The former retail giant’s headquarters, which sits across the street from the Somerset Collection, has sat vacant for over 15 years and was slated for demolition last fall.
The University of Michigan Health system is purchasing a portion of the vacant land at the former Kmart headquarters in Troy to build a multi-specialty facility, expanding its footprint into Metro Detroit and a city that is already home to two hospitals run by other health systems.
The UM Board of Regents on Thursday unanimously approved a motion to buy the 7.8-acre property for $4.42 million. The property is located on a 40-acre plot at 3100 West Big Beaver Road and was previously owned by Forbes/Frankel Troy Ventures LLC.
The new facility, which will focus on advanced specialty and diagnostic services, is a way to expand specialty clinical services and patient access in Oakland County, where there are no other exclusively adult Michigan Medicine facilities today, officials said. The services are expected to include cancer care and ambulatory surgical procedures, UM Health Chief Clinical Strategic Officer Scott Flanders said at a remote Thursday news conference.
UM Health does have a pediatric joint venture with Trinity Oakland in Pontiac.
Construction is expected to start next year once a budget is set and completion planned for 2027, Michigan Medicine officials said.
Michigan Medicine CEO Marschall Runge said it is a starting point for a “broader and deeper UM Health presence” in southeast Michigan.
“We are thrilled to announce our plans for a long-term presence and commitment to patients in Oakland County, in keeping with our efforts to create a statewide network of care that allows Michiganders the ability to receive our world-class care close to home,” said Runge, who is also dean of the UM Medical School.
“We are planning development of a facility that focuses on advanced specialty and diagnostic services.”
The former retail giant’s headquarters, which sits across the street from the Somerset Collection luxury malls, has sat vacant for over 15 years and was slated for demolition last fall.
“We believe this new investment will bring our UM Health expertise to a whole new community of patients, providing easier access for metro Detroit residents to our nationally renowned clinical expertise and innovation,” David Miller, president of UM Health, said in a statement. “We are excited to move into a prominent, easily accessible location in Troy, where we will continue to expand our presence. We expect this new facility will be a location for advanced and innovative clinical programs, including multi-disciplinary cancer care.”
Mayor: A win for Troy
The expansion is a win for Troy, Oakland County’s largest city, and will only draw more people and benefit the economy, Mayor Ethan Baker said Thursday.
Baker said it’s exciting to see “forward progress” on a redevelopment plan for the Kmart property, adding that most of the former structure has been demolished at the surface level. While the city was not aware of the identity of any potential purchasers of the property, the more options and access to health care in Troy the better, he said.
“They’re not buying the whole property. They’re just buying a portion of it, which will, of course, spark that continued redevelopment,” Baker said. “Our economy has diversified quite a bit to include a huge health care sector. Obviously, we have Beaumont Hospital in Troy, we have a (DMC) Children’s Hospital facility in Troy, and now we’ll have the University of Michigan, so it’s very exciting to have all the best options in the state right here in the city of Troy.”
This development helps to make Troy a strong “regional hub,” he said. Troy has more than 87,000 residents and has a median income of $115,600, according to the Census Bureau.
The planned health care facility will also be near two of Oakland County’s wealthiest cities, Birmingham and Bloomfield Hills.
“Health care is our largest jobs sector employing one of every seven people in our workforce,” Oakland County Executive Dave Coulter said in a statement. “This investment underscores our commitment to enhancing health care accessibility and innovation for our residents.”
Michigan Medicine has the right of first offer for a couple of additional parcels on the Kmart property if there is the opportunity and need for expansion, Chief Strategy Officer Keith Dickey said at a Thursday afternoon news conference. For now, they are focused on a singular facility at the one parcel, he added.
What UM Health plans
UM Health is still in the early phases of planning what care will be delivered at the new facility, said Flanders, the chief clinic strategic officer. It will focus on adult subspecialty care, including cancer care and ambulatory surgical procedures, he said.
“This will be similar to what we already have at our specialty center in Brighton, which has a variety of specialty services as well as ambulatory surgical capabilities and radiation therapy,” Dickey said. “It’ll be somewhat similar to our our facility in Northville as well, although Northville does not include ambulatory surgical services.”
The project will be paid for using Michigan Medicine’s general fund, although there is no firm budget yet, Dickey said.
“What the regents have approved now is for us to go into that detailed architectural planning phase,” Dickey said. “We’ll go back to the regents for approval once we have a more solid sense for what the budget will be. But our hope and expectation is that we would break ground sometime next year and that this facility would be open in 2027.”
Two UM regents who live in Oakland County praised the purchase and development.
Regent Jordan Acker said UM has missed out on having Michigan Medicine in Oakland County. But this will provide “incredible access for my neighbors looking for that Michigan Medicine experience without having to travel outside the county. This is a welcome, necessary and long-needed addition to Michigan Medicine’s portfolio,” Acker said.
Regent Denise Ilitch added that she was also excited about the project and had high expectations.
“It’s going to be beautiful,” Ilitch said, “but, more importantly, we’re going to be able to offer services there. Being able to spread our wings and provide better, quality health services is a benefit to our citizens.”
Metro Detroit health impact
Michigan Medicine is moving into Metro Detroit because it sees some disarray in the region’s market for specialty health care, said Allan Baumgarten, a Minneapolis-based health care analyst who has followed the Michigan hospital market for decades.
Henry Ford Health is years away from completing its new campus in the New Center and absorbing the Ascension hospitals and providers, Baumgarten said. Beaumont Health was in some turmoil before the merger with Spectrum, losing specialists and perhaps losing a little of its reputation in the market, he said.
“So I think Michigan Medicine sees an opportunity to capture some market share in the three Detroit counties,” Baumgarten said, adding that the Ann Arbor health system can argue that patients can now “have Michigan Medicine quality care close to home.”
The expansion follows Michigan Medicine’s merger with the Lansing-based Sparrow Health System, which was announced in 2022, as well as the combination of Beaumont Health and west Michigan’s Spectrum Health into the state’s largest health system called Corewell Health. Last year, Henry Ford Health announced a joint venture with Ascension Michigan, combining all eight of Ascension’s hospitals and the health system’s related sites of care with Henry Ford’s acute care hospitals and facilities.
Michigan Medicine has two other projects. The D. Dan and Betty Kahn Health Care Pavilion for neuroscience, advanced imaging, and cardiovascular and thoracic care in Ann Arbor and the Ypsilanti Health Center in downtown Ypsilanti are set to open in 2025 and 2024, respectively.
While Michigan Medicine is based in Washtenaw County, over 180,000 patients from Wayne, Oakland and Macomb counties sought care from the health system in 2023, Dickey said at the news conference. The expansion is part of Michigan Medicine’s long-term vision for a statewide system of care, Flanders said.
“We know there are many more who would like to get their care with Michigan Medicine, but that just isn’t practical for them either because of the travel distance or frankly the challenges with access and wait times for appointments with our providers in Washtenaw, Livingston counties,” Dickey said.
Experts: Project to drive more development
Redevelopment of the long-vacant site is a win for the area, experts said, as it sits in a prominent location that serves as a gateway along Big Beaver Road.
The Forbes Company bought the old Kmart site in 2009 for $17.5 million. Forbes/Frankel Troy Ventures LLC has maintained the vacant property and in the fall of 2023 applied for a demolition permit to raze the mammoth complex.
“Just the fact that they initiated the demolition was positive,” said James Becker, principal and managing director of Avison Young Commercial Real Estate’s Detroit office. “Landing a quasi-anchor for a significant component of the site which should drive further development is a huge win particularly with it being the University Michigan.”
UM officials said Thursday it would have a first right to offer to purchase more parcels to expand. More than 30 acres would remain following the purchase.
Becker said some of the remaining land at the site could be used for medical office buildings to support doctor groups that fall under the UM umbrella. “That’s generally the byproduct of that,” he said.
The site could still also support residential development, he said.
“That’s the natural on that site,” Becker said. “On the remainder.”
A spokesman for the Forbes Company said Thursday the company would not provide an interview or information regarding the property beyond what UM provided in its announcement.
Steve Morris, the managing principal of Axis Advisors LLC, noted the access to health care the site would provide along a busy corridor.
“Many, many people, thousands of people drive from North Oakland, Wayne County to Ann Arbor for this kind of treatment so it’s certainly a bonus for the community, No. 1,” Morris said. “And then as far as the ownership goes, it provides them something that helps them recoup the cost of property, the upkeep, the demo. It’s a bonus to the owner. A quality operation.”
The remaining acres will leave the owners enough land to consider other uses, he said.
“The alternatives could be some unique retail that complements Somerset mall north,” Morris said. “It would not be office use anymore because offices changed. It’s not what it once was. It could be high-quality residential, apartments and, finally, a hotel.”
Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
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