New Center Revival (DETNEWS Article)

We have a few threads concerning various aspects [[e.g., sale of the Fisher Bldg.) of what is happening in the New Center area.

This article summarizes a lot of story lines instead of referring mostly to a specific redevelopment project or two.

http://www.detroitnews.com/story/bus...ival/72941296/

I found this paragraph very interesting, but I'm not sure believable. The numbers, if true, would be a major renaissance for those neighborhoods.

"The neighborhood north of Wayne State University will see plenty of new life as housing demand outgrows Midtown, downtown and Corktown and moves north along Woodward, investors contend. A study commissioned by the Downtown Detroit Partnership says there is a need for 10,500 additional residential units a year in the greater downtown for the next several years. Further, the M-1 Rail scheduled to open in 2017 will be a game-changer, especially for Woodward, many believe."

Quote:

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Originally Posted by emu steve

We have a few threads concerning various aspects [[e.g., sale of the Fisher Bldg.) of what is happening in the New Center area.

This article summarizes a lot of story lines instead of referring mostly to a specific redevelopment project or two.

http://www.detroitnews.com/story/bus...ival/72941296/

I found this paragraph very interesting, but I'm not sure believable. The numbers, if true, would be a major renaissance for those neighborhoods.

"The neighborhood north of Wayne State University will see plenty of new life as housing demand outgrows Midtown, downtown and Corktown and moves north along Woodward, investors contend. A study commissioned by the Downtown Detroit Partnership says there is a need for 10,500 additional residential units a year in the greater downtown for the next several years. Further, the M-1 Rail scheduled to open in 2017 will be a game-changer, especially for Woodward, many believe."

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I don't know about 10,000/year, but I'm sure there is a lot of demand. The problem is no one knows how many units are "needed" at the prices it will take to produce them. My guess is that production will only ramp up relatively slowly as developers try to get a sense of the depth of the market.

I agree completely with what you posted.

I'd suggest that new redevelopment or new construction projects coming online will be kind of a 'pilot' test to determine the question: How much demand at what price points [[e.g., monthly rents)? Building are being renovated in these neighborhoods. New construction is/will be started.

That should produce a mix of cheaper and more expensive rents to see what the market will bear.

I also think that the market analysis needs to be segmented into various price [[rent) levels and develop estimates of expected demand at each rent amount.

The good thing about redeveloping existing buildings is that it is easier with them to produce lower rent units than new construction.

The worst thing would be to have a lot of new construction say near Comerica, Brush Park, etc. and not be able to find folks who can afford the housing units.

This probably belongs in a Henry Ford thread [[not sure where one is), but here is the Freep article on Henry Ford's new cancer center to break ground next spring.

http://www.freep.com/story/money/bus...roit/72961132/

Quote:

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Originally Posted by emu steve

I agree completely with what you posted.

I'd suggest that new redevelopment or new construction projects coming online will be kind of a 'pilot' test to determine the question: How much demand at what price points [[e.g., monthly rents)? Building are being renovated in these neighborhoods. New construction is/will be started.

That should produce a mix of cheaper and more expensive rents to see what the market will bear.

I also think that the market analysis needs to be segmented into various price [[rent) levels and develop estimates of expected demand at each rent amount.

The good thing about redeveloping existing buildings is that it is easier with them to produce lower rent units than new construction.

The worst thing would be to have a lot of new construction say near Comerica, Brush Park, etc. and not be able to find folks who can afford the housing units.

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That would be the very first thing a developer does. So you need not worry.

I seem to recall that there was a time when downtown residential population [[which included me) was only about 10,000 total. Adding 10k a year now is quite remarkable.

Quote:

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Originally Posted by Wesley Mouch

That would be the very first thing a developer does. So you need not worry.

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First, it isn't the first thing a small developer does. Typically they look at the existing rents and figure they are only adding a few units, so they aren't going to change the market much. They don't really need to worry about the depth of the market, nor do they need to worry about price points that they aren't going to be covering. There may be a problem if you end up getting a lot of small developers with projects coming on line at the same time expecting to be able to get high-end prices for their units.

Second, certainly a large developer will do more extensive market research, but in an historically thin residential market like greater Downtown that doesn't mean the numbers that they come up with will be accurate. They know that, and whoever is financing them will also know it, so they will probably be conservative and produce somewhat fewer units than they would in a more mature and predictable market, which is why even if there really is demand for 10,000 market-rate units/year, I doubt that many will be produced for a while. The wild card there is if you get a big project like the Fisher or the Book getting finished, that is going to be a lot of units and I could imagine an oversupply. Perhaps they will bring those on the market piecemeal.

This certainly is an aggressive price for a New Center [[Virginia Park Street) rehab. Especially since its on the block towards the Lodge, not at the Woodward end. At least the nasty old hospital is not across from it any longer.

http://detroit.curbed.com/2016/11/11...ation-for-sale