DETROIT — At the conclusion of his speech at the Urban Land Institute (ULI) Spring Meeting in Detroit, billionaire businessman Dan Gilbert gave conference goers one piece of advice. “Get in on some of these investments in Detroit,” he said. “It’s not too late.”
The event, held May 1-3 at the Cobo Center, drew 4,200 attendees from the real estate industry. It was the first ULI event in Detroit in 40 years.
Gilbert, founder and chairman of Quicken Loans Inc., spoke at the opening panel along with Christopher Ilitch, president and CEO of Ilitch Holdings Inc. Robert Taubman, president and CEO of Taubman Centers Inc., moderated the session, entitled “Detroit’s Renaissance.” Subject matter ranged from Detroit’s past to present, including development highlights and the resilient DNA of its citizens.
Left to right: Robert Taubman, Dan Gilbert and Chris Ilitch (Photo courtesy of Urban Land Institute)
Gilbert’s real estate company, Bedrock, has acquired and developed more than 100 commercial properties totaling over 16 million square feet in the city’s urban core. The Ilitch family, made famous by Little Caesars Pizza, owns both the Detroit Red Wings and the Detroit Tigers and is responsible for a 50-block mixed-use project under development known as The District Detroit.
For decades, the Motor City was a well-publicized story of economic decline and misfortune, pointed out Gilbert. At its peak in 1950, there were 1.86 million people living in the City of Detroit. Today the city’s population is slightly under 700,000, according to U.S. Census Bureau estimates.
“There’s nothing us Detroiters can say, show or tell you that is going to overcome the unique radioactive-like, reputational fallout of a 50- to 60-year economic decline and all the associated negative consequences,” Gilbert told the audience.
But the city is on its way to a major comeback. Bedrock alone has unveiled a package of four developments totaling $2.1 billion in new investment.
“Negative reputations do not die easily,” acknowledged Gilbert. “But there is a solution. Seeing, touching and feeling for yourself the excitement, opportunity, growth and reality that is Detroit 2018 will allow you to believe a story that is now on its way to much more pleasant chapters.”
Conference goers such as Andy Gutman, president of Southfield, Michigan-based Farbman Group, said he agreed with Gilbert regarding investment opportunities in Detroit. “The cool neighborhoods are just starting to take form once you are outside the central business district,” he explained. “Detroit is one of the largest cities in America in terms of square footage and we are still in the infancy stage of the comeback.”
Bedrock is developing the 130-room Shinola Hotel, which is slated to open later this year.
In December, Bedrock broke ground on what will be Detroit’s tallest building. An 800-foot, mixed-use tower will occupy the site formerly home to the city’s J.L. Hudson department store, which closed in 1984. Also on Woodward Avenue, Bedrock is developing the 130-room Shinola Hotel. Shinola, a Detroit-based company, is best known as a manufacturer of watches, bicycles and leather goods.
Sports-anchored development
Olympia Development, the real estate arm for the Ilitches, opened Little Caesars Arena in September. The 20,000-seat arena is now home to both the Detroit Red Wings and the Detroit Pistons. With 2.3 million visitors since its opening, the development is on pace to be the second-busiest entertainment venue in the world, according to Ilitch, who is the son of the late Mike Ilitch.
“The District Detroit is a dynamic, urban destination that has its heart on Woodward Avenue and is focused on filling the gap around I-75 to make a dense, walkable neighborhood experience,” said Ilitch during his presentation.
Following several hundred residential units in the Phase I development of The District that is nearing completion, Olympia just unveiled plans for six office buildings with ground-floor retail space. Three of the projects include the restoration of historic buildings, with the largest totaling 66,000 square feet of office space and 8,000 square feet of retail space. Three will be newly constructed, including a $65 million development on Woodward Avenue.
The $150 million headquarters for Little Caesars Pizza is expected to open this summer.
The District also includes the new, $150 million headquarters for Little Caesars Pizza. The property, which features pizza-shaped windows, is Detroit’s first newly constructed headquarters building in more than a decade, noted Ilitch. The nine-story building is expected to open this summer.
Likely anticipating a downtown revival, several big-name companies have announced moves to downtown Detroit. Google opened a regional office alongside Little Caesars Arena. Microsoft is moving from Southfield to Bedrock’s One Campus Martius building. LinkedIn just signed a 74,500-square-foot office lease on Woodward Avenue.
Rising from the ashes
After the Great Recession in mid-2009, the city’s unemployment rate had skyrocketed to well over 20 percent. Now the figure is around 7 percent, according to Ilitch. What’s more, Detroit is attracting and retaining young talent.
“For the first time in probably 60 to 70 years, not only have we started keeping our students, we’re attracting more than those that graduate on an annual basis,” said Ilitch. Located in the city, Wayne State University is currently home to 28,000 students.
In a short Q&A portion moderated by Taubman, questions arose of how to measure Detroit’s success (population growth) and what areas still need improvement (public transportation).
“I’m a big believer that people vote with their feet,” said Ilitch, who intends to see Detroit’s population grow by “building a community that people see value in, they’re attracted to and they want to be a part of.”
Gutman of Farbman Group said that Detroit can measure success in different ways. “We are seeing building values start to come close to replacement cost, which is a sure sign of growth,” he said. “There is also a vibrancy and excitement where people from the suburbs are moving to the city and others are coming down to shop, play and eat.”
Compared with other cities, the prices of projects currently under development and in the planning stages in Detroit make for a great investment, according to Gilbert, who said that “going vertical” is a new term being used in Detroit. Construction cranes are increasingly dotting the skyline.
Ilitch emphasized opportunity, telling audience members that investment in Detroit has the potential for “incredible impact,” more so than any other market in their portfolios. “The exciting thing is that the engine of development is just getting restarted,” he said. “Detroit is at a highly unique moment in time — a moment worth seizing.”
— Kristin Hiller