Soccer, World Cup and Detroit

[Bham1982]

Most business people [[who generally are familiar with bankruptcy) see the bankruptcy as a positive, not a negative. An investment firm from NY just bought the CPA building for 900k. Chinese investors are buying up downtown buildings. Etc.

The entire CPA building block was bought for 900k, an absurdly low number.

So basically you can buy an entire block in possibly the hottest Detroit neighborhood for less than developable [[former) farmland in an exurban township with good schools.

If that's the sales comp being used to show a revival, I hate to see the other sales comps. Property values are incredibly low, as the investment community does not yet see evidence of any turnaround in Detroit.

[MikeyinBrooklyn]

If that's the sales comp being used to show a revival, I hate to see the other sales comps. Property values are incredibly low, as the investment community does not yet see evidence of any turnaround in Detroit.

Bham, I think you are missing a key point on Detroit's property revival [[at least as far as downtown/midtown/corktown is concerned). Until the last couple of years, you could hardly give land away in Detroit. Now, people are paying real money for land and buildings. Yes, the value is still MUCH lower than comps in both our suburbs and other major cities. But it doesn't sit there forever rotting anymore. And, also note, the land and buildings being bought and sold are being actively built on or renovated, often by private sector tenants. The patient may not be ready to be discharged yet, but has gone from clinically dead to stable condition.

[corktownyuppie]

The entire CPA building block was bought for 900k, an absurdly low number.

So basically you can buy an entire block in possibly the hottest Detroit neighborhood for less than developable [[former) farmland in an exurban township with good schools.

If that's the sales comp being used to show a revival, I hate to see the other sales comps. Property values are incredibly low, as the investment community does not yet see evidence of any turnaround in Detroit.

We'll have to agree to disagree on the conclusion then.

First, you couldn't give that building away 6 years ago. So when values go from zero to 900k, I'd say that's some kind of an inflection point.

Second, one can't compare brownfield properties with vacant land. Vacant land is vacant. It's a blank slate. There are no demolition costs. You can building anything you want on it. The CPA building is the perfect example of why redevelopment is so hard in the city. Whoever buys it will start out with the choice of spending a lot of money to demolish just to get to vacant land, or they will spend an even more ridiculous amount of money to renovate. There are no either choices.

The one thing you and I agree on is that property values are incredibly low. Where we differ is that you are comparing them to performing properties in the suburbs. I'm comparing them to where they were 5 years ago.

The investment community sees plenty of evidence of a Detroit rebound. Even my contacts at Washtenaw County banks are expressing an interest in doing some development deals.

But just because it's happening doesn't mean that it's happening all over the city. And just because it's happening doesn't mean that it's competing with Birmingham or Ann Arbor.

This is the stage for the vulture buyers, not the blue chip buyers.

[mwilbert]

We'll have to agree to disagree on the conclusion then.

First, you couldn't give that building away 6 years ago. So when values go from zero to 900k, I'd say that's some kind of an inflection point.

Exactly. The interesting point isn't the absolute value of the property, but the fact that there is interest from outside the circle of local parking slumlords, and the trend. There is obviously no comparison between the value of land in even the hottest parts of Detroit and any interesting part of a normal city, but before you can have expensive property, you have to have some kind of predictably functioning property market, where there is at least some amount of liquidity, so that lenders have reason to think that they might be able to get their money out in case a borrower defaults, and Detroit is moving in that direction, which is huge.