Why Detroit?
“Detroit, “America’s comeback city,” once dependent solely on the automotive industry, has been molded into a well diversified and dignified metropolis. Abandoned warehouses and automobile plants are being converted into beautiful loft-style apartments. The river banks are seeing new life as retail, office, and residential space are becoming a hot commodity, expanding beyond the downtown space” (source: CBRE, Downtown Detroit Development Report, June 2017).
Detroit is one of America’s most iconic cities, with stunning architecture and a rich cultural heritage. Art Deco skyscrapers define its cityscape and tudor style brick homes populate its residential areas. So when the birthplace of Motown, techno music and the automobile industry fell to near ruin and declared bankruptcy in 2013, both public and private sector forces came together to create America’s greatest comeback story.
Development
Three trends driving new development: job growth, limited availability of desirable product, and dedicated new investment by private and public entities
Detroit’s unemployment rate is down to 8.7% in 2018 from 19% in 2014
Estimated 72 projects in downtown and midtown Detroit either recently completed, currently under construction, or proposed
$5.4B in projected capital to be invested in these projects between 2017-2020
Vacancy rate for Detroit office space estimated at 7% compared to 30% 10 years ago
The Illitch family has developed a new arena and 55 surrounding blocks in an area known as “the District”, an investment estimated at over $2B to dateDan Gilbert’s entities own more than 80 properties - total investment estimated to be more than $2.2B to date
Development of new streetcar called “Qline” is expected to spur over $7B in economic development within a decade
Automotive manufacturers and suppliers returning to the city with almost $2.7B in investment and new jobs
Detroit is experiencing a rising restaurant and boutique hotel scene
$125 million in improvements to commercial corridors in 23 city neighbourhoods set to begin in 2018
Considerable job growth driven by technology firms and large tech incubators are growing start-up activity in once dormant city sections
Key players driving development are Dan Gilbert, owner of Quicken Loans, and the Illitch Family, owners of Little Caesar’s Pizza, Detroit Red Wings, Detroit Tigers
Dan Gilbert’s entities own more than 80 properties - total investment estimated to be more than $2.2B to date
Downtown Detroit is now home to 4 high-profile professional sports teams, the Lions, Pistons, Tigers and Red Wings
JP Morgan Chase invested $150M in Detroit’s revitalization
Drivers
Second highest rent-to-value ratio in the U.S. at just over 8.5%
Low entrance requirement - single family homes for $65,000 USD and duplex for $95,000 USD
As of 2016, renters outnumber homeowners in Detroit at 52%
For April 2018, prices continue to rise, average sales price for single family homes up 8.7% from March 2017
Demolition in target areas is estimated to have increased surrounding home values by an approximate 4.2%
Low housing supply and vacancy rates - multi-family vacancy are below 5%
For 2017, Detroit identified as having the 3rd highest appreciation in the US at 20.6% year-over-year
City of Detroit actively involved in demolishing thousands of blighted or deteriorated homes
Home equity impact of all demolition activity has been calculated at $209M