Developer’s Bet Big On Detroit’s Turnaround With Luxury Condo Projects
Despite only filing for bankruptcy four years ago, developers have big dreams for downtown Detroit.
If you’ve always dreamed of living in a high rise glassy condo downtown but have never been able to afford it, there is one place where your pocketbook could finally meet your fantasy — Detroit.
Only a few years ago Detroit was roiling in bankruptcy. Storefronts were boarded up and entire skyscrapers were left to rot. Drugs, squatters and all the ills of a a city mired in poverty and crime prevailed. Some would say Detroit hit rock bottom when former Mayor Kwame Kilpatrick was jailed for corruption in 2013 and since then it has been inching its way back. Indeed, downtown Detroit is showing green shoots thanks to immigrants and hipsters moving to town.
And now, The Wall Street Journal reports, a brave developer is betting big on Detroit’s continued ascendency by constructing the first new high-rise apartment building in 25 years in the downtown of America’s poorest major city. It’s a undoubted risk. But risk is something David Di Rita knows all about. He first peddled the idea of building a luxury apartments in Motor City a decade ago. Being ahead of his time cost him and his business partners $1.5 million. It’s a still a place where bank lending remains as scarce as a bidding war and 70,000 empty scar the landscape.The population, which has dropped by almost a third since 2000, continues its southerly slide and unemployment is twice the national average.
Di Rita is opening up his 15 story, 80 unit apartment complex, The Griswold on the same site where he failed before. His apts, feature floor-to-ceiling windows, granite countertops and polished concrete floors. At $2000 a month for a 1 bedroom apartment they are around three times the price for a house in the area and slightly more than a 1 bedroom apartment in Brooklyn’s Crown Heights. So why take such a gamble? Despite the odds, Di Rita claims to be fifty percent leased and his prescience appears to be infectious.
The Journal reports that Dan Gilbert, the founder of mortgage lender Quicken Loans Inc. and the owner of the Cleveland Cavaliers, is building a 400-unit complex in the northeastern corner of downtown and another 200 “micro-units” for young professionals. St. Louis-based developer McCormack Baron Salazar is putting up nearly 300 units in an enclave called Orleans Landing on the Detroit riverfront. The first residents began moving in recently. Another 200-unit building called the Scott, which occupies nearly an entire block in a once-desolate corner of downtown, opened Dec. 1.
Before the developer’s moved in the massive job of turning around the oil tanker of Detroit’s economy began with small entrepreneur’s whose dreams were allowed to take root in a city where opportunities were low but so was the cost of living.
The Detroit News reported that ten philanthropic foundations, both local and national, joined forces in 2007 to commit $100 million to a new fund known as the New Economy Initiative (NEI). Their goal — to transform a failing economy into a diversified engine of opportunity through entrepreneurship.
A decade later, it has been an undoubted success. Since 2009, NEI’s investments in organizations supporting entrepreneurs have helped launch 1,700 companies (40 percent of which are minority-owned, twice the national average) and create 17,500 jobs (many in high-tech sectors), according to new studies by the W.E. Upjohn Institute for Employment Research and PricewaterhouseCoopers. This has boosted output in the regional economy by nearly $3 billion.
Tech fueled millennial growth is music to any developer’s ears. Indeed, in many ways Detroit takes after Pittsburgh, which is now enjoying a real estate boom in part because its tech sector, led by Google and Carnegie Mellon University’s computer science program, helped the city soar again after depopulation which followed the demise of the steel industry. The greater Detroit area has the largest concentration of engineers in the world and three top-tier universities. And despite the price of the new condos, if you can take the winter, its a very affordable place to live.
“You ask yourself, can I put hundreds of thousands of dollars into this project and risk that I’m not going to get a return?” Mr. Di Rita says. “It requires a certain amount of personal wherewithal and personal risk.” An understatement if ever there was.
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