"I've been priced out of downtown Detroit" - Headline on CNN.com

[stinkytofu]

Many of us obviously know about this, but interesting to see this as a main headline on CNN.com. At least CNN is covering something about us that doesn't involve bankruptcy, criminal mayors, of murder rates...

Setting aside the gentrification and other issues...some would say this is good PR for the city.

http://money.cnn.com/2014/05/27/real...html?hpt=hp_t2

[Bham1982]

Great news. Our dreams have been fufilled.

Now that Detroit is thriving again, we can cancel the state support, and eliminate all Detroit-specific allocations. Detroit can proceed to be the state's economic engine.

[jt1]

Great news. Our dreams have been fufilled.

Now that Detroit is thriving again, we can cancel the state support, and eliminate all Detroit-specific allocations. Detroit can proceed to be the state's economic engine.

Well, in that case it would only be fair that one or two of the halfway houses be relocated to Birmingham.

Is there a reason that you have to respond to any decent news with your shitty, snarky attitude? Nobody stated that Detroit's problems are over.

[DetroiterOnTheWestCoast]

Well, in that case it would only be fair that one or two of the halfway houses be relocated to Birmingham.

Is there a reason that you have to respond to any decent news with your shitty, snarky attitude? Nobody stated that Detroit's problems are over.

Getting back to the story, in just about any other major downtown across the country only very well paid young professionals could ever dream of renting a nice one bedroom apartment downtown or even close to downtown and live alone. Or even rent a two bedroom in a place anything like West Village for $800. That can't get you a closet in San Francisco, or even Oakland these days.

The only objectionable part of the article to me was this quote from Lafayette Park boy:"it seemed unfair to forced to pay more." In a rebounding market, why is that "unfair?" What is more unfair is the terrible decline of the city which has made the cost of real estate so abnormally suppressed.

I'd also advise the Quicken guy who "cant' find" a condo to buy, including $20k in free money, to perhaps expand his search, [[perhaps to New Center) and jump on the chance to get that free money.

[mwilbert]

Great news. Our dreams have been fufilled.

Now that Detroit is thriving again, we can cancel the state support, and eliminate all Detroit-specific allocations. Detroit can proceed to be the state's economic engine.

This doesn't really seem to have much to do with the story, does it?

In any case, it is good news. We want more people downtown, and rents have to be high enough to make renovation/construction feasible. As reported in the story, it isn't as if you can't find other accommodations within a reasonable distance.

[nain rouge]

"Local Instagram Artist Priced Out of Birmingham After Dad Cuts Allowance, Moves to Ferndale"

[nain rouge]

"D:Hive Plan to Make Detroit More Attractive Place to Invest Works Too Well, Prices Out Its Employees and Forces Company to Rethink Business Plan"

[bailey]

So, basically, rents are starting to climb over the $1 a sqrft range... good news. But isn't the mantra around here that $2 per is the trigger point for new development to make financial sense?

[nain rouge]

OK, I'll stop trolling with all these consecutive posts, but this Kopietz dude is unintentionally hilarious. He works for D:Hive, one of those dubious companies that wants you to "live, work, and play" in Detroit. Nows he's complaining that rents are increasing. He's like a living, breathing Onion article.

[jt1]

So, basically, rents are starting to climb over the $1 a sqrft range... good news. But isn't the mantra around here that $2 per is the trigger point for new development to make financial sense?

I'm curious where that $2/ number comes from [[not you but the people that state this). Is there anywhere in SE Michigan that rents are at $2/? I just don't see anyone paying $1700 for a 850 sq ft apartment anywhere around here [[city or suburbs)

[bailey]

I'm curious where that $2/ number comes from [[not you but the people that state this). Is there anywhere in SE Michigan that rents are at $2/? I just don't see anyone paying $1700 for a 850 sq ft apartment anywhere around here [[city or suburbs)

IIRC that is what developers claim is the point where they make a profit on new construction in Detroit without relying on subsidies. I'm not sure if the same math applies in the suburbs.

[Scottathew]

"Local Instagram Artist Priced Out of Birmingham After Dad Cuts Allowance, Moves to Ferndale"

That was more than a little funny!

[DetroitPlanner]

IIRC that is what developers claim is the point where they make a profit on new construction in Detroit without relying on subsidies. I'm not sure if the same math applies in the suburbs.

I would use the rent in some place like Canton for a comparison. Stuff is still getting built there; both rental and owner occupied.

Not saying that I want Detroit to be Canton, but it is the same market area and it is still increasing in housing units.

[mwilbert]

In 2012, 4-7 story apt. construction in Detroit [[probably Metro, not sure, source isn't clear on this) was estimated to cost $180/sq ft. Cap rates for new multifam construction in Detroit are currently around 7% according to CBRE. So 180 * .07 / 12 months means about $1.05/sq ft. But that is gross square feet, so for rentable square feet it would be more like $1.20/sqft/month. That doesn't include any non-construction costs, like land, permits, demolition, protection of neighboring structures, etc., which in downtown might add a fair bit. Still, you would think you could get unsubsidized construction someplace well below $2.

[bailey]

In 2012, 4-7 story apt. construction in Detroit [[probably Metro, not sure, source isn't clear on this) was estimated to cost $180/sq ft. Cap rates for new multifam construction in Detroit are currently around 7% according to CBRE. So 180 * .07 / 12 months means about $1.05/sq ft. But that is gross square feet, so for rentable square feet it would be more like $1.20/sqft/month. That doesn't include any non-construction costs, like land, permits, demolition, protection of neighboring structures, etc.,

.. building several floors of parking...

Still, you would think you could get unsubsidized construction someplace well below $2.

I don't think "someplace" is the issue. I think the claim is as it relates to the rather specific CBD/Woodward corridor/Midtown area.

[mwilbert]

By someplace, I meant someplace in greater downtown.

[swingline]

In 2012, 4-7 story apt. construction in Detroit [[probably Metro, not sure, source isn't clear on this) was estimated to cost $180/sq ft. Cap rates for new multifam construction in Detroit are currently around 7% according to CBRE. So 180 * .07 / 12 months means about $1.05/sq ft. But that is gross square feet, so for rentable square feet it would be more like $1.20/sqft/month. That doesn't include any non-construction costs, like land, permits, demolition, protection of neighboring structures, etc., which in downtown might add a fair bit. Still, you would think you could get unsubsidized construction someplace well below $2.

This is a good post. $2/sq. ft. is far too high for an alleged break even price for any Detroit neighborhood. For comparison, newer construction in affluent Old Town in Chicago rents for much less. http://chicago.craigslist.org/chc/apa/4490520132.html That's not to say that individual luxury properties or units couldn't demand $2/sq. ft. in Detroit, but a break even rental rate is certainly lower.

[emu steve]

Great news. Our dreams have been fufilled.

Now that Detroit is thriving again, we can cancel the state support, and eliminate all Detroit-specific allocations. Detroit can proceed to be the state's economic engine.

Is Bham1982 a flack for L. Brooks Patterson? [[or did I miss something? )

[emu steve]

This is the type of article which suggests there is some hope for downtown Detroit.

When market forces [[demand, supply and costs) show demand exceeding supply and rent costs increasing that is usually direct evidence that some positives are happening.

Even though there are some subsidies involved, the marketplace seems pretty vibrant and that is very good news.

[aj3647]

Rents increase almost everywhere, that's just how it works. Try renting an apartment in Ann Arbor/Ypsi area, your rent goes up 10% every year for no reason whatsoever. I'm moving out of my formerly $800 a month apartment after the rent went up to $979 and I lived there for less than two years [[it went up twice). But rather than bitch about how I'm entitled to live there for a lower price, I'll simply do what an actual adult does and look for a different place with a price that I am more comfortable with.

Heaven forbid the entitled hipster moron in the article *GASP* find a two-bedroom and a roommate to lower the costs.

[DetroiterOnTheWestCoast]

Rents increase almost everywhere, that's just how it works. Try renting an apartment in Ann Arbor/Ypsi area, your rent goes up 10% every year for no reason whatsoever. I'm moving out of my formerly $800 a month apartment after the rent went up to $979 and I lived there for less than two years [[it went up twice). But rather than bitch about how I'm entitled to live there for a lower price, I'll simply do what an actual adult does and look for a different place with a price that I am more comfortable with.

Heaven forbid the entitled hipster moron in the article *GASP* find a two-bedroom and a roommate to lower the costs.

The article does say the hipster now has a roommate - ironically he's moved in with a friend in Midtown, a location that others are getting priced out of.

[Danny]

Gentrification has its price. If private developers want Detroit to look like Park Ave. I say so be it. Poor folks displace more the Young professions and hipster cool skinny jean kids. I heard living in Southwest Detroit would an excellent spot for them.

[ABetterDetroit]

Again proof that something's actually changing economically in the core of the city by what is obviously an apartment shortage.
Just my opinion, but I remain convinced that a good chunk of capital is still sitting on the sidelines waiting for the outcome of the bankruptcy proceedings. If the outcome is viable and finished in a timely manner more developers will jump into the market to answer the demand for new housing wherever that demand exists. There are simply too many ways and places that residential property could be developed to make a blanket statement that $2 a sq. ft. has to be achieved to be profitable.

[Hypestyles]

... so what's this recurring talk about there still being lots of office-building vacancies downtown? how many buildings have at least 50% or more empty suites?

[ABetterDetroit]

... so what's this recurring talk about there still being lots of office-building vacancies downtown? how many buildings have at least 50% or more empty suites?

Exellant on topic post!

Yes, converting lower demand existing office space to high demand residential could be one of the possibilities for future devolopment.