MARKET BREAKDOWN
Detroit city planners have always looked for creative ways to build value. Campus Martius Park created economic activity all on its own, according to city planners.
REGIONAL SPOTLIGHT: DETROIT
change was coming, although not in the way many expected.
helping Detroit “revitalize its troubled ur- ban core with a skating rink, fountain, gar- dens, event stage,” and more. The success of Campus Martius Park eventually led to multiple expansions and development of other parks in the area, such as Cadillac Square which has been the site of a number of proposed mixed-use developments and is home to the Cadillac Tower, which will likely soon be joined by Meridian Health Plan’s future headquarters. All of this work was in process in Detroit prior to and even during the disastrous years that followed the housing crash, if an investor knew where to look. “By 2009 and 2010, I was picking up really good deals both on physical properties and on mortgage notes,” Jordan recalled. Around that time, he began using his native knowl- edge of the area to buy properties that he believed would have sustained rental demand, rehab them, and lease them out. “I built up a company with nearly 20 team members,” he said. Because of wide- spread investor uncertainty about Detroit during that time, Jordan opted to purchase, renovate, lease and manage those proper- ties himself to keep his interests and those of his investors protected. “We’ve always been really straight- forward with our investors and very transparent about why and where we are buying properties,” he explained. “Trea- sure is sometimes found where other people don’t look, and I’m so proud that I’ve been a part of it for such a long time.” Another influential “treasure seeker” in the area is indisputably Dan Gilbert, found- er and CEO of Quicken Loans. Gilbert
officially and publicly dedicated himself to the downtown area’s revitalization around 2010, when he moved Quicken’s headquar- ters and 1,700 teammembers to the area. Today, his businesses employ more than 14,000 area residents according to Crain’s and he has investment capital in more than 90 properties in the downtown area. Gilbert not only builds up his personal projects in the area, but also works to bring in other powerful economic players. He is also the co-chair of the city’s Blight Remov- al Task Force and was appointed to lead the city’s bid for a new Amazon headquarters in the area. That bid has been compared to bidding for the Super Bowl, which the city hosted in 2006 in hopes of building, as the governor of Michigan at the time described it, “confidence in Detroit and…millions of dollars in revenue.” WORKING BY THE NUMBERS While real estate investors who keep a cool head are far more likely to generate great returns in Detroit, these days that objective, emotionless perspective is a bit harder to maintain. Forbes recently dubbed the city first in the nation for un- dervalued housing markets, saying that the city’s inventory is worth 11.7 percent more than its current median selling prices. This past July, RentCafe projected that the rental inventory in the area had climbed 175 percent and was still climbing. Miami Dol- phins team owner and Detroit native Stephen Ross announced in early fall of this year that he would teamup with the two other groups to invest $27.5 million in new housing inven-
DOWNTOWN DETROIT: CAREFUL PLANNING AND LOCAL PASSION POWER UP THE MOTOR CITY While most people think of Detroit’s recovery and current renaissance as having begun in the wake of the housing crash, city planners and officials have viewed the downtown metro area as key to the city’s recovery and been acting on that view since the mid-1990s. In 1996, the city passed a referendum to allow casino gambling within the city limits, a groundbreaking move at the time. By 1999, multiple temporary facilities had opened in the area. By 2007, as the city struggled to revitalize its economy using innovative strategies that might set it apart from other struggling metro areas, those temporary structures had made way for permanent ones that brought jobs, tourist money, and a little glamour to an area that desperately needed it at that time. Casinos are not the only thing that was in the works before the housing bubble burst, either. In 2004, the city opened Campus Martius (left), a park located in the downtown area’s main intersection that has been consistently cited as one of “the best public spaces in the United States” by urban design experts at the Urban Land Institute (ULI) and elsewhere. “Campus Martius created its own demand,” said Pat- rick Phillips, ULI’s global CEO, in 2015. Phillips went on to praise the park for
electricity not just in homes but also along some major thoroughfares. By 1903, when Henry Ford founded his Ford Motor Company and Dodge, Pack- ard, and Chrysler soon followed, the city was in full-on expansion mode. Although the auto industry also brought quite a bit of violence to the area as labor unions and labor activism, at first well-intentioned and serving a vital role defending American auto workers’ rights, eventually brought in a heavy mafia presence, the new sector was good for the city. In fact, the auto indus- try’s own explosive expansion resulted in astronomical growth for all of Detroit, which led to it eventually ballooning to the fourth-largest city in the country by 1920. Prohibition cemented Detroit’s status as a crucial waterway. The city served as a por- tal for illegal Canadian spirits until alcohol was legalized again in 1933. Unfortunately for Detroit and, indeed, the entire state of Michigan, which was
heavily reliant on the city’s continued prosperity, the good times did not last. Although the city had a population of more than 1.8 million at its peak, the city sprawled outward as cars made it easier for workers to live farther away from the metro center and then, as civil unrest, poor schools, and violent clashes over segrega- tion became increasingly commonplace starting in the 1960s, the area’s poorest residents found themselves isolated in pockets of the city, in some cases unable to reach employment because urban public transit had been allowed to languish. That problem expanded for decades before modern legislators attempted to tackle the issue [see sidebar]. Between 1950 and the early 2000s, high unemployment and urban decay created a negative situation for much of the city that municipal leaders struggled to resolve. Fortunately for Detroit and for real estate investors,
Detroit literally translates to “strait” from French. Since most trade and industry relied on waterways at the time of the city’s founding, it is no surprise that a city positioned at the juncture of two of the Great Lakes would have thrived. By the end of the 19th century, the city and the surrounding state had played a crucial role in the Civil War (President Lincoln is said to have declared “Thank God for Michigan!” when the state’s First Volunteer Infantry Regiment arrived to defend Washington D.C. in 1863) and shipping magnates and their wealth had arrived to launch what is often referred to as Detroit’s “Gilded Age.” Many now-his- toric properties and neighborhoods remain in Detroit as remnants of that time, when the city was often referred to as the “Paris of the West” thanks to its grand mansions, modern architecture and widespread
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