27,000 square feet.                                 bounded in the United States from         BUSINESS DIARY . . . . . . . . . . . . . . . . 40
ing the recession, it also has set the bar for rental              With an asking rental rate of $36 per square foot,          financial trials of the past decade,      CALENDAR . . . . . . . . . . . . . . . . . . . . 38
rates — commanding double the average rate for the              according to Washington, D.C.-based CoStar Group,              but it trails rivals in China and         CAPITOL BRIEFINGS. . . . . . . . . . . . . . 41
region.                                                         the building is among the most expensive office                several other markets. Ford will          CAREERWORKS . . . . . . . . . . . . . . . . . 39
   “This is something that will give some hope for              spaces in metro Detroit.                                       seek to draw on Korde’s knowl-
the idea of new construction in the region,” said Pe-                                                                                                                    CLASSIFIED ADS . . . . . . . . . . . . . . . . 41
                                                                   CoStar lists the average rental rate for Class A of-        edge of mature markets and key
ter Noonan, vice president of brokerage services for            fice space in metro Detroit at $21 a square foot, and          growth markets in the Asia-Pacific        KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8
Birmingham-based Bailey Schmidt Inc., the real estate                                                                                                                    LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8
firm representing the landlord in the leasing work.                                                 See Greenleaf, Page 42                         See Korde, Page 43    MARY KRAMER . . . . . . . . . . . . . . . . . 11
                                                                                                                                                                         OPINION . . . . . . . . . . . . . . . . . . . . . . . 8
                                                        Cool Places online                                              Small-business webinars
 THIS WEEK @                                            See profiles of 10 winners of Crain’s Cool Places               Part one of a Comcast-sponsored series is
                                                                                                                                                                         OTHER VOICES . . . . . . . . . . . . . . . . . . 8
                                                                                                                                                                         PEOPLE . . . . . . . . . . . . . . . . . . . . . . 39
                                                        to Work 2011 and info about the November                        Sept. 27, focusing on disaster preparedness,
 WWW.CRAINSDETROIT.COM                                  awards ceremony, crainsdetroit.com/cool                         crainsdetroit.com/smallbizwebinars               RUMBLINGS . . . . . . . . . . . . . . . . . . . 46
                                                                                                                                                                         WEEK ON THE WEB . . . . . . . . . . . . . . 46
Page 42                                                                                CRAIN’S DETROIT BUSINESS                                                                  September 12, 2011



Games: Legislation, court ruling could score state incentives
■ From Page 3
in order to attract and retain our       said. “That’s the only way to devel-    tional Detroit hotel called the Gar-     million to develop the game, the        traditional economy. This is a way
highly educated residents.”              op a game and is put in as a quality    rick Arms, was recently approved         mobile application and the website      to get them to stay.”
   Carrie Jones, director of the         check to ensure the video games         for $411,650 in credits.                 and required 30 full and part-time         Louisiana introduced its digital
Michigan Film Office, said the pro-      meet all of the specifications.”           “We created and wrote the en-         employees.                              interactive development tax credit
posed bill will help grow the digi-         McClure also said it is unusual      tire storyline,” McClure said. “So          Hurwitz said he hopes the pro-       program in 2005, which offers
tal production industry while giv-       for a production company to own         we own all of the intellectual prop-     posed legislation will clear up         video game and interactive pro-
ing     college     graduates     an     intellectual property rights, in        erty rights.”                            some of the confusion.                  duction companies a 25 percent tax
opportunity to find work in Michi-       part because video games are often         McClure said there will be 25            “Nothing is black and white that     credit on production work and an
gan.                                     based on movies, toys and other         employees working on “Ghost              says, ‘if you meet these criteria       additional 10 percent credit for la-
   “Video game production is an          copyrighted products.                   Game,” which is expected to hit          you will be approved for the cred-      bor.
industry we want to attract to the           “Michael Bay does not own all       stores in October 2012.                  its,’ ” Hurwitz said “But right            “There is no cap on the amount
state,” Jones said. “Those types of      of the intellectual property rights        Another video game production         now, I am optimistic.”                  of an incentive and they are good
jobs match perfectly with what we        to ‘Transformers’ ... but he was        company found a way around the              One idea to help grow the video      throughout the life of the project,”
want to see in Michigan.”                given approval to produce the           need to fully own intellectual prop-     game industry is to separate the        Stelly said. “There is not an
   Jones said the Michigan Film          film,” McClure said. “In the same       erty rights.                             incentives for live-action film pro-    amount of money we can’t give
Office is working closely with leg-      way, we don’t own the intellectual                             It took several   duction and digital production.         back.”
islators to draft a new program for      property rights to ‘Man vs. Wild,’                          rejected applica-       Chris Stelly, executive director        Louisiana spent about $12.8 mil-
handing out the credits but said         but we were given approval by the                           tions       before   for Louisiana’s Office of Entertain-    lion on entertainment industry tax
the office has to abide by the cur-      Discovery Channel to develop the                            Sean Hurwitz,        ment Industry Development, a divi-      credits in 2010.
rent set of rules.                       video game.”                                                CEO of Royal         sion of the Louisiana Economic De-         Seyburn said it would be benefi-
   When      Nathaniel     McClure,         The regulations show “a lack of                          Oak-based Pixo-      velopment Corp., said the two           cial for Michigan to think about
founder of Farmington Hills-based        knowledge about how the industry                            factor Entertain-    industries are so different they        separating live-action film produc-
Scientifically Proven, moved to          works,” McClure said.                                       ment LLC, and        need separate incentive pro-            tion and digital production.
Michigan in September 2009 from             McClure said he spent about                              his team of          grams.                                     “Live-action producers are no-
California, he hoped to be one of        $1.5 million developing the game,                           lawyers found a         One difference, Stelly said, is      mads,” Seyburn said. “They follow
the first video game developers to       but things soured when he was de-                           way to get not       that films usually finish shooting      cheap money, but video game pro-
take advantage of the credits.           nied nearly $400,000 worth of cred-     Hurwitz             only     a    Ben    in four to six months whereas           ductions are bigger full-time pro-
   McClure said he wanted to get in      its by the film office and the Trea-    Hogan video game approved for            video games take longer to pro-         jects.”
on the ground floor of video game        sury Department.                        tax credits, but also a related mo-      duce and create more long- term            Hurwitz said he is on the fence
production here and had an idea to          McClure filed a lawsuit in Oak-      bile application and an interactive      jobs.                                   about separating the two indus-
develop a game centered on the           land County Circuit Court last July.    website as well.                            “We recognized early on that         tries and does not want to alienate
popular Discovery Channel televi-        In June, Judge James Alexander             By creating a Michigan-based          each industry is distinct and sepa-     anyone in Michigan’s fledgling en-
sion show “Man vs. Wild,” which          sided with McClure in a summary         company called Ben Hogan Golfing         rate,” Stelly said. “Video games        tertainment industry.
finds host Bear Grylls fighting the      judgment order that found the law       Game Productions LLC, Hurwitz and        have more of a drive toward per-            Yet he too said dividing the two
elements in extreme terrain with         did not require video game pro-         a team of investors were able to ne-     manence, which means more per-          groups could provide much-need-
little more than a pocket knife.         ducers to own intellectual proper-      gotiate the rights from the famous       manent jobs and a longer commit-        ed stability to the video game pro-
   McClure pitched his idea to the       ty and distribution rights.             golfer’s estate to use his name, film    ment by the company.”                   duction industry, even if that
Discovery Channel and received              Terry Stanton, public informa-       footage and the book Five Lessons:          In addition to creating perma-       meant divvying up the $25 million
the go-ahead to develop the game.        tion officer for the Michigan De-       The Modern Fundamentals of Golf,         nent jobs, Stelly said, the video       pot.
   He entered into a contract with       partment of Treasury, declined to       leaving Pixofactor as a vendor on        game industry is creating an op-           “I could see the advantages to
Newport Beach, Calif.-based Crave        comment on the ruling, which has        the project.                             portunity for college graduates to      having certain amounts allocated
Entertainment Inc., a boutique video     been appealed.                             “We only needed enough of the         find employment in Louisiana.           for video games,” Hurwitz said.
game publisher, to help pay for the         Meanwhile, the “Man vs. Wild”        intellectual property to create the         “The interactive industry is cre-    “One major film can easily use
development, but waived distribu-        video game hit store shelves in         digital product,” said Marc Sey-         ating something new for our             that entire $25 million, but $25 mil-
tion rights in doing so.                 May.                                    burn, president of Birmingham-           young people,” he said. “We are ex-     lion could make a lot of video
   “You are required to use a first-        There is good news on the hori-      based Seyburn Knox Law Group PLLC.       periencing brain drain in our           games.”
party publisher in order to develop      zon for McClure.                        “Having that gave us preap-              state. Recent graduates would              Nathan Skid: (313) 446-1654,
a game for Playstation 3, Xbox 360          Scientifically Proven’s latest       proval.”                                 have to go out of the state to work     nskid@crain.com.            Twitter:
or the Nintendo Wii,” McClure            project, “Ghost Game,” set in a fic-       Hurwitz said it cost about $2.5       in fields that were not part of our     @nateskid




Greenleaf: Birmingham building fills quickly at top rates
■ From Page 3
$18.25 per square foot for all types                                             limited,” he said. “More specifical-     Kalamazoo-based Greenleaf Trust,        Achour. He said the restaurant,
of office space.
   The office space on Old Wood-
                                          TENANT DEALS                           ly, there is a tangible lack of avail-
                                                                                 able medium-to-large blocks of
                                                                                                                          a money management firm. Cata-
                                                                                                                          lyst Development Co., the real estate
                                                                                                                                                                  which seats 220 people, has annual
                                                                                                                                                                  sales of roughly $3 million.
                                          In the 12-month lease-up for the
ward Avenue is ranked as the 31st         Greenleaf Trust Building, just three   space in these environments,             holding arm of Greenleaf, is devel-        “But we’re seeing a strong up-
most-expensive corridor of office         deals filled the office space,         which opens up the opportunity           oper and owner of the building.         turn for the fall, based on parties
space in the United States, accord-       setting a market-high level of $36     for new development.”                       Development costs have never         being booked, and we’re already
ing to an analysis by Chicago-            per square foot.                          Gantner is listing an office pro-     been released, but estimates based      seeing a lot of requests for holiday
based Jones Lang LaSalle, with an            South Carolina-based Ogletree,      ject slated to be built just to the      on the building’s size and current      parties,” he said.
average of $26 per square foot and        Deakins, Nash, Smoak & Stewart         south of the Greenleaf Building          construction rates put the cost in         On the top of the five-story
a top of $36.                             PC leased 12,000 square feet,          and Peabody’s Dining & Spirits, called   the $20 million to $25 million          building are two floors of residen-
   At $36 per square foot, the            taking the entire third floor. Randy   The Balmoral, which would have           range.                                  tial space still being built out.
Greenleaf space was a bargain,            Book, a broker in the Southfield       80,000 square feet of office and re-        The space is high-end by any            That space will set a high bar as
said Ted Fuller, president of Fuller      office of Colliers International,      tail space and be developed by Roy-      measure. Floors are covered with        well.
                                          represented the tenant.
Central Park Properties, which owns                                              al Oak-based US Equity Capital LLC.      imported Japanese stone. Molding           Rent for the five units will range
1 million square feet of real estate         Finnea Group LLC signed a              Approved by the Birmingham            around the doors is solid walnut.       from $11,000 to $17,500 per month.
                                          lease for 4,000 square feet on the
in Birmingham.                                                                   City Council, the building could         Office floors have balcony space        Drew Schmidt, a principal in the
                                          second floor. Brendan George, a
   “For that building, for that qual-     broker in the Southfield office of     break ground as early as this fall,      equipped for meetings amid the          Bailey Schmidt firm, said there is
ity, I’d say that’s a bargain,” he        CB Richard Ellis, represented the      said Gantner.                            plants making up the green roof.        strong interest for the units, which
said. “It’s brand new, high quality,      tenant.                                   The Balmoral would be one of the      Natural light is designed to enter      will soon be under construction.
and it’s in a great location.”               Greenleaf Trust uses 9,000          only speculative office develop-         most office areas, and the ceilings     One person is interested in two of
   With the space fully leased, he        square feet on the second floor.       ments built in recent history. Other     are 9 feet tall, much higher than       the units, he said.
said he doesn’t expect a boost to his        The next step is leasing the five   than the Greenleaf Building, Birm-       normal.                                    Skepticism about the project is
portfolio because the office space        apartments in the building, with       ingham-based Surnow Co. redevel-            The building is also seeking cer-    something that never entered his
he owns is 100 percent occupied.          monthly rental rates ranging from      oped the 19,000-square-foot former       tification under the U.S. Green         mind.
   That scarcity of space in Birm-        $11,000 to as much as $17,500.         post office building at 320 Martin       Building Council’s LEED program.           “From the beginning, I knew
ingham helped drive the high rent                                                St. and leased the entire building.         Retail space on the first floor      this would be a success,” he said.
at the Greenleaf building, Noonan        other than Detroit’s central busi-         After announcement of the             was leased by Greenleaf’s hospital-     “A great building, great location
said. In fact, he said, there were in-   ness district, with a walkable, ur-     Greenleaf Building project, some         ity division with its restaurant,       and an unbelievable owner; we
terested tenants in line behind both     ban environment, said Ron Gant-         in the real estate community were        Zazios.                                 were able to find the right tenants
Ogletree and Finnea, ready to take       ner, executive vice president in the    quietly skeptical about develop-            While the restaurant had a           because it was a recipe for suc-
the space if those deals fell through.   Detroit office of Jones Lang LaSalle.   ment of a speculative project in the     strong start, it had a summer that      cess.”
   Driving demand in Birmingham            “In general, opportunities in         middle of the recession.                 showed a 25 percent decrease in            Daniel Duggan: (313) 446-0414,
is it’s uniqueness in being the only     this region for office space in a          The building was completed in         sales compared to last summer,          dduggan@crain.com.            Twitter:
sizeable office market in the region,    walkable, urban environment are         June 2010. It was developed for          said General Manager Fadi               @d_duggan

								
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