MARKET BREAKDOWN
REGIONAL SPOTLIGHT: DETROIT
on in this city and there have been for some time if you knew where to look for them,” Jordan said. “We’re not just bringing in new things, either. We’re still an international automotive hub which, thanks to today’s technology, means that we also attract a healthy amount of interest from high-tech companies interested in being involved with smart cars and other aspects of the auto industry.” “This city is a treasure, and although treasure is usually found where people don’t look, more people are starting to see Detroit’s potential for themselves. I’m just glad that I’ve been here all along.” •
tory to revitalize neighborhoods surrounding but not part of downtown. Perhaps most impressively, Detroit edged out Dallas-Fort Worth, San Diego, San Jose, Colorado Springs, and Boston on Realtor. com’s mid-year list of hottest housing mar- kets. Detroit ranked sixth on the list. “There has been so much hard research showing that Detroit is growing in the right direction,” said Jordan. “Rents are going up. Values are going up. Buildings are complete- ly occupied, and the mayor is busy putting Detroit on the map again by doing practical things like making sure we’ve got the proper lighting systems in our neighborhoods, a strong, ethical police force, a solid school system, and, of course, constantly improv- ing employment numbers and jobs growth. “We think we can be confident that number is going to stay put and even head farther
DETROIT AT A GLANCE
ARE THERE TRANSIT TRAPS IN DETROIT? A s long as there have been people who needed to get places, there has been a need for a “conveyance for public hire,” as it might once have been phrased. Today, the more familiar term would be “public transport,” and one of the most in-
Michigan Real Estate Investors (MREI) http://www. michiganrealestateinvestors.com/ Real Estate Investors Association of Oakland (REIA of Oakland) http://www.reiaofoakland.com/ Real Estate Investors Association of Wayne (REIA of Wayne) http://www.reiawaynecounty.org/ Property Management Association of Western Michigan http://www.pmawm.com/ Detroit Metropolitan Apartment Association http://www.dmaa.net/ Detroit Regional Chamber of Commerce http://www.detroitchamber.com/
Detroit’s driver-less “People Mover” runs in literal circles around the city’s downtown area.
explained Ryan VanSickle, an urban planner working in Atlanta, Georgia. “If you don’t have the right infrastructure or transit service connecting your residents to where they actually need to go, your neighborhood may struggle no matter how good it looks on paper.” In today’s development sector, more and more project developers place a high value on fixed infrastructure like rail transit and conventional bus systems that work efficiently because they offer a sense of permanence and connection to more places than do trolleys or more tourist-oriented transit options. To that end, Detroit’s current mayor has made transit a priority in his administration and increased funding for a number of renewal projects, including replacing a fleet of old and unreliable buses, significantly reducing wait times for those buses, and 24-hour service on many routes. Furthermore, the city’s new Q-Line streetcar, named for and sponsored by Quicken Loans, also promises to bring additional development and jobs to the areas along its line. Skeptics, however, accuse Quicken of opening the streetcar as a publicity stunt. It remains to be seen whether the motivation matters, since streetcars, jobs growth, and rising property values do tend to go hand in hand. If you want to leverage a rental strategy in Detroit, the important thing is to know not just the real estate market, but also your tenant market. “Despite improvements in recent years, much of suburban Detroit is out of reach for public transit,” VanSickle noted. “Detroit is…the home of the automobile and its suburbs have long been averse to public transit expansion,” stated Ryan Felton, a transportation and technology reporter for Jalopnik.com, much more bluntly. All of this becomes relative once you determine whether your renters are going to be negatively affected if they can’t catch a bus to work. Get clear on that specific point, and your rental investments in Detroit will have avoided the transit trap. •
fluential factors in the success or failure of certain types of real estate investments can rely heavily on a specific facet of public transport: the mass transit system. Mass transit first appeared in the form of the omnibus in Paris, France, in 1662. It was followed by the passenger horse-drawn railway, which ran betweenWales and the United Kingdom and opened in 1806, and the Stockton and Darlington Railway in England, the first public steam railway in the world, which opened in 1825. Today, the termmass transit usually refers broadly to a city’s bus transportation system, subway system, light rail system (which may include streetcars and trams, depending on local vernacular), and, in some cases, municipal bicycle-sharing systems. Not surprisingly, since public transport tends to be far less expensive, especially in metro areas, than commuting, many relatively low- and lower-income populations as well as environmentally conscious demographics, such as young professionals and Millennials, often prefer to use these systems to travel for work and pleasure. Since these populations also tend to have a high proportion of renters, real estate investors purchasing properties for rentals must factor in the availability, accessibility, and desirability of public transport in the eyes of their target market, tenants. If an area has a high population of residents dependent upon public transport but little or no access to it, that area can become a “trap” that prevents those individuals from accessing jobs and other community benefits outside walking distance. Property values and community wellbeing in such “transit traps” tend to stagnate because residents may have more trouble obtaining and keeping jobs than those living in comparable areas with access to public transport. An investment property intended for a mass-transit oriented tenant but with poor mass transit access will simply be less desirable. “For years, residents could end up stuck inside urban areas, just as today they may end up stuck outside them,”
Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at cellis@thinkrealty.com.
down now that the city is firing on all cylinders,” said Jordan. He referred to the long-held national percep- tion that Detroit had become a “ghost town” and noted that in the past 12 months, city planners, city and state officials, residents, and local econom- ic drivers like Gilbert and other revitalization foundations and organizations, have come to- gether to change that narrative for the better. “In all actuality, there are phenom- enal things going
Albert Cobo Convention Center https://www.cobocenter.com
City of Detroit Official Website www.detroitmi.gov
ATTOM Data Solutions www.attomdata.com (800) 550-4802
U.S. Census – Quick Facts on Detroit https://www.census.gov/ quickfacts/fact/table/ detroitcitymichigan/RHI805210
Zillow www.zillow.com
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