Why Post-Recession Detroit Is the New “It” City
An estimated $18 billion — that’s how much debt Detroit faced when the city filed for Chapter 9 bankruptcy two years ago. According to USA Today, it was the largest municipal bankruptcy filing in U.S. history. It left Detroit a postapocalyptic wasteland. People wondered if the city would ever be able to rebound from such a devastating economic step, but the city is already on the path to recovery.
In the midst of collapse, thousands have rallied around the city, seeing it as an opportunity to rebuild. The New York Times reveals that a legion of entrepreneurs, longtime Detroiters, and transplants alike have united around the conviction that the city has fallen as far as it can go — the time to buy is at hand. And the facts support this idea. Residential real estate occupancy has climbed to 99%. Even better — office vacancies are at 11%, the lowest rate in decades.
In the absence of the manufacturing economy that built Detroit, the city has spread in new directions. New industries and businesses are popping up across the city, bringing life, jobs, and a new vitality previously unseen. So who is seeking out this new Detroit?
Cities with potential attract entrepreneurs. Detroit is a fresh market with low prices, eager workers, and massive expansion opportunities. It’s no wonder that thousands of budding and seasoned entrepreneurs have planted their roots there.
Dan Gilbert, the Founder and Chairman of Quicken Loans and Rock Ventures LLC, moved his entire family of companies to Detroit in 2010. Since then, according to a press release, he has invested more than $1.7 billion to purchase and renovate more than 75 commercial properties, creating thousands of jobs. Many of his purchases cost as little as $8 a square foot, as reported by The New York Times, just one illustration of Detroit’s affordable attractiveness.
Another example is the Build Institute, which started in 2012. The program has helped over 500 aspiring and experienced entrepreneurs transform their business ideas into reality. In addition to classes, the Build Institute offers networking events, mentorship opportunities, and resources all with the goal of nurturing the Detroit community.
Alongside entrepreneurs, investors are heading toward the city in droves. The New York Times discloses that of Detroit’s 380,000 original properties, 114,000 have been razed, and another 80,000 are considered in need of demolition. This leaves a wide-open playing field for investors and capitalists to add their money to the city and watch it grow.
Detroit Venture Partners is one such example. Their approach has been to back early-stage start-up teams with grit, creativity, and passion for those who are looking for new opportunity. Since their founding, they’ve backed 70 start-ups in Detroit’s downtown tech ecosystem.
Another player in the investment field is the Detroit Economic Growth Corporation, dedicated to supporting existing businesses and garnering new city investments. Their mission is to bring together public sector policies with private sector investments to strengthen downtown Detroit.
Local Retail and Restaurants
Since 2013, 77 new restaurants and 41 new retail locations have opened in downtown Detroit, according to the 7.2 SQ MI report. The city’s small businesses are building the backbone of the new Detroit and revitalizing otherwise dead neighborhoods. These restaurants and retail stores are in direct response to the almost 3,000 new housing units built and renovated between 2010-2014, according to the same 7.2 SQ MI report.
These two new restaurants in downtown Detroit used refurbished heritage buildings. By using previously vacant buildings, small businesses are getting a larger bang for their buck while updating city streets at the same time.
Also finding a new home in Detroit are tech start-ups. Silicon Valley used to be the place to be, but when the Huffington Post interviewed Mike Vichich, the founder of Wisely, he claimed that it just makes sense to grow a tech start-up in the Midwest. Young developers in Detroit are just as adept as West Coast talent, but they’re more affordable, as are other professional services and office space options.
Many tech start-ups tend to agree with Vichich. Over 100 start-ups have made Detroit their home, including Are You A Human?, Stik, and Hashgram. Even large corporations like Google have recognized the opportunities available in Detroit. Google recently named Detroit as part of its Tech Hub Network, one of seven tech centers around the country who will receive investments and help from the giant, according to the Detroit Free Press.
As evidenced already, there’s an abounding love for Detroit, which is why a lot of the new business is about clean living and cleaning up the city. John Hantz, a Detroit-area tycoon, has made it his mission to transform Detroit into a city with reclaimed parks, mixed-green communities, retention ponds, and community gardens. The ew York Times reveals that Hantz has cleared 150 acres for tree farms and has planted 15,000 sugar maple, white birch, oak, and burr trees.
Beyond Hantz, many other organizations desiring a clean, safe, and inviting Detroit have popped up. Green Garage opened in 2011 and has worked to transform Detroit businesses into environmentally and socially accountable companies. Another program is Downtown Detroit Partnership, which advocates and develops programs to transform downtown Detroit into a beautiful and vibrant area. The end goal of these businesses is to make Detroit an even more attractive city to work and live in.
There’s never a better time to visit Detroit. It’s affordable and bustling with new life. That’s why businesses such as the Detroit Experience Factory are gaining speed. With all the new restaurants, retail stores, and start-ups around the city, a guided tour is exactly what every tourist needs. And lest you think that people aren’t interested in visiting Detroit, according to Hotels.com and SeatGeek, Detroit is ranked the number two best American city for sports travel.
The revitalization of Detroit offers an interesting case study. If a city billions of dollars in debt and on the brink of ruin can become a new business powerhouse, what can happen in cities with far fewer barriers to overcome? Or is Detroit unique? For now, it seems that the hustle and bustle of the new Detroit has only just begun. And as entrepreneurs and investors continue to flock to the Motor City, bringing money and new business ideas, there’s no telling what type of city Detroit will become in a few years’ time. One thing is for sure: it’s great to see that the American spirit is alive and well and that you can’t keep a good city down.