This is certainly what Dan Gilbert would like you to think so he can resell his cheaply purchased real estate at a profit.
Detroit has poor infrastructure (responsible for recent flooding,) high taxes, no public rail transport, poor roads, rush-hour traffic congestion, poor parking, some of the worst schools in the country, corrupt local government, is full of blighted neighborhoods, and I am sure many other terrible things. I am trying to see the reason why anyone would think it was a good idea to live or work there in its current condition.
Is this not the case for all "emerging markets"? This wouldn't be a story if Detroit had low crime, great infrastructure, low taxes, superb public transport, immaculate roads, and prestigious schools. All of the aforementioned would translate to increased costs of living. Is Dan Gilbert making money from this? Absolutely, but he's also the one that took on the initial risk.
The cost for cheap, spacious housing and office space in Detroit is having to tolerate a phoenix city in the midst of an identity crisis; expecting something which resembles NYC or SF is silly. I grew up in Michigan and have been to Detroit numerous times, and what I've witnessed lately (in concentrated locations, of course) is exciting -- see http://techtowndetroit.org/. Granted, there are certainly depressing and desolate areas of the city, but again that should be expected for a city that has seen massive emigration and decreased revenue. I am optimistic about the future of Detroit.
There are a lot of differences between Detroit and a real emerging market. For one, higher minimum wages. For another, additional environmental and labor regulations (and while some of this may benefit society and some of it may not, much of it probably results in increased compliance costs.) For a third, a 41% corporate income tax rate (35% US + 6% Michigan, according to casual internet search).
If you're going to pay the very high price of doing business in the US, it might be a better plan to locate yourself somewhere a little less wrecked where it actually buys you something.
"If you're going to pay the very high price of doing business in the US, it might be a better plan to locate yourself somewhere a little less wrecked where it actually buys you something."
Your comparisons to traditional emerging markets are well taken, but your last sentence highlights my point perfectly. Detroit is much more than abandoned buildings and abject poverty. Of course those are the easiest things to focus on because they cater to strong emotions. Meanwhile, all of the positive aspects about Detroit are subsequently white-washed. Detroit is a massive city encompassing 143 square miles, and much of it is in dire condition, but let's not throw out the baby with the bathwater. Keep in mind that there are pockets of Detroit in which amazing people are building incredible and exciting things, typically in a highly bootstrapped fashion. Blanket statements like, "less wrecked" imply that Detroit in its entirety is wrecked. This is certainly not the case as illustrated by companies like Shinola and VC firms like Ludlow Ventures. For additional examples, see: http://www.growdetroit.com/detroit-startup-list/.
Of course I am biased as a native Michigander, but for life in general I much prefer to focus on silver linings than frayed seams.
That's why the title say "America's emerging market", not "the best emerging market ever". You're commenting on an article called America's emerging market and complaining about the fact that America's emerging market is in America.
Emerging suggests positive change currently and into the future. The only positive I can see from the story is cheap real-estate?
There's no indicator, in the article at least, that anything is happening in Detroit to turn around job prospects since the car industry keeled over. So you wouldn't go there for work. Also, according to protonfish, Detroit has terrible infrastructure and sounds like a shitty place to live. So you wouldn't go there for the lifestyle.
All of which leaves me wondering: what's so great about Detroit that it should be considered an emerging market?
Aside from the Detroit car industry doing quite well, I have to comment on -
"Also, according to protonfish, Detroit has terrible infrastructure and sounds like a shitty place to live."
Just to contrast here, protonfish questions the motives of a billionaire who has moved thousands of his own employees, and made significant investments, in downtown Detroit. A man who, despite the financial capacity to live anywhere in the world, lives in Detroit. Invests in Detroit. Believes in Detroit.
Isn't that an incredible contrast? On the one hand you have someone taking strong actions, and on the other you have someone posting a comment on a message board. And you believe the guy posting on a message board?
I doubt protonfish knows anything about Detroit beyond some ruin porn they saw on a Reddit post.
Hell, I bought my car because it was made in Detroit (I was born and raised in Michigan). 'Imported from Detroit' is a hell of a marketing message for Fiat/Chrysler to make.
A city is a community with interconnecting personal and business relationships. The whole is worth more than the sum of it's parts. The inhabitants of Detroit are a declining auto industry and people with nowhere else to go.
Vibrant cities attract people in spite of their limitations. Detroit is defined by them. The best thing for Detroit would be to de-incorporate and start afresh.
Dan Gilbert wasn't the first person to notice he could buy Detroit skyscrapers for the price of one years rent in NYC. He's been criticized, even in Detroit, for buying them yet no one else was willing to take the risk. Like most things only in hindsight does it look like he got a screaming deal. Most of the knowledgeable real estate people are still unwilling to buy them and you're worried about Gilbert getting a profit? Note the Chinese are not only buying them but recently outbidding Gilbert.
A city comes back in spurts and not all at once. After fifty years of trending down at an accelerating rate I've been arguing for several years no one in the press was seeing the story of the city's revival. Yet there are critics snarking that the entire city isn't back yet. It didn't decline equally and it won't return that way. All those high paying jobs that are moving downtown are also creating jobs in security, health care and restaurants.
If you look carefully you can begin to see it happening elsewhere. Tear down those 70,000 blighted properties (which is beginning to happen) and you won't be able to deny in a few years that its happening all over.
Detroit is Michigan's Northern Star and until it returns to prominence neither will Michigan.
Yeah. Anyone who talks about how great Detroit is and how it is making a "comeback" is most likely living in either the small portion of the downtown core that has enjoyed some investments recently, or in one of the wealthy gated neighborhoods. They haven't traveled outside those places to see the real Detroit, which consists of rundown and abandoned neighborhoods as far as the eye can see and an incredible amount of poverty that permeates them.
If you insist that Detroit is defined by its failing communities and not by its successful ones then Detroit will always, by definition, be failing. To argue that Detroit is not making a "comeback" you must claim that either the successful areas are not growing or that they will not continue to grow.
Isn't it possible that such a comeback is reflected in small areas at first? That the city isn't going to wake up one morning restored to its former glory?
Comments such as yours (and the parent above it) seem to believe that Detroit is down and must stay down. That any negative in the town anywhere invalidates any positive elsewhere. But that is, of course, nonsense. Indeed, we heard exactly the same sort of noise about New York City in the 80s which, while clearly never hitting anywhere near the bottoms of Detroit, many wrote off as beyond repair, settled into a cesspool of crime and decay.
The "real" Detroit includes an invigorating downtown, growing investments, and an actual tech community. That, too, counts as Detroit, and it doesn't not count simply because you can point to negatives elsewhere.
>>Comments such as yours (and the parent above it) seem to believe that Detroit is down and must stay down.
It's not that it must stay down, but rather that it most likely will. The only reason it was a successful city at one point is manufacturing. Manufacturing has since left, and it's very unlikely that an equally lucrative industry is going to be able to fill the gap.
In general, it's much easier for small towns to become successful cities (as Detroit once did), than for decaying cities to make a comeback (as some people think Detroit will do soon).
Manufacturing has since left, and it's very unlikely that an equally lucrative industry is going to be able to fill the gap.
By this measure, just about every American city is doomed. Except, I suppose, San Francisco, if we accept that every city is "winner takes all" (which it isn't and has never been).
Detroit is a metro area about 4 million strong. It is the gateway for millions of Canadians, and to the Toronto area. It is midway between a number of great cities. It has abundant energy, geological and political stability, limited pests, and so on. It has a very large workforce, and despite the reputation, a very large educated workforce.
I mean some of the commentary in here is just...weird. Someone else commented as if all industry is going to move South, as if winter is a significant economic factor (it isn't) to industry (aside from data centers and cooling, for that matter).
i think its the myspace of cities. i dont mean that as a snarky comment. I think once a city has an outflow of a certain magnitude, even if there are good things about the city it has already lost its ability to sustain structure.
> Detroit has...poor roads, rush-hour traffic congestion, poor parking, worst schools, corrupt local government, full of blighted neighborhoods, many other terrible things.
Compared to what?
(I ask, because viewed from the perspective of developed countries, that's how much of the United States looks)
The Madison Block[1] has a lot to do with the growth startup-wise in Downtown Detroit. Also, there are more and more meetups going on. For example, Detroit Soup[2] is a growing event and calls people to join, pay $5 for soup, and vote on a project that will benefit the city (people present their projects). Even MHacks, the premier college hackathon run by students from the University of Michigan, was held in the Quicken Loans headquarters this spring. I have also been to a few meetups such as one from the Detroit NodeJS group, and the Detroit Drones group- the meetup groups are active and growing.
The city has had its ups and downs, but things are on the rise. Take it from someone who has lived near the city for 17 years. I think there are a lot of assumptions about Detroit, but there are a few things that are true: We have a 14.5% unemployment rate, a post industrial culture (culture of employees expecting to work for the Big Three immediately, instead of a culture of entrepreneurs), a financial problem, and poor Detroit schools (however the schools in suburbs are much better).
I think that the combination of a lot of opportunity, and recent support from people like Dan Gilbert gave Detroit a huge start with the Madison Block, and that is the reason that people look at Detroit and what is happening in the city now.
Is there a PR firm behind the effort to make stories about Detroit appear here from time to time, or is it actually that compelling of a city-story?
I have to think that there are many US cities equal to or superior to Detroit in just about any balance of livability metrics one could produce, including cost.
Very abstractly speaking, I can't even see it being a local maxima for any particular basket of criteria...help?
People also are interesting in the potential of Detroit. Detroit was founded where it was because it is on a river and the Great Lakes. It has good farmland (I'm guessing on that point). It is amidst other major cities. It has history.
So if Detroit recovers, there is a natural support structure around it that will make it an interesting city.
Anecdotally I know some artists who have moved out that way for an abundance of cheap space - not empty office buildings as another poster pointed out, actual cheap art space.
There's a real potential for Detroit to develop major bohemian settlements now that every major urban center in the US is squeezing that demographic out rapidly (SF, Brooklyn, Seattle, Portland, etc). There can be a spectacular cultural resurgence for the city.
Speculators are probably hoping they can turn this into a Brooklyn-type situation. Get an influx of artists and creatives attracted by cheap, plentiful space, and then flip said property to wealthy professionals who are more bohemian in their own heads than in reality.
The problem is that Detroit doesn't really have that strong of a white collar job base. You can get the broke artists in, but there isn't really a ready pool of professionals to flip to. In that sense it might be ideal - it's possibly an ungentrifiable fortress for creatives.
I live just over an hour outside of downtown Detroit (with no traffic), almost took a job there a few months ago, and plan on spending a decent amount of time there in the over the next year. Detroit definitely isn't the best city, but there are lot of people heavily involved in making it a lot better. If the local government can miraculously get its act together, the city stands a chance to significantly improve over the next 10-15 years.
Also, I see many more negative articles about Detroit than positive. The city water fiasco that is currently ongoing comes to mind.
Most of the stories you read about Detroit are deeply negative. We've seen "ruin porn" on here, the whole water issue (where having a service turned off for lack of payment somehow got cast into something greater). It gives a baseline for a story like this -- and the contrast -- to appear.
> We've seen "ruin porn" on here, the whole water issue (where having a service turned off for lack of payment somehow got cast into something greater).
The water issue is much greater than just a few people experiencing water cut offs because of bills. Nearly 70,000 residential accounts are going to have their water cut off through the end of September. Why should such a huge portion of a cities population have their water cut off because of financial hardship? Water is essential to survival and removing access to water for these people is extremely cruel.
>Nearly 70,000 residential accounts are going to have their water cut off through the end of September.
No they won't. Detroit faced an endemic issue where people simply felt that they didn't have to pay their water bills because there was no consequence. Now that they've instituted this plan, lots of people have found the ability to pay their bill, or to make arrangements to pay it eventually, or to credibly make a case for why they can't.
Pretty much every city charges for water, and pretty much every city cuts you off if you don't pay your bill.
I visited Detroit for the first time this past weekend, I was surprised by how much I enjoyed it- beautiful, clean downtown area (much cleaner than SF), a very lively art scene (many artists ARE moving there for the cheap rent), many new bars and restaurants, a growing community of people that care and want to see the city improve.
If you just visited the downtown area, some would argue that you didn't see the "real" Detroit. I might be one to make that argument had I been to Detroit in the last 15 years. Tell you what, could you do me a favor and catch a bus up to around 6 Mile Road and Woodward Ave. and let me know how things are looking? :-)
(Seriously, though, unless Detroit has undergone some hard-core gentrification in the last decade, please don't do that.)
I visited the abandoned neighborhoods as well and saw some terrible blight and impoverished areas- my point is that as an outsider, that's all you expect from Detroit, which is only part of the picture.
Article cites cheap rent as a reason businesses are flocking there, but I don't buy it.
Houston's downtown, which has excellent office stock and is in the center of an exponentially stronger economy, has median rents at about $25 per square foot. Detroit's CBD median is $23 per square foot.
Plenty of cheap office space all around this country so I reject that this is the reason.
Visit Downtown Houston... then compare it to Downtown Detroit... I think you would rather be in Downtown Detroit.
I live behind the gates on Sunset... and I'm sitting in the Museum District as I type this. So don't misunderstand me... there are a lot of nice places inside the 610 in Houston. Downtown is not one of them however.
I'm a Houston guy... but I have to say... if you ever actually visit Downtown Detroit, you will find it is MUCH more clean and attractive than Downtown Houston. It was a visit to Detroit that made a lot of people around here kick in to redo or demolish a lot of the eyesore abandoned towers in Downtown Houston. There are just too many of these abandoned buildings in Houston's Downtown right now... so it's slow going.
Well fair enough. Houston's downtown is pretty boring but not too much blight although that abandoned Days Inn needs to go. My point was just that downtown Houston is the center of a much stronger and larger economic area.
I suppose if there were such a scale for economic strength, that you could boil down to a 1 to 10 scale...
In the US economy as a whole, Detroit would rate about a 2 or 3, Houston would be a 8 or 9.
Exponential is an obvious exaggeration if we're being literal, but given the disaster that is Detroit, overly strong words may make sense to do the mess justice.
Many midwestern cities have an over abundance of office space. If you drive down I75 through the Detroit metro area you'll see buildings that have been empty for years.
One of the big problems with Detroit is that it's missing people to pay taxes into the system. That means the remaining people have to pay higher share of taxes for infrastructure that's supposed to support far more people.
A solution could be asking immigrants to live there and giving them an accelerated citizenship schedule. If they live in Detroit for X years, they qualify to become citizens. That'll bring an influx of new people who will pay taxes, start new businesses and work at all levels of the economy.
I think this is the same as the idea of the Governor and the President. There are a lot of issues with it, but the main one I see is the jobs issue.
Typically, immigrants move to places where jobs are plentiful. With a program like this, you are moving immigrants to a place, and then ASSUMING that jobs will follow. I'm not sure it works like this. I think places like San Fran, Chicago and Boston for instance, all draw a lot of immigrants because there are a large number of open jobs in these places. Historically speaking... setting up immigrant neighborhoods in the absence of jobs has proven to be a bad idea.
If you have to use governmental incentives, and I'm not saying you do, but if you are going to use governmental incentives... I think a BETTER approach would be to give the incentives to companies and startups. If companies and startups come to Detroit, then people will follow to fill any jobs these enterprises create. I don't think you need to put forth more governmental incentives to INDIVIDUALS to live in Detroit. (In fact, I think that's been a big problem in Detroit in recent history).
If you want healthy growth... it really does need to be predicated on a diverse and vibrant private sector.
Now if you are absolutely bent on providing incentives to individuals, then Detroit should provide the incentives to recent college grads, or other young people to come to Detroit to try to make a go of a startup. Everything from free healthcare to nearly-free office space in some of the many available buildings just outside the development zones, (or even inside of the zones???), could be offered to them on a first come first served basis. Such an offer would, I think, be well received by today's young people given the troubles they are experiencing in the job market.
With regards to "setting up immigrant neighborhoods in the absence of jobs has proven to be a bad idea." what's an example of this? I'm curious about what's been tried in the past.
There is no longer any real benefit to dealing with the additional expense of the weather issues with current trade agreements. Add to that the continuing expansion of contract manufacturing in Mexico. It just doesn't make sense for companies compared to Texas, Alabama, Mississippi etc.
It's a great story, but I just don't see how it is possible beyond a small boutique city center for special cases.
This piece came across as a feel good piece, if anything its a familiar story. Town goes down the tubes, yuppies move in and renovate old housing and such pushing what few remaining stragglers there are left out and help recreate a few revitalized islands amongst the rest. Usually led by a few strong business interest who promote the idea to get further concessions and good will all the while the decaying neighborhoods on the perimeter of these areas just stagnate
urban renewal does sound great until you realize the only people who suffer are those who are already suffering. So you have depressed prices which means large swaths of property can be bought out on the cheap. Then those areas get developed and local property values increase. However, instead of buying out the dieing islands of poor they are driven out either through increased taxes, zoning, or imminent domain seizures, which turn the property over to the very same people who would not buy it when they know government will take it for them
No, if you were so inclined, the time was several years ago at the bottom of the real estate crash. And in that situation, ideally, you just knock over the buildings and hold on to the land betting on a recovery one day.
(knock over the buildings because the neighborhoods you'd be buying hyper cheaply into - for $1,000 a lot - if you don't knock them over, you're going to have extreme problems with upkeep, vandalism, squatters, homeless people taking up residence, drugs, etc)
Detroit has poor infrastructure (responsible for recent flooding,) high taxes, no public rail transport, poor roads, rush-hour traffic congestion, poor parking, some of the worst schools in the country, corrupt local government, is full of blighted neighborhoods, and I am sure many other terrible things. I am trying to see the reason why anyone would think it was a good idea to live or work there in its current condition.