Angel investors and mission-driven developers are helping Detroit bolster its economic base, according to a recent series of reports from the Urban Institute. “Coming Back from the Brink: Capital Flows and Neighborhood Patterns in Commercial, Industrial and Multifamily Investment in Detroit” and “Mission Finance in the Motor City.” suggest the least trumpeted story is the resurgence of commercial and multi-family investments to the tune of $147 million a year from 2007-2015.
Much of the investment is concentrated in greater downtown as those with capital and social vision pick up properties at bargain-basement prices and rehabilitate them. The heroes, says Brett Theodos, lead author of the Urban Institute study, are those who combine financing to build or restore commercial, industrial, multifamily, and institutional real estate in Detroit.
The least trumpeted story is the resurgence of commercial and multi-family investments to the tune of $147 million a year from 2007-2015.
“From providing real estate developers with technical assistance to their willingness to make riskier loans, mission lenders’ importance goes far beyond the amount of money they have invested in Detroit,” Theodos says.
Across all of Detroit, the total dollar volume of construction and rehabilitation investments in commercial and multi-family real estate doubled from $374 million in 2011 to $770 million in 2015.
Thanks to these investments, Theodos says the city has had a net gain of 4,100 jobs since 2010, reversing decades of job loss. Detroit still has the highest poverty rate of any city in the nation – 40 percent – complicating the risk even when the need is great.
The research is financed by JP Morgan Chase Foundation, which expects to invest $150 million to restore Detroit neighborhoods, bolster entrepreneurship and rebuild the commercial districts.
Across all of Detroit, the total dollar volume of construction and rehabilitation investments in commercial and multi-family real estate doubled from $374 million in 2011 to $770 million in 2015. The Woodward corridor is a prime source of investment. The largest single private-public entity is the Little Caesar’s Arena. Nearby new multifamily housing has gone up in Brush Park, just east of the arena and the Foundation Hotel opened across from Cobo Center. Lear Corp. opened a three-story building in Capital Park.
The goal of the study, which is part of a series examining Detroit neighborhoods, is to identify and tackle barriers to community investment. While the report encourages aggressive effort to facilitate development and hopes to promote more flexible subsidy financing sources, it is hoped that oversight in building and finance continues. It’s also recommended that developers are vetted thoroughly before embarking on historic projects where they could run out of money midway into the job, a dilemma that has burdened Detroit and other large cities.
Editor’s Note: TheHUB maps out neighborhood investments making it easier for everyone to see where investment “is” and “is not” occurring in Detroit. See TheHUB’s report on District 5 and District 2 developments.
See Commercial, Industrial, and Multifamily Investment in Detroit (Executive Summary
See Coming Back from the Brink
See Mission Finance in the Motor City
Photo by Michelle & Chris Gerard