“Detroit is so bad, the opportunity is so great” according to Tony Goldman, CEO of Goldman Properties in New York, in Crain’s Detroit Business. That was the sentiment at “Detroit: Forged by Innovation”, a two-day conference highlighting Detroit’s real estate opportunities. It’s been a long, slow march for the city, which has been plagued with high unemployment, a declining population, and severe money problems, but leaders of its resurgence remain optimistic in Detroit’s future. David Blaszkiewicz, president of Invest Detroit and CEO of the Downtown Detroit Partnership was asked if Detroit is the new Brooklyn: “No, Detroit is the new Detroit” he responded.
While businesses have led downtown’s transformation, its residential market has been the anchor. In fact, in a release by S&P/Case-Shiller Home Indices, Metro Detroit is one of only two major markets where home prices increased, up 4.3% from June to July, 1.4% July to August, and 2.7% in August, according to the Free Press. The Detroit News reported that home foreclosures were down nearly 33%, the 11th month in a row they’ve decreased. S&P’s index committee chairman David Blitzer described Detroit as “the healthiest when viewed on an annual basis.”
Residential demand in Detroit has centered Downtown, where developers believe the market is at a “tipping point”. Jeffery Schostak, director of corporate real estate services for Schostak Bros. & Co. described Woodward as “near capacity…leasing opportunity has been outstanding.” According to mlive.com, the company’s Lofts of Merchant Row development is at 99% capacity. Sue Mosey of Midtown Detroit, Inc. told the Detroit News that Midtown’s residential occupancy is up to 95%, the highest in a decade. “We really need housing. We’re going as fast as we can”, she said.
To meet the demand in Midtown, developers are adding more than 200 additional residential units, according to Mosey. Construction on The Auburn began in September, and when finished the three-story building will offer 58 new residential units. A few blocks north on Cass, construction on The Union finished this summer, and the building now offers fully furnished apartments to Wayne State University students. Similarly, new projects such as the Broderick Tower, which is being renovated and converted into upscale apartments, are taking advantage of high demand and a need for rentals downtown.
The increased demand is largely the result of Live Midtown, a program offered by WSU, the Detroit Medical Center, and Henry Ford Health System that gives financial incentives to employees who move to the neighborhood. Live Midtown has been so successful it prompted downtown employers Blue Cross Blue Shield, DTE Energy, Compuware, Quicken Loans, Strategic Staffing Solutions to start Live Downtown, which aims to bring residents downtown. The $4 million program’s popularity prompted Urban Science to join in last week, according to CEO Jim Anderson in Crain’s, who said “A rebirth of a city is a shared commitment, and we’re proud to be a part of it”.
The companies offering Live Midtown and Live Downtown hope that bringing in residents will further spur development and help fill empty buildings and storefronts. Nate Forbes, managing partner of Forbes Co., told mlive that “Its employment; its living; then its play”, meaning that once employers move downtown, housing and entertainment follow. Indeed, Forbes Co. manages the Summerset Collection, which recently brought several retailers downtown over the summer to cater to new residents. The project, called CityLoft, was so successful that sponsors decided to continue the program through December.