Don't think rents are rising fast in Detroit , Think again !

[Detroitdave]

Good news and Bad news . The Good news is Detroit's rents are the fifth fastest growing in the country. The bad news is Detroit's rents are the fifth fastest in the country.
Even though the big boys, NYC, LA SF ect are wayyy ahead and we are 15th out of the big boys we are moving VERY fast.
Hold one folks ,the word is getting out .
You decide
http://detroit.curbed.com/2016/5/17/...-market-report

[Junjie]

Good news and Bad news . The Good news is Detroit's rents are the fifth fastest growing in the country. The bad news is Detroit's rents are the fifth fastest in the country.
Even though the big boys, NYC, LA SF ect are wayyy ahead and we are 15th out of the big boys we are moving VERY fast.
Hold one folks ,the word is getting out .
You decide
http://detroit.curbed.com/2016/5/17/...-market-report

The absolute level is so low that it's hard to see a slight rise [[7.7%) as anything other than a positive sign of increased demand. According to the article, if rents in Detroit doubled, which is hard to imagine, it would only be in between Philly and Chicago which are both pretty affordable big cities. So it's hard for me to see an angle where this is "bad news."

It will also be interesting to see how much latent demand there actually is. Part of the runup in price has to do with relatively limited supply in the few desirable areas to rent. If e.g. the entire Book Tower, Stott Tower, new construction at Hudson's, and numerous rentals in the Brush Park development[[s) all come online around the same time and rents continue their current trend, that would be a much more powerful signal. But they might not.

[Shai_Hulud]

The absolute level is so low that it's hard to see a slight rise [[7.7%) as anything other than a positive sign of increased demand. According to the article, if rents in Detroit doubled, which is hard to imagine, it would only be in between Philly and Chicago which are both pretty affordable big cities. So it's hard for me to see an angle where this is "bad news."

It will also be interesting to see how much latent demand there actually is. Part of the runup in price has to do with relatively limited supply in the few desirable areas to rent. If e.g. the entire Book Tower, Stott Tower, new construction at Hudson's, and numerous rentals in the Brush Park development[[s) all come online around the same time and rents continue their current trend, that would be a much more powerful signal. But they might not.

I agree. There will be a lot of new housing units becoming available in the next 1-2 years. If the prices continue to rise after that it will be a positive sign.

[TTime]

Rising rent downtown is great for landlords and retail establishments that sell $100 t shirts. It signifies that there are dummies around that are more than willing to part with their money even if they are not getting very much in return.

[Bham1982]

This is a classic D-Yes thread.

The study, if you care to understand it, looks at average market rents by metropolitan area. It has basically nothing to do with the relative fortunes of downtown/midtown.

The Detroit metro area has 5.3 million residents. The entire core Detroit [[downtown up to New Center west to Corktown, east to Ambassador Bridge) has 35k residents. So the "gentrifying zone" of Detroit isn't even 1% of the sampled data.

The reason that rents are rising is because the auto industry is churning out record profits. Suppliers will give first-born for skilled engineers. Has almost nothing to do with the "hipster hordes are turning Detroit into Brooklyn" meme.

[middetres]

From the study:

"In total, we looked at market rents for the 300 largest cities in America. Using our 28% rent-to-income ratio, we found out how much households needed to make in a year to pay for two-bedroom apartments. From there, we focused our attention on the principal cities of the 15 largest U.S. metro areas."

Nowhere does it say the average rents are from the entire metropolitan area of the 15 principal cities included on the list. They are of the principal cities only!

So either the hipster hordes are turning Detroit into Brooklyn, or those skilled engineers are deciding to live in Detroit.

Personally I think it's a bit of both.

[Wesley Mouch]

Great new! Rising rents means more development and jobs -- both of which Detroit needs.

If you're a tenant, its a mixed blessing. We should have some decent protection for tenants. Nobody should be forced to move out or have their rent increased without decent notice so they can either decide to pay-up, or move to lower-rent districts -- which fortunately we have in great quantity!

[SammyS]

I've had to up my tenants rent for the the last two years by, coincidently, 8% but I'm hardly keeping up with my taxes. Detroit [[Midtown in my case) is not cheap but neither are the expenses to keep the property. If RE is approaching $300/sf, then it should be no surprise that rents follow accordingly. At that rate, $1.50/sf rental sounds reasonable.

[Gistok]

.... but unfortunately in some not so safe neighborhoods....

[SaintMe]

west to Corktown, east to Ambassador Bridge

MacArthur Bridge?

[Bham1982]

MacArthur Bridge?

Sorry, meant MacArthur Bridge.

[Detroitdave]

This is a classic D-Yes thread.

The study, if you care to understand it, looks at average market rents by metropolitan area. It has basically nothing to do with the relative fortunes of downtown/midtown.

The Detroit metro area has 5.3 million residents. The entire core Detroit [[downtown up to New Center west to Corktown, east to Ambassador Bridge) has 35k residents. So the "gentrifying zone" of Detroit isn't even 1% of the sampled data.

The reason that rents are rising is because the auto industry is churning out record profits. Suppliers will give first-born for skilled engineers. Has almost nothing to do with the "hipster hordes are turning Detroit into Brooklyn" meme.

I'm not sure about that other sources say different
https://www.glassdoor.com/Best-Citie...LST_KQ0,20.htm

[Detroitdave]

Bloomberg and Glassdoor say different.
Things are changing. It's not quite the hellhole that some want to keep it as .
It's not perfect , but it's not hell on earth like some are making it out to be.
http://www.bloomberg.com/news/articl...ities-for-jobs
https://www.glassdoor.com/Best-Citie...LST_KQ0,20.htm

[Jason]

Low rents is great for affordability but rents need to be higher in order to justify higher quality new construction.