BEYOND DETROIT’S BANKRUPTCY
While nobody can predict the future, CORENET’s 2015 annual Economic Luncheon held last week certainly asked several community leaders for their thoughts on where our local economy is heading this year. As always, the local commercial real estate industry showed up in force to hear economic predictions for the coming year. With the capacity crowd assembled at Dearborn Inns’ banquet center, 2015 CORENET MICHIGAN President Patrich Jett welcomed attendees and thanked all of the other supporting organizations lending their support, including: BOMA, CBOR, CREW, ICSC, IFMA, IREM, USGBC and SMPS.
This was the first major real estate event in the Detroit community following the end of Detroits’ bankruptcy and the optimism and positive attitude among both the audience and community business leaders was palpable. There’s plenty of reasons to believe our local and state economic fortunes are improving and better days are ahead. Patrich Jett provided information on CORENET’s 2015 calendar and introduced Chuck Stokes, WXYZ Detroit Editorial Director to the audience. Mr. Stokes briefly reflected on his perception of how downtown Detroit and Mid-Town had significantly improved over the last few years. Mr. Stokes led a lively discussion with the panel members.
CAUTIOUS OPTIMISM VOICED FROM DISTINGUISHED PANEL
Mr. Stokes first introduced Rob Riney, President and CEO of Henry Ford Health Systems (HFHS), and asked him if he’s excited to see the changes happening in and around metro Detroit. Mr. Riney expressed that HFHS is celebrating its 100th anniversary this year and so many exciting things are happening in the hospital system, including an expanded Mid-Town that has now incorporated the original hospital into its geographical borders. He spoke about developing 300 acres of land around HFHS’s original hospital and south of Grand Boulevard in Detroit. Major announcements about a Master Plan for redevelopment of a walkable, livable hospital campus are in the making and may even include an expanded Motown Music Museum. CEO Riney went out of his way to indicate the necessity of a strong region, not just a strong inner city core at the expense of weakened suburbs.
When asked the same question, Matt Cullen, President & CEO of Rock Ventures, noted the entire regional economy is much stronger as compared to several years ago. Stating that most of the profound change in the region emanates from a significant turnaround in the City of Detroit, Cullen further indicated the city has gone from a drag on the local economy to an engine of growth. Whereas people and businesses in the past needed incentives to relocate downtown or Mid-Town, high occupancy rates have shifted demand whereas now there’s a notion that businesses and millennials need to be downtown in order to be in the middle of all this action. Matt said the momentum is positive and the pace continues to pick up. Yet, there are looming problems with this turnaround.
Mr. Cullen noted the greatest activity is happening in a 3 square mile area when Detroit is a city comprised of 136 square miles. Without paying attention to all of Detroit and its dozens of neighborhoods, the recovery will not be spread amongst and enjoyed by all Detroiters. In order for a vibrant Detroit to succeed, all of Detroiters must share in that success. Our entire region must be cognizant and vigilant that the recovery helps all.
Sam Munaco, Broker for Adocate Real Estate Advisors, emphasized Detroit’s bankruptcy never negatively affected his business in locating desirable real estate for his business clients in the city. Mr. Munaco spoke about a transformational event occurred when General Motors moved back downtown into the Renaissance Center, establishing it as their headquarters. Subsequent moves downtown followed by Compuware and then Dan Gilbert’s Rock Financial companies, especially Quicken Loans, provided additional momentum to reoccupying many other buildings. Over the last 3-5 years, Mr. Munaco indicated there’s been a steady stream of companies and professionals moving back into the city and making long term commitments. As Dan Gilbert’s real estate company (Bedrock) leads, many others are following. Sam reminded us to be mindful of repositioning Detroit for future demand and retraining the next generation of Detroit workers to take advantage of the new economy that will arise.
WELCOMING A NEW DETROIT AMBASSADOR TO THE CITY
There’s been a change at the top of the Detroit Economic Growth Corporation (DEGC). Mr. Roderick Miller has left a similar post in New Orleans and headed north to help re-establish part of Detroit’s lost luster. Some of the comments from Mr. Miller were illuminating. For instance, most of the world considers what’s happening in Detroit is significant, not necessarily what’s happening in Michigan. In other words, most people outside of Michigan consider Detroit as equivalent to Michigan and is undoubtedly the most relevant factor in what’s happening in the state since that’s their known reference point.
Mr. Miller stated he had no intention of taking the job when first asked. A trip to Detroit changed his mind, as he saw the progress made and possibilities to once again make Detroit a world class city. What was troubling to him is that there is no unified vision for Detroit at this time. Business leaders provided 15 different answers to his same question of where the city should be and look like in 15 years.
Therefore, according to Mr. Miller, one of Detroit’s biggest challenges is how to redefine itself moving forward. Detroit has the national and international spotlight but no cohesive message. Mr. Miller was wondering aloud what’s the business value proposition from Detroit’s perspective to the international community ?
Another concern of Miller is that Detroit (and Detroiters) think small. Mr. Miller spoke about Detroit’s rich history and the real possibility for a very bright future. He warned the audience not to set our sights on Detroit being a second class city. He reasoned Detroit can be a world class, first class city. One of Mr. Millers’ early priorities will be to repopulate the city as it’s one that has been built for 2 Million people.
While there’s so many reasons to feel positive about the direction of the economy, it is not time to take the “foot off the accelerator” as we head into 2015. Detroit has taken the first few steps towards recovery, but it’s a very long, treacherous road to get back to any sense of normalcy for the city. Additionally, the entire region must continue to make strides to ensure a strong Detroit translates into a strong southeastern Michigan and a very strong state. Keep the gloves on, as there’s much more work to be done.
ROBERT E. MATTLER, Associate Broker, Attorney and LEED AP BD+C, is Director of Green Brokerage at Armada Real Estate Services in West Bloomfield, Michigan. He speaks and writes about emerging green real estate issues in Michigan and elsewhere. Bob is also the senior news correspondent for www.greeningdetroit.com For more information, contact Bob at Armada Real Estate (248) 855-1221; or by e-mail: email@example.com