Detroit apartment buildings fill; renters' age falls

**downtownguy** · June-23-11, 12:04 PM

Thanks, Corktown. The cynic in me has been squelched, and I feel much better about the numbers that were published.

**pswingset** · June-23-11, 02:17 PM

Greetings DY,

It seems to me that the conversation regarding rental/condo living in the lower Woodward corridor has focused mostly on larger multi-unit dwellings, whether they be rehabbed or new build. My question is regarding smaller developments or future developments i.e the holes in the street wall that we all wish were something other than a parking lot. Is it easier to secure financing for a larger Book Cadillac or Washington Square sized building than it would be to finance a Harmonie Park sized project [[my hypothetical dream lot would be the lot south of Casa Habana http://maps.google.com/maps?q=harmon...28.83,,0,-4.92 ) ?

I personally like the idea of filling in the gap with something a kin to http://maps.google.com/maps?q=West+F...337.7,,0,-5.48

Maybe some members in the planning field and/or financing field can tell me whether something like what I posted above would be cheaper to build/easier to finance than a 40-50 unit mid-high rise deal.

**corktownyuppie** · June-23-11, 02:48 PM

Originally Posted by pswingset

Greetings DY,

It seems to me that the conversation regarding rental/condo living in the lower Woodward corridor has focused mostly on larger multi-unit dwellings, whether they be rehabbed or new build. My question is regarding smaller developments or future developments i.e the holes in the street wall that we all wish were something other than a parking lot. Is it easier to secure financing for a larger Book Cadillac or Washington Square sized building than it would be to finance a Harmonie Park sized project [[my hypothetical dream lot would be the lot south of Casa Habana http://maps.google.com/maps?q=harmon...28.83,,0,-4.92 ) ?

I personally like the idea of filling in the gap with something a kin to http://maps.google.com/maps?q=West+F...337.7,,0,-5.48

Maybe some members in the planning field and/or financing field can tell me whether something like what I posted above would be cheaper to build/easier to finance than a 40-50 unit mid-high rise deal.

Your idea would be *much* easier to finance. the Westin Book Cadillac required over 15-20 different lenders, all who had to mutually agree on different terms, interest rates, and the orders of priority they would get paid if the deal went south and the construction notes couldn't get paid off. I can't even get 15 people to agree on planning a 4-day vacation together.

A project of the size you propose could likely be financed by one bank, but they would probably want to see you front 50% of the purchase and construction costs. [[I'm estimating, don't quote me on that). The problem is that you'll probably need 400-700k? [[again, estimating, depending on which of those buildings you're referring to in the Google photo) in available cash.

The reason more deals of that size don't get done, IMHO, is that for all the work you put in, the profit is much lower than a 70-unit apartment complex. Bigger, professional developers might agree that you could make money on the project, but a big apartment complex might require 5 times as much work up fornt, but pay 20x out in profits. But for a private investor doing this on the side, or if you had 2 or 3 partners, that's a totally doable project....the question is do you have 400-700k in available cash?

In any case, I'm probably 5 years away from getting involved in deals like that iwth my own money, but the potential is there. Once that critical mass gets lined up, there's so many great opportunities for investors because the entry price is so low. Unfortunately [[or fortunately, depending on your opinion...investors who buy when there's blood in the streets stand to gain the most), the people who have the access to capital combined with the skillset and knowledge required to do these deals were generally coming of age in the 1980s, when downtown was supposedly as dangerous as Juarez. So selling them on the idea of looking at deals downtown has been like pulling teeth. The latest nonsense with Kwame, Conyers, etc. combined with the banking failures had put a halt to whatever momentum was starting.

But things are turning now, the younger set is starting to move up in the world, and I'd say that in 5-7 years, much of Grand Circus Park will be filled, lower Woodward will finally halfway decent retail, and investors will start looking at Capitol Park.

The above is a fairly uninformed opinion based on anecdotal evidence, a small window of experience, and incomplete analysis. Your mileage may vary.

**JDKeepsmiling** · June-23-11, 02:53 PM

Originally Posted by corktownyuppie

Your idea would be *much* easier to finance. the Westin Book Cadillac required over 15-20 different lenders, all who had to mutually agree on different terms, interest rates, and the orders of priority they would get paid if the deal went south and the construction notes couldn't get paid off. I can't even get 15 people to agree on planning a 4-day vacation together.

A project of the size you propose could likely be financed by one bank, but they would probably want to see you front 50% of the purchase and construction costs. [[I'm estimating, don't quote me on that). The problem is that you'll probably need 400-700k? [[again, estimating) in available cash.

The reason more deals of that size don't get done, IMHO, is that for all the work you put in, the profit is much lower than a 70-unit apartment complex. Bigger, professional developers might agree that you could make money on the project, but a big apartment complex might require 5 times as much work up fornt, but pay 20x out in profits. But for a private investor doing this on the side, or if you had 2 or 3 partners, that's a totally doable project....the question is do you have 400-700k in available cash?

In any case, I'm probably 5 years away from getting involved in deals like that iwth my own money, but the potential is there. Once that critical mass gets lined up, there's so many great opportunities for investors because the entry price is so low. Unfortunately [[or fortunately, depending on your opinion...investors who buy when there's blood in the streets stand to gain the most), the people who have the access to capital combined with the skillset and knowledge required to do these deals were generally coming of age in the 1980s, when downtown was supposedly as dangerous as Juarez. So selling them on the idea of looking at deals downtown has been like pulling teeth. The latest nonsense with Kwame, Conyers, etc. combined with the banking failures had put a halt to whatever momentum was starting.

But things are turning now, the younger set is starting to move up in the world, and I'd say that in 5-7 years, much of Grand Circus Park will be filled, lower Woodward will finally halfway decent retail, and investors will start looking at Capitol Park.

The above is a fairly uninformed opinion based on anecdotal evidence, a small window of experience, and incomplete analysis. Your mileage may vary.

This is the thing that will be amzing to see in the next 10-15 years. Imagine people scrambling to move into N. Corktown, the Capital Park area and "gasp" the lower Cass Cooridor. When demand fills up an area, the next area over starts looking mighty attractive.

**pswingset** · June-23-11, 03:02 PM

Thanks for the insight corktown, as an urban studies student at WSU, I see myself being a player in the future of the built environment downtown.

**BrushStart** · July-15-11, 05:47 PM

This lack of residential housing downtown is really becoming an EPIC problem. I have friends today that can't find a place to live downtown. Waiting lists at some buildings are now ongoing, meaning they have a rolling list with no expected openings. I didn't believe them so I called around, and seriously, there's nothing open. Even if you wanted to live downtown right now, you can't.

At first, I was excited about the high occupancy rates, but now I wonder how many people are being turned away and where they are going. Rents are climbing. It's hard to believe people can't find a place to live downtown. Again, WHERE ARE THE DEVELOPERS??? WHERE ARE THE BANKS???

For the love of god, there is a DEMAND to live in Detroit and we're not capitalizing on it because there are no open units! If you have $$$ and expertise, please build some buildings in the CBD or renovate some lofts.

I hope we hear a flood of construction announcements in coming months, there are surely more renters in the pipeline with nowhere to go.

Vox · July-15-11, 08:29 PM

Originally Posted by BrushStart

This lack of residential housing downtown is really becoming an EPIC problem. I have friends today that can't find a place to live downtown. Waiting lists at some buildings are now ongoing, meaning they have a rolling list with no expected openings. I didn't believe them so I called around, and seriously, there's nothing open. Even if you wanted to live downtown right now, you can't.

At first, I was excited about the high occupancy rates, but now I wonder how many people are being turned away and where they are going. Rents are climbing. It's hard to believe people can't find a place to live downtown. Again, WHERE ARE THE DEVELOPERS??? WHERE ARE THE BANKS???

For the love of god, there is a DEMAND to live in Detroit and we're not capitalizing on it because there are no open units! If you have $$$ and expertise, please build some buildings in the CBD or renovate some lofts.

I hope we hear a flood of construction announcements in coming months, there are surely more renters in the pipeline with nowhere to go.

There's a whole lot of area outside of Downtown to live in. All of it is the city of Detroit. Maybe you should rethink your myopia.

**Hypestyles** · July-15-11, 08:43 PM

more diversity of liveable housing stock is needed.. more renovated buildings.. demolish decrepit, condemned apartment buildings.. central west, central east, center-north..

**BrushStart** · July-15-11, 09:05 PM

Originally Posted by Vox

There's a whole lot of area outside of Downtown to live in. All of it is the city of Detroit. Maybe you should rethink your myopia.

Maybe it's not MY myopia. Maybe it's the demands of the populous. The demand has outstripped the supply. It's basic economics. Maybe people want to be able to walk to walk to work and to the bars, parks, restaurants, and entertainment venues concentrated in specific areas. Seeing as we have no decent mass transit to make those things easily accessible, you can't expect everyone to jump at the chance to live outside of greater downtown. Seeing as we have ample space to build and plenty of buildings to renovate in the CBD, maybe it's not unreasonable to expect some dense residential development.

Now that I've lambasted you, let me temper what I said with the statement that there's nothing wrong with other areas of the city, but it is not what's in demand. The market is out of whack and the people who live downtown are getting burned by rising rents and those who are trying to move to downtown are getting locked out. I guess I should have figured that someone [[YOU) would find some asinine way to turn demand for a Detroit address into a bad thing.

Vox · July-15-11, 09:26 PM

Originally Posted by BrushStart

Maybe it's not MY myopia. Maybe it's the demands of the populous. The demand has outstripped the supply. It's basic economics. Maybe people want to be able to walk to walk to work and to the bars, parks, restaurants, and entertainment venues concentrated in specific areas. Seeing as we have no decent mass transit to make those things easily accessible, you can't expect everyone to jump at the chance to live outside of greater downtown. Seeing as we have ample space to build and plenty of buildings to renovate in the CBD, maybe it's not unreasonable to expect some dense residential development.

Now that I've lambasted you, let me temper what I said with the statement that there's nothing wrong with other areas of the city, but it is not what's in demand. The market is out of whack and the people who live downtown are getting burned by rising rents and those who are trying to move to downtown are getting locked out. I guess I should have figured that someone [[YOU) would find some asinine way to turn demand for a Detroit address into a bad thing.

You've lambasted me? That's rich. I'll just call it a d-bag tax, for a lack of a better word. What is in demand is out of wack? I have to laugh. It's supply and demand, and the demand is there, but the supply is controlled by capital. The market is just doing what it's supposed to, fill the properties available at the highest rents possible.

I don't feel sorry for people like you. really don't. You know why? Because you feel that Downtown is the only part of Detroit that matters. And when I suggest that you move to another area of Detroit, you counter with the lamebrained asinine way to turn a Detroit address into a bad thing.... YOU did that all by yourself.

**mwilbert** · July-15-11, 11:22 PM

Rising rents are obviously annoying, but they are also what will end up creating a supply of new rentals downtown. It isn't as if people haven't been burned developing [[or lending on) housing downtown before, so you can't expect people to leap into construction as soon as it looks decent, and developers are still going to want whatever tax credits they can get, which takes time. The good news is there is plenty of space to renovate as apartments, and with rentals more in demand than condos, it will probably come on the market as rentals. The bad news is that it isn't going to be online quickly, and it will end up costing more than people have been used to paying.

Anyway, you have to expect that as downtown becomes a more attractive place to live, it is likely to cost more to live there--that's how the housing market works.

**BrushStart** · July-16-11, 02:12 AM

Originally Posted by Vox

You've lambasted me? That's rich. I'll just call it a d-bag tax, for a lack of a better word. What is in demand is out of wack? I have to laugh. It's supply and demand, and the demand is there, but the supply is controlled by capital. The market is just doing what it's supposed to, fill the properties available at the highest rents possible.

The underlying economics are clearly escaping you. Suffice it to say that there are reasons why downtown has been a city stronghold, why it hasn't fallen as far as other neighborhoods, and why it will rebound faster and with greater intensity. The capital is there. It is always there; it just needs prodding.

I don't feel sorry for people like you. really don't. You know why? Because you feel that Downtown is the only part of Detroit that matters. And when I suggest that you move to another area of Detroit, you counter with the lamebrained asinine way to turn a Detroit address into a bad thing.... YOU did that all by yourself.

I never asked for your sympathy, nor do I want it. Nowhere did I imply that downtown is the only part of Detroit that matters. Yet, it is an axiom that downtown is the single most important neighborhood in Metro Detroit. It is the nucleus of an otherwise confused and disjointed agglomeration. Downtown is the citadel from which all new growth will emerge.

Whether you leave this discussion with a better understanding or not, greater downtown is going to be the most in-demand and influential part of the city going forward. Most people will be most attracted to areas that are connected to the institutions located in the greater downtown area. Downtown needs to be the focus of development and growth, while the rest of the city needs to huddle around it like a bonfire in winter.

Rebuilding downtown requires accommodating growth when demand presents. This city needs to learn how to be an opportunist by actually contributing to the momentum occurring within it. You can call it the "snowball effect," or whatever you want, but in simple terms, success begets success. New residential developments will spur new commercial and retail growth, which will in turn lead to more residential developments. The cycle repeats until a greater market force interrupts it. Downtown has about 50 years of making up to do, and the sooner we start putting the toothpaste back in the tube the better.

Vox · July-16-11, 09:09 AM

Originally Posted by BrushStart

The underlying economics are clearly escaping you. Suffice it to say that there are reasons why downtown has been a city stronghold, why it hasn't fallen as far as other neighborhoods, and why it will rebound faster and with greater intensity. The capital is there. It is always there; it just needs prodding.

The economics aren't escaping me. I realize full well why Downtown hasn't fallen further than other neighborhoods, it's been propped up for years. The only reason Midtown functions as well as it does is Wayne State, and it's police force. Remove that, and there starts to be a problem.

I never asked for your sympathy, nor do I want it. Nowhere did I imply that
downtown is the only part of Detroit that matters. Yet, it is an axiom that
downtown is the single most important neighborhood in Metro Detroit. It is the
nucleus of an otherwise confused and disjointed agglomeration. Downtown is the
citadel from which all new growth will emerge.

But yet you continue to insist that the same failed policies be continued to benefit a precious few people at the expense of the city at large. Let me reiterate. Downtown does not equal Detroit as a whole. Every neighborhood is equally important, and the more you bray about Downtown's importance to Detroit as a whole just belies your ignorance about the reality of Detroit as a city.

Whether you leave this discussion with a better understanding or not, greater
downtown is going to be the most in-demand and influential part of the city
going forward. Most people will be most attracted to areas that are connected to
the institutions located in the greater downtown area. Downtown needs to be the
focus of development and growth, while the rest of the city needs to huddle
around it like a barrel-fire in winter.

Nice analogy about the barrel fire. Sounds to me like you are calling the rest of Detroit a homeless person or something less to be desired. Kinda elitist, isnt it?

Rebuilding downtown requires accommodating growth when demand presents. This city needs to learn how to be an opportunist by actually contributing to the momentum occurring within it. You can call it the "snowball effect," or whatever you want, but in simple terms, success begets success. New residential developments will spur new commercial and retail growth, which will in turn lead to more residential developments. The cycle repeats until a greater market force interrupts it. Downtown has about 50 years of making up to do, and the sooner we start putting the toothpaste back in the tube the better.

Rebuilding Downtown? Surely you jest. That's been going on now for the past 30+ years, at the expense of the rest of Detroit. I think the focus should spread out to other neighborhoods for a change.

**BrushStart** · July-16-11, 10:29 AM

Vox, I truly don't know what your problem is, but you seem insistent on taking whatever it is out on me. I posted a concern about the lack of downtown housing, and that developers need to add new units to accommodate demand- but you've managed to turn this into a crusade against me- that somehow I am an "elitist" who doesn't care about the rest of the city. You read further into my analogies than what was intended and you twist my opinions to suit your agenda. If it comforts you to be that way, fine.

**Doma** · July-16-11, 10:37 AM

Quote of the month right here!

Originally Posted by BrushStart

Downtown needs to be the focus of development and growth, while the rest of the city needs to huddle around it like a barrel-fire in winter.

**BrushStart** · July-16-11, 11:01 AM

Originally Posted by Doma

Quote of the month right here!

I didn't mean it to have a negative connotation. I meant huddle around it like a hearth, i.e. economic engine. It now reads "bonfire" to clear up any confusion.

**rencense** · July-16-11, 11:12 AM

watch out for scott.......he's a dick

**maxx** · July-16-11, 12:13 PM

Renting rather than buying is the way to go right now. Just ask the Mortgage Brokers Assc. who walked out on their mortgage to rent elsewhere. The Daily Show did a great number on them featuring Wyatt Cynac.

Vox · July-16-11, 12:43 PM

Originally Posted by BrushStart

Vox, I truly don't know what your problem is, but you seem insistent on taking whatever it is out on me. I posted a concern about the lack of downtown housing, and that developers need to add new units to accommodate demand- but you've managed to turn this into a crusade against me- that somehow I am an "elitist" who doesn't care about the rest of the city. You read further into my analogies than what was intended and you twist my opinions to suit your agenda. If it comforts you to be that way, fine.

I don't know what the holy hell you are talking about. Crusade? Not a chance. This is a discussion board, isn't it? And I'm giving my opinions in a logical, clear, manner. Quite unlike what you've been presenting, IMHO.

And it seems you must really like fire or something. First the barrel fire imagery, now changed to a bonfire, as well as the post of the Billy Joel song. What's next?

**midwesthostage** · July-16-11, 01:19 PM

So I've gotten a kick out of reading through these posts; currently I my husband and I live in the Kales but starting looking for something with more space. Wasn't until then that I came to experience how tight the rental market is! We did find a space in the Leland lofts, however our lease is not up in the Kales yet :0). So if anyone is interested in a two bedroom with great views, PLEASE visit the Kales and inquire about available units! Aside from that, you can find stuff here and there especially on Craigs list. But it is the logical progression of things that as downtown is developed and gets more expensive, there will be more demand for the immediately surrounding areas. I'm okay with it as long as it doesn't change the atmosphere of the city too much [[read: gentrification, suburban dolts moving back into the city because it's "cool".)

**mikeg19** · July-16-11, 01:30 PM

Ok, so if we are looking adding more residential options into DOWNTOWN, what buildings are going to be able to handle a vast amount of renters? I can think of the following off the top of my head:

Book Building and Tower
Free Press Building
Stott Building
Metropolitan
Wurlitzer
United Artists

Now whether these buildings are economically feasible to redevelop and are suited for residential use is another story, but that's what I can think of in terms of mass scale redevelopment. Now considering the amount of demand there is for housing in Detroit, I don't think those buildings would cover it. Input from someone more well versed in this area will be able to expand on this thought. What other buildings downtown could be rehabbed to accommodate a major influx of residents?

**BrushStart** · July-16-11, 01:32 PM

Originally Posted by Vox

And it seems you must really like fire or something. First the barrel fire imagery, now changed to a bonfire, as well as the post of the Billy Joel song. What's next?

Haha, everything else aside, it's all coincidence.

BTW, things going on in my life are about to make it difficult to live anywhere in Detroit, not just downtown. Changed employment situations, finances, among other things are likely going to land me somewhere near Ypsi. I'm doing my best to make things work financially and logistically, but with the cost of long commutes, gas and insurance, Detroit may not be feasible. It's not just me either, it's my girlfriend and the added pressure it puts on her. I've got a few ideas, but it does not look good. The second best scenario is I have to leave for a few years and can move back if the situation changes.

**mwilbert** · July-16-11, 04:14 PM

Every neighborhood is equally important,

I really don't see how this can be true. It seems to me that the city would be improved if some of its neighborhoods were leveled and the ground planted with trees. On the other hand, the city would be damaged by the loss of some other neighborhoods. The idea that these two types of neighborhood are equally important is not plausible to me.

Vox · July-16-11, 04:33 PM

Originally Posted by mwilbert

I really don't see how this can be true. It seems to me that the city would be improved if some of its neighborhoods were leveled and the ground planted with trees. On the other hand, the city would be damaged by the loss of some other neighborhoods. The idea that these two types of neighborhood are equally important is not plausible to me.

Why not? Some neighborhoods are just as good as Midtown, WITHOUT the extra police presence afforded by Wayne State. Palmer Woods, Indian Village, Green Acres, etc.

Do you think that the Poletown neighborhood doesn't have a negative effect in a lot of ways on the Midtown district? It's right next door. You can even smell it some days from Wayne. If that was kept up in the first place, there would be a competitor to Midtown right there, with a complete urban shopping district, AND a farmer's market, to boot. But, the city council chose, in their infinite wisdom, to plow money and resources into d-bag heaven.

**corktownyuppie** · July-16-11, 04:41 PM

Every neighborhood is equally important.

This would be true if a unicorn showed up at Jefferson and Woodward with $250,000,000 in a bag.

The problem is that we have no money. We have dwindling resources and increasing costs. It costs just as much money for a garbage truck to drive one block with 20 houses vs. one block with 3 houses. Putting 200 people in a high rise requires one officer to guard. Putting 200 people in single family homes across 10 blocks requires a patrol car. Putting 200 people spread 4 families per block means 50 blocks and 5 patrol cars.

The idea that we all locations are equally important could fly if we could afford it to work. But we can't, and the problem is getting worse, not better.

I can understand that this will be hard to hear for those people in neighborhoods that will have to be sacrificed in order to keep the whole ship afloat, but we don't have a choice. Will my old neighborhood at 7 and Kelly survive? I don't know.

Will downtown survive? Yes.

Let's pour the resources we have into saving those neighborhoods that will form the critical mass of new Detroit. We can do so compassionately for those who will have to say goodbye to their old neighborhoods, but we're at a point where emotional ties to the past need to be cut so we can focus on not having to be the municipal embarrassment that Detroit is.