Designed by the same architect as the First National Bank building around the corner, the store even originally shared the same urns-and-swags architectural details. But a fire in 1960 devastated the building—and by then, Ward’s was already planning to leave downtown for Arborland. It was the beginning of a downward spiral for the block.
“I’ve watched this building closely for four decades, and I’m aware of its sad history,” says local real estate developer Ed Shaffran, whose office is across the street. Though the former showcase was eventually repaired and given a “modern” metal facade, it was never again a prime address. Former U-M Spanish prof Glen Gale bought it in 1977 and operated it as a mini-mall called Town Center Plaza, but a 1986 Observer article reported numerous tenant complaints and frequent lawsuits.
It didn’t help that several properties across the street had become Ann Arbor’s miniature red-light district. When Shaffran got involved in the 1980s, there was “an adult bookstore, massage parlor, pawn shops, and worse,” he recalls. “It was very, very seedy, and no one wanted to be associated with the area.”
Working with family members, Shaffran bought the problem properties, “kicked those businesses out, and renovated the block on our side.”
The former Ward’s store, though, went further downhill. Dale Newman, a controversial figure who made his living in Ann Arbor’s lowest tier of commercial real estate, purchased it in 1995.
“Dale marched to the beat of a different drummer,” Shaffran says. “He let a lot of things slide and didn’t conform to the rules. Over time, he couldn’t replace tenants when conditions deteriorated, and he made some bad business decisions.”
When an Observer reporter visited in 2011, buckets were strategically placed in the lobby to catch the rainwater dripping from the damaged roof, and Newman was trying to borrow a million dollars to rescue the property from foreclosure. He finally lost it in 2013.
Joe Barbat, founder of Southfield-based cellphone chain Wireless Toyz, bought it out of foreclosure. He set out to turn it into a condo complex called Montgomery Houze.
Four years ago, city council approved plans to rehabilitate the historic two-story building while adding a four-story addition to the back. But an inspection revealed that the building lacked the necessary footings to support the addition, and nearly twenty months passed before the owners could begin installing steel beams to shore it up. Construction moved more slowly than anticipated, but eventually the building grew from two stories to six.
“It’s an unbelievably nice job,” Shaffran says. “But a beautiful building doesn’t always make economic sense. I have no idea how much money they sank into it. Initially, they planned for condos, but lack of success made them decide to rent the spaces as apartments.”
The apartments—which boast downtown views, hardwood floors, and high ceilings—were put on the market for between $2,100 and $4,500 a month. Most had contracts signed in the summer of 2021, but the apartments weren’t finished on time for the start of U-M classes—and the tenants weren’t informed until two days before their move-in date.
“Wish I could give zero stars,” one disgruntled tenant wrote in a Google review. Other one-star reviews complained about the management, glitchy key fobs, and building malfunctions. These were met by a flurry of five-star reviews, “presumably written by the management company,” says one tenant who asked to remain anonymous.
But with all forty-one units rented, the transformed building was finally a viable—and valuable—property. In June, Barbat sold Montgomery Houze to a Delaware company for $21 million. Neither principal responded to inquiries about the sale.
“I don’t think [Barbat] hit a grand-slam home run,” suggests Shaffran. “I’m sure he hit a nice single.”
The early snafus have been resolved, but Shaffran says he’s heard that a significant number of apartments have been turned into Airbnbs. “That’s the owners’ privilege, of course,” Shaffran notes, “However, having been in the hotel business, I know how much wear and tear takes place in that scenario, on the structure as well as the furnishings. Short-stay places are often treated pretty badly.”
Meanwhile, the first-floor commercial space remains empty. Though the city wants retail storefronts in new downtown buildings, construction costs can make them dauntingly expensive.
“I’ve got comparable commercial spaces in the same area,” Shaffran says. “The Montgomery Houze is asking between $45 and $55 per square foot, while mine rent for the low $20s to high $30s.
“This is a strange time for commercial real estate and real estate owners in Ann Arbor—and elsewhere,” he says. But whatever happens to the retail space, “you can’t show me a downtown block that’s had more change for the good.