Barely a decade after Detroit declared bankruptcy, the city is emerging as America’s most unlikely real-estate boomtown. And I love it.
A development frenzy has gripped Detroit’s central business district. Big companies, including Ford and developer Related Cos., are spending billions of dollars on office buildings and other properties.
Dan Gilbert, a Detroit native and the billionaire co-founder of home lender Rocket Mortgage, is leading the city’s revitalization. His new skyscraper, still under construction, recently topped out at 681 feet, making it the city’s second-tallest tower. It sits across the street from downtown Detroit’s first Gucci store.
The city’s residential market is also taking off. Home prices in the area are up 40% since 2020, and last fall had the steepest rise among major U.S. metropolitan areas.
The number of apartments downtown has more than doubled to 5,903 since 2010, according to the Downtown Detroit Partnership.
Detroit’s business-district transformation offers lessons to other cities that are struggling to revive their empty downtowns and avoid being sucked into a debilitating doom loop.
Cities across the country are racing to convert commercial buildings into apartments. They are also adding bars, restaurants and entertainment venues to make up for the missing foot traffic.
In Detroit, not everything is going right. Office vacancy rates are still high and foot traffic hasn’t fully rebounded to prepandemic levels. General Motors made headlines last week when it said it is staying in downtown Detroit, moving its headquarters to the Gilbert development.
But GM will be taking up significantly less space, a sign of the challenge of filling up offices as more employees work remotely.
Even so, Detroit’s downtown recovery is already ahead of schedule. Its abundance of once-empty buildings offered opportunity. Many are nearly a century old, with small floors and beautiful architecture, said Eric Larson, CEO of the Downtown Detroit Partnership. These are exactly the types of buildings that work well as apartment conversions.
In more robust markets, such as Midtown Manhattan, these buildings would have been torn down and replaced by characterless glass office towers with cavernous floors.
But in Detroit, they remained as ruins, waiting for someone with money and local pride to come and convert them. That person turned out to be Gilbert.
“We really had three options,” he said. “Extend the leases, go to some farmland and build a campus—which wasn’t really attractive to us—or come downtown and fill up some of these beautiful old buildings that we really loved.”
Gilbert’s companies bought more than 130 properties downtown, spending billions. His real-estate venture, Bedrock Detroit, converted the Book Tower, a century-old, 38-story Italian Renaissance Style skyscraper, into apartments, a hotel, offices, retail, event space, bars and restaurants. The $400 million project opened last year.
Chief Operating Officer at Thomas St John Group
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