Gilbert's Team: We Need 5 More "Boom" Years

[313WX]

That's quite a bit to ask for given we're now 8 years into the current economic "expansion" [[the longest in the post World War II era only surpassed by the Dot-Com bubble) with auto sales having peaked.

But it still goes to show how tenuous the economic situation in Michigan, and especially downtown's "comeback," remains [[which shouldn't surprise anyone).

http://www.detroitnews.com/story/opi...ley/102475734/

[emu steve]

Agree and I think my posting has been consistent with that article.

I would think that five more years of sustained growth, esp. if they get the fail jail site, that downtown/CBD will mostly be in good shape. Not all areas, but most.

Another poster indicated 20 top sites along Woodward which ideally should be developed including a few in the CBD, some in lower Midtown, some near WSU and some near New Center. I would think that half to two-thirds of those could come on line within five years. Henry Ford Hospital could be a big player too.

Five more years of sustained economic growth could help the riverfront area.

Neighborhoods are more grass roots efforts. Less the efforts of major players but the efforts of locals to improve their neighborhoods.

The big question and largely unanswered is: What are the total number of jobs [[and composition) within Detroit today, five years ago, and what will it be five years from now? All of the building activity and the after the building are finished will require workers. LCA will represent a movement of employment from OC to Detroit. The new building at the Hudson's site will require a ton of retail workers. Kind of an one building "small mall'?

Job growth will solidify Detroit and nearby areas. Nothing helps neighborhoods more than rising incomes of those who live within a city. Having the income to pay property taxes, utility bills, upkeep of the house, etc.

[Bigdd]

It's not just 5 more years to build stuff,... you need the years to pay down the financing.

You can finish the project,.. but if the economy recedes noticeably and you can't rent most of the office space, and sell the lofts for big bux,... the buildings and everything around it are going to be in trouble.


[[Unless Gilbert is paying cash for all these buildings and renovations).

[O3H]

Might be an awful lot of empty, open, dusty, space available
while some take a financial beating based on "hope"

[SammyS]

The investor in me is split.

One part is optimistic of growth at the same trajectory of recent years and embraces it.
The other hopes of a slight correction so that I can add more to the portfolio.

[Bigdd]

The investor in me is split.

One part is optimistic of growth at the same trajectory of recent years and embraces it.
The other hopes of a slight correction so that I can add more to the portfolio.

When the prices seem unrealistic,... SELL.

By late 200, I knew a housing crash was coming,.. and soon. Wrote a paper on it. Gave it to anyone who would listen. I thought it was imminent in 2003 and sold my rental properties. It actually peaked a year or two later.

I bought places for no money down,.. and sold them for double what I never paid.

I was looking at the prices and the way the math added up,.. the new owners would have to put 20%+ down,.. raise rents 10%,.. AND have 100% occupancy,.. and they'd STILL be upside down $2,000 a month [[on a 4-plex for example).

So I sold. A few years later people were asking double what I sold them for. Don't know if any of them got that money.

In 2006 everybody and their brother thought they were a real-estate genius. Nearly all went into bankruptcy,.. lost their house, etc. One friend that had 24 rental houses lost it all,.. and he and his family are all still living in his mom's basement.

I never speculate. If the money works long-term [[even if you have 2/3 the occupancy you have now),.. then I'll do it.

[SammyS]

Sound advice Bigdd

I see select areas of Detroit poised for a massive boom. I won't call them cheap but compared to other large cities, they do have upside potential.

Rent is steady and the "priced to sell" properties, move in days.....and for double what they did only a few years ago.

Personally, I'm confident in Detroits latest revival and I see the risk palatable especially when most people are on the other side of the bet. That's right! When I ask, about 9/10 folks who are both financially and RE savvy, are bearish towards Detroit. That's the green light for me

[313WX]

Well, I guess if the bar you're setting is simply "upside potential" from the rock bottom of the 2008-2013 era, then yes a "massive boom" is poised to happen.

That said, the folks who are still bearish towards Detroit have good reason to be. Although the city has shed a lot of debt and Dan Gilbert alone has made a ton of moves to try and revive significant parts of downtown, the fundamental outlook of Detroit and Michigan [[Jobs, Infrastructure, Regressive Government, etc.) is still fairly abysmal in terms of supporting long-term growth potential. That's what typical investors really look at when taking on bets [[it's the same reason why Tesla's stock continues to shoot through the moon while's GM's stock remains in neutral).

[emu steve]

President Trump never calls and asks for my advice, but I'll offer it:

Infrastructure is an absolute winner for him because instead of worry about trying to create/save a few thousand coal jobs, infrastructure is an absolute winner.

It 'primes the pump' and produces hundreds of billions of domestic economy spending for material and labor.

Produces a lot of jobs at various levels. Good paying jobs including engineers, skilled trades, etc. This could help in robust, strong states like California but it also could help in MI and also states struggling like W. Va, KY., etc.

These NEW jobs could counter-balance an economy if it [[the economy) starts to slow down. We haven't had a 'cyclical recession' in a long time [[we've had other causes, e.g., financial system, 9/11, etc.). I remember growing up the MI economy going into the tank when the automobile industry experienced a pronounced slow down.

It produces tangible results. Roads, bridges, airports, etc. are all quality of life issues. Other infrastructure is needed, but not as visible to the public.

http://www.huffingtonpost.com/entry/...ushpmg00000009

[rbdetsport]

First of all, Steve.. Can you please stop talking yourself up? It is completely obnoxious, very narcissistic, and almost Trump-like.

In terms of growth, if the economy continues to thrive these next 5 years, I disagree that Detroit can't double the growth it has experienced in the last 7 years. I agree that the services like schools and transit need to see improvement and growth for this growth to continue; however, I see the growth in the Greater Downtown area being synergy and that larger developments, with more height, are around the corner. Brush Park and Cass Corridor are about to be thriving and we are beginning to build new in Downtown. As other cities around the country are growing at a ridiculous pace, I think we will continue to see the same trend in Detroit as growth continues to prop up more growth.

[Eber Brock Ward]

Detroit still has a lot of upside left, IMO, even an an iffy market, if only as a result of normalizing the wealth/population ratio of what a city holds as a ratio of the region that built up around it.

[Richard]

I think you guys pretty much nailed it and understand the process,I am also thinking that the next three years are going to be moving forward but when the next election cycle hits the markets are going to be unstable based on what happened in the past election.

[O3H]

People need to sell an awful lot of """widgits"", "whatcha-ma-call-its"", etc. to pay the rent, overhead, and employees on anything they rent/lease.

Just don't see the market , any market, wanting anything sooooo badly that 100's move in to occupy the space built by the real estate tycoons.

Building is easy, making a profit isn't necessarily so.........