Guest post by Richard Broder, chief executive officer, Broder & Sachse
There is no doubting Detroit’s potential.
Since its founding in 1701, Detroit has advanced the nation as the site of many firsts. It is the home of the first concrete highway, moving assembly line, traffic light, phone number and international suspension bridge, to name just a few.
The city now defined by bankruptcy was once one of the most powerful, employed, wealthy, populated and expansive communities in America. In its heyday as the world’s automotive center, hard-working middle class Americans flocked to the Motor City to be part of its auto boom and wartime tank production.
With this impressive legacy as a guidepost, Detroit is returning to its entrepreneurial roots. Civic and business leaders are working together to return the city to its former vitality and economic prosperity.
The names Mike Ilitch and Dan Gilbert are synonymous with current revitalization efforts. Companies like Penske, Compuware, General Motors and Blue Cross Blue Shield have activated interest in the city with major new real estate investments. Their presence is a catalyst for other developers to become engaged, and has elevated Detroit’s prospects for the future.
My company, Broder & Sachse, recently announced its purchase of an 80,000-square-foot office building and parking structure on Congress Street. That joins our other properties in the city: the Canfield Third Lofts and 1214 Griswold, a 168,000-square-foot market-rate apartment and retail project that will include renovation of a 1929 building listed on the National Register of Historic Places.
The city’s building momentum is being fueled by local and regional developers. “Hot spot” areas are already developing – specific areas of investment and economic activity within the city. Capitol Park, the historic district that once housed Michigan’s state capitol building, is being envisioned as a new arts district with galleries and cafes on the ground floors and residential apartments above. It is expected to provide a venue for emerging artists to display and perform their work, and serve as a green refuge for residents who live in the area.
Since 2011, nearly every structure lining Capitol Park has been transitioned to new owners. The Detroit Economic Growth Corp., Karp & Associates and Bedrock have worked tirelessly to acquire the buildings in Capitol Park – the last being the Farwell building, the former United Way building and the Capitol Park building. Even the park itself is getting a refresh. This is a glowing example of private industry working with citizen-run organizations to bring about concentrated economic and community growth.
Detroit’s rising visibility is already having an impact on residential availability by creating a “good news” “bad news” scenario for renters. Statistics show that apartment occupancy is almost topped out. High demand allows for premium pricing by developers and it also stagnates a major population migration back into the city. In what might come as a surprise to many, there are currently long waiting lists for apartments in the city. New supply will hopefully rectify the apartment shortage, especially in popular areas such as Grand Circus Park. Rental rates are rapidly approaching the $2-square-foot mark, but Detroit rental prices are bargain basement compared to the $5-per-square foot rents in Manhattan.
Increased residential occupancy also enables commercial investment. New city residents require a host of goods and services to support their daily activities, and retail development is beginning to keep pace.
Two major examples come to mind, a new Meijer store and a Whole Foods Market. In July, Meijer opened a $20 million store, a first within in Detroit’s city limits. Meijer brings with it a mix of commercial buildings into its Gateway Marketplace, located near the site of the abandoned Michigan State Fairgrounds. In this development, Meijer will be joined by national retailers, fast-food outlets and a PNC Bank.
Already residents are calling the shopping plaza a blessing. The Meijer store alone has created 550 full-time and 400 part-time jobs, as well as a sense of hope for the city. The megastore also rings the bell for other potential developers to join Detroit’s budding retail community. Another Meijer site is being proposed in a $35 million development near Grand Riverview Avenue and Seven Mile Road. City supporters call Meijer a magnet for jobs, retail and commercial activity.
Of equal celebrity is the city’s new Whole Foods Market built by our sister company, Sachse Construction. The upscale grocer is embracing a new customer type for its goods by locating in the Midtown district. The market also opened earlier this year to accolades and community revelry.
A new target of economic development is the area located west of Woodward Avenue and north of Interstate-75. Mike Ilitch, development lightning rod and NHL owner, has plans to build his Detroit Red Wings a new $450 million home there. Another $200 million is being considered for surrounding residential and commercial development – which will be primarily driven by smaller developers. The arena is sure to add to Detroit’s growing star power, and will be connected to other city attractions by way of the planned 3.1-mile M-1 Rail streetcar line that will run on Woodward from downtown to West Grand Boulevard. Recovering this massive acreage from blight and turning it into a vibrant space is another success story resulting from government and industry partnership.
There are many other positive stories being written. Many of them are focused not on the biggest agents of change, but on smaller investors that help complete the urban landscape. These are the lesser-known developers who provide safe and comfortable housing, affordable markets and services, and a true sense of community.
The brilliance of Detroit’s turnaround plan resides in its bilateral approach.
First, the city is being revitalized for visitors, who will play an important role in Detroit’s resurgence. Conventions, sporting events, concerts, exciting shopping and dining, and a thriving theatre district will draw tourists nationally and residents from the surrounding suburbs. Capitalizing on Detroit as a true destination will grow the city’s revenue stream, a critical factor in its future success.
More importantly, these efforts are aimed at improving the city for its residents and future residents. Families, children, young adults and seniors need and deserve safe, economical and efficient housing options. The vision for Detroit is to create a living city center – a thriving metropolis, filled with taxpaying residents who work and play and shop in the city. These residents will have access to parks, schools, markets, restaurants and entertainment, and a variety of city services.
Despite its current financial position, Detroit can become an example of urban renewal, rebirth and reclamation. Everyone must be aligned to make progress, but a strong core in Detroit will be good for the entire region.
With the continued efforts of serious investors and committed citizens, Detroit may soon add another first to its long list of notable accomplishments. It may become the first major American city to rise from bankruptcy as a national economic success story.
Richard Broder is chief executive officer of Birmingham, Mich.-based Broder & Sachse, a full-service commercial and residential real estate company.