Detroit apartment buildings fill; renters' age falls

[Detroitej72]

All I was saying is that I feel a new, modern apartment complex would do well in the market, that is all. This board can be pretty harsh, my main reason for not posting much.

Typically, the kind of people who prefer those new, modern apartments are not the kind of folks who would move to Downtown Detroit. Besides, there all ready is Harbortown and Riverfront Towers that fit that bill.

[BrushStart]

I can tell you that my building is one of the ones listed above by Lowell, but according to a letter for intent to renew my lease that I received today, the base rent is more than 10% higher than what Lowell listed above, and is 20% higher than it was a few years ago. When does it become appropriate to form a local chapter of the "Rent is Too Damn High" political party?

[Planner3357]

...what about those abandoned buildings in highland park on woodward? looks like they held some apartments at one time..

Well...the building to the south of Farrand Park, on Woodward is slated for demo as it has extensive fire damage. Too bad as it was arguably the most significant building in HP, outside of McGregor.

The apartment building to the north of Farrand is very much worth saving. In fact, myself and a group of folks thought about purchasing it on the cheap and redeveloping it..it's owned by the city.

However, who wants to live in HP? After working there I can tell you it makes Detroit look like the Virgin Mary. Totally 3rd world...absolutely horrific. Their slogan "a return to excellence", is freaking joke...

[agrahlma]

The Side bar deserves citing to:

The numbers for selected Detroit apartments:

• Millender Center Apartments
Address: 555 Brush St.
Units: 339
Occupancy: Full, with a waiting list
Rental rate: $1,000 to $2,600

• Park Shelton
Address: 15 East Kirby St.
Units: 226 [[74 of which are rentals)
Occupancy: Fully leased
Rental rate: $800 to $1,300

• Harbortown Apartments
Address: 250 E. Harbortown Dr.
Units: 172
Occupancy: Full
Rent: $850 to $1,600

• Lofts of Merchants Row
Address: 1247 Woodward Ave.
Units: 157
Occupancy: 97 percent
Rental rate: $815 to $2,500

• Studio One
Address: 4501 Woodward Ave.
Units: 155
Occupancy: Full, with a waiting list
Rental rate: $795 to $1,295

• Lofts at Woodward Center
Address: 1448 Woodward Ave.
Units: 61
Occupancy: Full
Rental rate: $660 to $1,400

• Fort Shelby Tower Apartments
Address: 527 W. Lafayette Blvd.
Units: 56
Occupancy: 95 percent
Rental rate: $1,629 to $3,500

Our building, the Broadway Lofts, are also full - 16 units

[BrushStart]

Iodent Lofts on Park Ave is also full with a wait list last I heard.

[esp1986]

I can tell you that my building is one of the ones listed above by Lowell, but according to a letter for intent to renew my lease that I received today, the base rent is more than 10% higher than what Lowell listed above, and is 20% higher than it was a few years ago. When does it become appropriate to form a local chapter of the "Rent is Too Damn High" political party?

I hate to say it, but all of you that rented when there was a lot of supply will begin to get sticker shock. Your rates that, at the time, were 'market rate' will begin to skyrocket because of the relative lack of supply now. There are a lot of people who want to live in those areas, and now being exacerbated by the Downtown and Midtown living incentives, there is far more demand than supply. Until there are more units available, the rates will continue to rise as there are more people willing to pay the price... simple economics.

[Danny]

More created jobs for the empty nesters and hipsters ages 21 to 35 are definately filling up apts. from Downtown Detroit and all the way down to midtown areas. So far new housing are being built at the David Brodrick Tower and new housing/hotel being proposed at The David Whitney Building. This is exciting news for City of Detroit out of the middle of the its DOOM AND GLOOM! New tenents are not going to worry the city corruption for city hall, poor sevices and po'folks running about. They are just going to make a living so they can start a family and move on and repeat the next generation of young folks.

Give it about the next 20 years. Downtown Detroit and the rest of Midtown will be too diversifed. New exotic businesses will rival Ferndale, Royal Oak and Birmingham that the suburbs will be nothing more a bedroom area ready to be filled with low-income residents.

WORD FROM THE STREET PROPHET

Gentrification is still working in Detroit, most folks, especially the large black communities didn't see it come before its too late.

Neda, I miss you so.

[Mind field]

Great article. With demand outstripping supply, hopefully investors see opportunities in downtown Detroit's large stock of abandoned buildings, vacant lots and parking lots. I've always known that downtown Detroit has HUGE potential to be a thriving area, with assets not found anywhere else in Michigan.

[agrahlma]

I hate to say it, but all of you that rented when there was a lot of supply will begin to get sticker shock. Your rates that, at the time, were 'market rate' will begin to skyrocket because of the relative lack of supply now. There are a lot of people who want to live in those areas, and now being exacerbated by the Downtown and Midtown living incentives, there is far more demand than supply. Until there are more units available, the rates will continue to rise as there are more people willing to pay the price... simple economics.

Very true – in fact I was talking to another renter in our building, and prices are already going-up. We’re lucky in that we negotiated a longer term lease for a reduced price – given the current prices around town and the increased demand, it now appears that we got a great deal.

[mikeg19]

This is awesome news for the city, not so great for people like myself looking to move downtown who are early in their career. I'm afraid I'm going to be priced out of downtown due to the increasing demand/rents. I know it may be a bit early for this having it just announced that the renovation would take place, but is anyone aware of what the pricing in the Whitney Building will be? I don't recall them saying anything. This

[English]

DYes, welcome to my world from February 2010 - April 2011. All of this has happened within the last year or so, and if it wasn't for friends, I'd be out of luck. I'm glad I've got my deal right now, because even six months ago, many of the buildings listed still had vacancies. I know this because I looked at just about everything on that list!

2-4 years ago, it was foreclosure city in Midtown and the CBD. Today, I can definitely tell you that where I live is fully occupied. There will be a place available nearby soon, but my neighbor plans to list it for more than triple what this [[identical) place went for. A few months ago, my parents said "they won't get that." Last month, they revised it to "they'll likely get that if they can wait until the summer of '12."

Also, I have been watching Zillow, Trulia, Realtor.com, and many other websites since I knew I'd made the shortlist for my current job [[December 2009). I have watched the inventory in core Detroit neighborhoods dwindle over the past 6-12 months.

Very soon, yes, most of us will be priced out of the core. I'm gearing up to hunker down in my current place, but goodness knows where property taxes will end up going... or whether many of us will be priced out of home ownership altogether: http://www.washingtonpost.com/propos...haH_story.html

We'll just have to see.

[jtf1972]

This is great news [[if you're not looking for an apartment in this area, as low demand would be perfect for!)

I am all for repurposing historic buildings for residential with modern amenities. I don't think any tall glass towers are needed as of now, but would love to see some infill such as this:

http://maps.google.com/maps?q=nyc&hl...1.59,,0,-14.54


It's just around the corner from where I went to school, so I remember it well as a surface parking lot. When I saw that it was built as mixed use retail/residential I was thrilled [[even though I can't even come close to affording to live there!) I think this sort of arrangement could work for Detroit, even including a parking level or two incorporated into the building itself

[313WX]

Now the national economy just needs to get out of the crapper so the companies who are interested in developing here can get their financing.

[corktownyuppie]

Getting priced out is no fun, but it's a sign that things are improving. All that pent up demand will result in vacant building after vacant building finding investors to rehab and create more capacity. That's why Broderick Tower and the Whitney Building have found financing...investors, from the equity holders to the lenders, are more confident that the project will be able to fill the vacancies. Once they're built, you'll see prices temporarily drop down again as buildings compete to fill spots.

But that said, getting priced out is a good thing. If you want downtown to be nice, you need to fill it with high income residents. That's what'll support the restaurants and the Whole Foods, bring the tax base back, etc. Let's be honest...if your apartment in the CBD and within footsteps of the entertainment district is renting for 50-cents/sq ft., then you're not going to be able to support all the city services and retail shopping that are there to make the downtown well-lit, safe, and vibrant. You want downtown to be nice? Well you want a two-bdrm apartment to cost $1200.

My friend moved in the Kale's building a few months ago and paid $1170 for a two-bedroom. But there's no way she would've paid $700 for a darker, older building only a few blocks away. That's a sign that you're attracting the kind of residents we need to support businesses.

And while I'm really optimistic for the downtown, let's not get ahead of ourselves. You might get priced out of your current apartment, but there will be another one that pops up at your old price soon enough...you just might have to extend your walk to Comerica Park or the DIA from one block to three blocks.

With 60% of the downtown buildings vacant, we're a long way -- maybe 10-20 years from the real gentrification problems.

[Lowell]

By most other city standards the rents are are still very low. However rent as been increasing everywhere as drop off in home sale [=unwillingness of banks to give loans to all but those with high credit scores] is driving rentals.

15 years ago we could park for free around downtown and rents were greatly depressed. But what kind of downtown was it?

[Joseph C. Krause]

I would pay double my current rent for a building which would cause my age to fall.

[EL Jimbo]

I would pay double my current rent for a building which would cause my age to fall.

Same here, but I'm still of an age where if it were cut in half I'd have to turn in my driver's license because I wasn't old enough. Even still, at age 30, 20 sure seems like a LONG time ago.

[wolverine]

This is great news and proves all the naysayers are full of hot air. Once people who work downtown start to live there, common sense says that retail will follow. At first it will be the drug stores and stores that folks buy their day to day goods, but eventually other retail will follow. You have to crawl before you walk.

Heck, I'm surprised there would even be naysayers. Rentals are up everywhere and many downtowns are faced with the problem of not having enough vacant apartments to rent. It's resulted in a boomlet of new apartment buildings and renovations all of over the US, and helping to get the construction industry moving again. This certainly works in favor of Detroit....bigtime.

I think in the case of condos, buying downtown can be a scary thing. It's a huge investment and hard to predict what direction things will go in terms of amenities, crime, etc. But with rentals, you have much more freedoms. You can give downtown Detroit a "trial run." A year later, if you hate it, you can move. But I think more people will choose to stay.

[DetroitPlanner]

With 60% of the downtown buildings vacant, we're a long way -- maybe 10-20 years from the real gentrification problems.

The issues with gentrification are generally seen in neighborhoods not central business districts. Our neighborhoods are in trouble while the CBD market is just rosey. I can't see getrification having a negative effect here as neighborhoods are far too depressed in terms of housing value. The worst issues would be the new folks being targets for crime because they are seen as easy pickens by the lumpen proletariat.

[bartock]

By most other city standards the rents are are still very low. However rent as been increasing everywhere as drop off in home sale [=unwillingness of banks to give loans to all but those with high credit scores] is driving rentals.

15 years ago we could park for free around downtown and rents were greatly depressed. But what kind of downtown was it?

Yep. Of course you have to jump from the CBD/Midtown to the inner-ring suburbs outward, but rents everywhere are going up as a result of bank-driven demand. Even as home values continue to drop or level off. Rents in our part of HW were going for 75-80 cents a square foot 2 summers ago. Now, they are going $1.00 - 1.10 a square foot. These are homes that would be lucky to sell today for $75 a square foot.

[Autoracks]

I wasn't trying to suggest anything or shake the ugly stick at Riverfront Towers exclusively. Im fully aware that bedbugs ignore redlining and every other socio cultural device meant to keep something or someone in their place. I wouldnt be the least bit surprised if some of of that expensive rental list up there doesn't have a bed bug infestation. All it takes is 1 person bringing in infested furniture or bringing them in from a hotel room

[downtownguy]

I think in the case of condos, buying downtown can be a scary thing. It's a huge investment and hard to predict what direction things will go in terms of amenities, crime, etc. But with rentals, you have much more freedoms. You can give downtown Detroit a "trial run." A year later, if you hate it, you can move. But I think more people will choose to stay.

I couldn't agree more. That's what I did almost 30 years ago. I hope the developers learn their lesson from the last decade, though. Seems like almost every new development was supposed to be condos. Many of those didn't happen, and the ones that did have struggled with the real estate meltdown. Even though I may not be the best example, downtown will probably continue to be a rather transient community... something fun to do when you're young and not yet committed to a family lifestyle. For that reason, I hope all new development is skewed towards rentals, not condos.

[downtownguy]

Can somebody with experience on these matters comment on the accuracy of occupancy rates? I always thought they tend to be inflated to create a sense of urgency and demand. I don't deny that interest in the CBD is up, but I'm dubious of some of the 100% figures. I know someone who signed a lease at Millender just two weeks ago, and she said they were offering all sorts of incentives to move in. That's consistent with what I had heard a few months ago that the vacancy rate in that building was rather high.

[downtownguy]

When were the Riverfront Towers built? I imagine that this would be the last major project of its kind in Downtown.

Trolley Plaza came first. It was the first new construction in or near the CBD since Lafayette Park in the 60s. Then, if memory serves me correctly, Riverfront Apartments were built, thanks to some prodding from Coleman Young to his buddies Max Fisher and Al Taubman [[?). Then Millender Center was built, based on the higher than expected occupancy at Trolley Plaza, which was built by the same developer, Forest City Management. Harbortown followed perhaps in 1985, and two or three years later, they built the second tower. After that, things slowed down, and I don't think any major residential development occurred near downtown until the last decade.

[corktownyuppie]

Can somebody with experience on these matters comment on the accuracy of occupancy rates? I always thought they tend to be inflated to create a sense of urgency and demand. I don't deny that interest in the CBD is up, but I'm dubious of some of the 100% figures. I know someone who signed a lease at Millender just two weeks ago, and she said they were offering all sorts of incentives to move in. That's consistent with what I had heard a few months ago that the vacancy rate in that building was rather high.

I don't claim "expertise", but when I was helping a friend shop downtown, here's what we found:

-Millender Center had openings, but their occupancy is high enough that the floor plan we were looking for wasn't going to be available until Fall.

-Kales Building has a waitlist, next opening comes up in October.

-Iodent Lofts has a waitlist, unsure of next opening.

-The Ellington is fully occupied.

- The apartments above Biggby's and Starter's on Woodward didn't have openings for a few of the floor plans we were considering, but did have some openings.

=========

The problem from a property developer point of view isn't demand, perse, it's financing, especially construction financing for adaptive reuse. For example, even if you had another 100 people who wanted to move downtown and were willing to pay, where would they live? You can't say, "well, this nice building is full, so move into this decrepit vacant building, and we'll drop the rents by 95% to make up for it." It takes 2-3 years to go from concept to completion once you factor in architecture, financing, and construction. The problems is that 2-3 years ago we were in the middle of total freefall in banking and lending, so the "pipeline" from projects coming to fruition disappeared.

But they're starting back up again, and I have no doubt that when Broderick and Whitney get completed, they will have no problems filling them. And once they do, the Woodward Corridor from Michigan Ave up to I-75 will have the critical mass necessary for other investors to feel confident picking up the projects outside the "inner ring" of Grand Circus/Park