DETROIT—Detroit has recently gained a great deal of notice due to the resurrection of its downtown. But one question that has remained is whether the stupendous growth in its office employment and residential occupancy will have an impact on the vast city beyond the core. Gregg McDuffee, executive director of the Detroit-Wayne Joint Building Authority and outgoing chairman of Urban Land Institute-Michigan, tells GlobeSt.com that he already sees the ripple effects of downtown development and expects the wider city to benefit even more in the future.
“It's important to understand that Detroit was the first middle-class city in the early 20th century,” he says. “It was an incredible melting pot that brought people in from all over the world.” And as the city grew during these decades, thousands of people, many attracted by the burgeoning auto industry, built single-family homes. “When you look around Detroit, you'll see that we've got very solid neighborhoods throughout the city.”
Those neighborhoods have gone through some rough times, he admits. “After the 2008 financial crisis, we saw precipitous declines in values even in the good neighborhoods.” In the past few years, however, several developments have started bringing the city back from that low point. The auto industry was returned to health, for example, and the city went through its bankruptcy proceedings and then got a new mayor and city council.
Since 2012, home values have soared, he adds, and not just in the downtown core. “It's driven by demand,” mainly by the flow of young people attracted by rapidly improving jobs market. And even though many of the major employers, such as Quicken Loans, have had a dramatic impact by bringing thousands of jobs into the core, “we've seen a lot of younger people that don't necessarily want to live downtown.” And even though it's true that the rental residences in the downtown are now about 98% occupied, “many millennials still have an interest in homeownership.”
In fact, these days when a good house in a solid neighborhood goes on the market, McDuffee says it's not unusual to see three or four prospective buyers make serious offers. Although a lot of challenges remain in underserved neighborhoods, “we've now got a very robust housing market in middle-class areas. Detroit is once again becoming a melting pot.”
Many of these areas are adjacent to the corridors, such as Woodward Ave., that radiate out from the downtown and tie it to other neighborhoods like Midtown and anchors such as the Ford Medical Center and Wayne State University. The QLINE, Detroit's new light-rail system, will stretch for more than three miles up this corridor, and when it begins carrying passengers next year, it will be the first time in generations that city residents have such a public transportation option.
He estimates that about 1,000 new units of rental housing is set to be developed along the corridor, and many more thousands along Woodward and other corridors over the next decade. And all of this activity, even if a lot of it is in rentals, also brings stores, restaurants, other businesses and amenities. “It's great to have a vibrant downtown, but we are also seeing a growing sense of security and vitality in other areas. And what happens along the corridors tends to bleed into adjacent neighborhoods.”
“We're seeing people buying up homes along the edges,” he adds. “People are always looking for the next edge, and the edges keep getting moved a little further out.”
DETROIT—Detroit has recently gained a great deal of notice due to the resurrection of its downtown. But one question that has remained is whether the stupendous growth in its office employment and residential occupancy will have an impact on the vast city beyond the core. Gregg McDuffee, executive director of the Detroit-Wayne Joint Building Authority and outgoing chairman of Urban Land Institute-Michigan, tells GlobeSt.com that he already sees the ripple effects of downtown development and expects the wider city to benefit even more in the future.
“It's important to understand that Detroit was the first middle-class city in the early 20th century,” he says. “It was an incredible melting pot that brought people in from all over the world.” And as the city grew during these decades, thousands of people, many attracted by the burgeoning auto industry, built single-family homes. “When you look around Detroit, you'll see that we've got very solid neighborhoods throughout the city.”
Those neighborhoods have gone through some rough times, he admits. “After the 2008 financial crisis, we saw precipitous declines in values even in the good neighborhoods.” In the past few years, however, several developments have started bringing the city back from that low point. The auto industry was returned to health, for example, and the city went through its bankruptcy proceedings and then got a new mayor and city council.
Since 2012, home values have soared, he adds, and not just in the downtown core. “It's driven by demand,” mainly by the flow of young people attracted by rapidly improving jobs market. And even though many of the major employers, such as Quicken Loans, have had a dramatic impact by bringing thousands of jobs into the core, “we've seen a lot of younger people that don't necessarily want to live downtown.” And even though it's true that the rental residences in the downtown are now about 98% occupied, “many millennials still have an interest in homeownership.”
In fact, these days when a good house in a solid neighborhood goes on the market, McDuffee says it's not unusual to see three or four prospective buyers make serious offers. Although a lot of challenges remain in underserved neighborhoods, “we've now got a very robust housing market in middle-class areas. Detroit is once again becoming a melting pot.”
Many of these areas are adjacent to the corridors, such as Woodward Ave., that radiate out from the downtown and tie it to other neighborhoods like Midtown and anchors such as the Ford Medical Center and Wayne State University. The QLINE, Detroit's new light-rail system, will stretch for more than three miles up this corridor, and when it begins carrying passengers next year, it will be the first time in generations that city residents have such a public transportation option.
He estimates that about 1,000 new units of rental housing is set to be developed along the corridor, and many more thousands along Woodward and other corridors over the next decade. And all of this activity, even if a lot of it is in rentals, also brings stores, restaurants, other businesses and amenities. “It's great to have a vibrant downtown, but we are also seeing a growing sense of security and vitality in other areas. And what happens along the corridors tends to bleed into adjacent neighborhoods.”
“We're seeing people buying up homes along the edges,” he adds. “People are always looking for the next edge, and the edges keep getting moved a little further out.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
