What is the holdup on developing downtown properties and how can it be expedited?

[BrushStart]

The weather was fantastic today so I decided to take a long walk around downtown after leaving Winter Blast [[which, was fantastic BTW... did anyone know they had pony rides!?). I started walking north on lower Woodward, went around GCP by UA, then around the perimeter of Comerica Park, down past the DAC, around Music Hall, then through Harmonie Park and down Broadway, back down Gratiot to Monroe, went through Greektown, circled around the BCBS campus and then down Larned to the RenCen. The only rencent changes I noticed are that they are doing remodeling at 5&10 Bar in the Kresge Shops and that the restaurant at Gratiot and Broadway next to Henry the Hatter has closed.

If I had to estimate the number of vacant storefronts and/or buildings along my walk, the number would be at around 25. Typically, I only notice the storefronts that are occupied as opposed to the ones that aren't, but today the vacancies just stood out because Campus Martius was jam packed in contrast to the rest of downtown, which was somewhat deserted. Most of the empty buildings have for lease/sale signs up, others just sit vacant. My question, which is half based in outrage and half in confusion, is what is holding up the development/use of this space? I have some theories, but perhaps people can enlighten me further.

First, I will say what I do not believe to be causes:

1. Crime- there is little to no crime downtown that would deter businesses/redevelopment
2. Competition- there are many businesses that could have a monopoly on the entire area
3. Desirability- many of the buildings are literally steps from job centers and magnificent entertainment and cultural institutions
4. Parking and Access- there is ample parking for these buildings as well as access from the PM and bus stops.

Here's what I think are the major causes for vacant storefronts and buildings:

1. Speculators and Absentee Landlords- many of these properties are owned by people who have no intention of ever developing them or leasing them to tenants. I can cite two examples involving prime buildings downtown that are totally vacant and run-down that have been generated interest by more than 12 businesses looking to lease but have been turned away by the investor. The investor has no interest in dealing with tenants and simply keeps the property on the market at a ridiculous asking price. I suppose they have so much money that they can sit on the property until "Detroit turns around" and then they'll flip it at a huge profit.
2. Cost of Renovation- some of the buildings that are not in ready to rent condition will require some additional investment that would be prohibitive of development. At the same time, I think most of them would be profitable as residential space. Cost of renovation is only a problem for less than half of the vacancies.
3. Lack of Downtown Residents- it's been said before, but downtown's primary foot traffic is generated by sports and other events, thus in the absence of those things, there may not be enough patrons to support certain types of businesses that require a steady volume of sales.
4. Lack of Anchor Businesses- a diversity of other businesses would help other businesses get started much in the same way that neighboring businesses in a strip mall benefit one another with increased traffic.

Downtown Detroit is an anomoly in that a building flanked by the Opera House, Comerica Park, the DAC, Music Hall, and with frontage on a beautiful little park can sit totally vacant. In this case, it is the result of a speculator. I know that some of the buildings are owned by the city, and shame on them for letting them sit vacant. There are hundreds of retailers from artists to apparel shops to restaurants to a number of businesses that would be interested in leasing these spaces for the right price. It could really bring some life back to certain parts of downtown. As far as the speculators are concerned, they should either shit or get off the pot. Just because some of these buildings are tied up in some rich widow's portfolio that she doesn't even know exists shouldn't mean that they should rot away, vacant forever. The city should be dinging these speculators and absentee landlords with hefty fines for every cracked window, tattered awning, and crumbling brick. Either make the place look nice while you sit on it and do nothing, or sell it, rent it, or develop it. Otherwise, it could be a hundred years before these buildings are ever inhabited again. The other problems hindering renovation and use would be mitigated and improved by new developments. Hell, even investors will make out if property values go up.

Bing: It's time to put the pressure on.

[401don]

Along with the lack of downtown residents, which is number one, I think the second biggest obstacle is that people drive straight into their workplace's attached garage and never have to walk outside for even a single block. You would never believe thousands of people work downtown when it's totally deserted at 8:45 am. Secondly most of the people working in the highrises are in the Ren Cen, Financial District, etc. and are several blocks away from the Woodward/Grand Circus Park corridor.
We need a combination of about 5,000 more residents and the same number of employees anywhere between CMart and Grand Circus Park to generate foot traffic. Then I think we will finally start to see some small, independent retailers. Ten years ago, I never thought I would see it but I believe we're only about 5-10 years away now, which in the big picture is not long at all.

[mwilbert]

A combination of limited demand and people who think their properties are or soon will be worth more than they are. Also, I believe some landlords who might be willing to rent to someone, but don't want to rent for uses they think are not worthy--there used to be a ton of wig shops along Woodward and now there aren't. I could be mistaken, but I suspect that is less because people don't want wigs, and more because the landlords decided that their property would never fetch the kind of money they want with that kind of shop occupying their storefronts.

More downtown residents is probably the biggest single thing that would help. The landlords will eventually see prices rise and get bought out as they wish, or decide that they want some income and rent their spaces out.

[davewindsor]

There's just one cause. Banks won't lend money. It costs a lot of money to open up a new business whether it be a restaurant, retail or whatever. Banks see you want to open up shop in downtown and say you're too high a risk and won't lend money. Investors with vision buy a building hoping it will get refinanced and then the banks turn you down. The banks see you own a building in downtown and say you're too a high a risk and won't lend you the money for rehab. It doesn't even matter if you have great credit. There's a huge stigma when banks see what you are trying to do. You want downtown revitalized, make the money available to downtown entrepreneurs. Have a Marshall plan for downtown and it'll change or wait another couple decades for some more Dan Gilberts to show up with their own money. It's that simple.

[DetroitDad]

I used to think that too, but lack of people Downtown isn't the issue. The issue has more to do with diversity. There are a lack of niches that are worth the effort to exploit. The niches that are there are not being exploited because of a lack of entrepreneurs. We have a lot of people with dreams who sit around posting on blogs, but few who actually get it together and start getting things done.

Detroit is truly a frontier and proving ground for the future entrepreneur.

[Carey]

I think the main problem is lack of people downtown, period. The small number of residents has already been noted. But there aren't that many people working downtown, either. I've worked downtown or in Midtown since the early 1970s, and the streets seem more deserted between 9-5 these days than ever. While Quicken's move to the Compuware Building gets a lot of deserved publicity, I think we miss the departure of a lot of smaller businesses, such as law firms, etc. Despite the various obstacles -- tight money, speculators and all -- I can't believe a lot more workers wouldn't bring some more businesses. Not sure a whole lot more workers are coming, though.

[BrushStart]

I agree that number of downtown residents does play a factor, but like I said, how many buildings in ready-to-rent condition are unoccupied because the property owner has repeatedly turned down business tenants? I know of two prime buildings where that's the case, but I'm sure there are many more. Obviously, you can't force them to rent, but you can force them into keeping the place in good condition, shoveling the sidewalk, etc. If number of downtown residents is truly the cause, then the addition of new residents in Broderick Tower should have a corresponding effect.

[canuck]

Very well stated BrushStart; the pressure must be put on the developers and property owners to use their vital forces, their noggins together and generate a plan to

[[1)Inspire confidence and enthusiasm for downtown.
[[2)Pick up the phone and generate deals with chain stores and craftsmen, shopowners.
[[3)Find ways to introduce a variety of businesses on the streets so that downtown folks get all they need without going to the Pointes.
[[4)Encourage a transit, bike and pedestrian culture to offset the car dominance.
[[5)Effect a change at street level. Break up monotony in areas that are either too loosely filled or seem closed to the public.
[[6)Plazas with wide sidewalks fronting large buildings could see the introduction of interesting shops set up year round or seasonally.
[[7)Dont let up until the core looks and feels like the Grand Bazaar at Istanbul...

The encouraging thing is the city center is very clean and the roads and sidewalks are ready to go.
I think you are right 401don about the incremental factor. If we can imagine some more reuse of buildings into condos and a major campaign to attract burbans to the court of Saint-Antoine Laumet de Cadillac. If business density started happening in well-chosen clusters, the impetus might prove successful and grow from there. That woud spur development and multiply service jobs. Then struggling malls like The Shops at Kresge's might take-off in a big way. I think developers and property owners need to believe in this strongly enough. I think incentives like a progressive rental schedule over 5 years to would be shopowners, and chains could deliver results in time. It is a collaborative effort. I think the city did a lot to beautify, it is remarkably well-kept. Now it needs to grunge-up a tiny bit not from abuse but from good old footwork.

[Richard]

Believe it or not personally I think the progress that is being made in the downtown is at a big advantage when compared to other cities and poised to comeback on a much more solid foundation and be years ahead ahead of the other cities.

With the other cities the first thing they did is promote business into the downtown which in turn raised the property values greatly which in-turn made the residential unaffordable for the average worker.

Detroit is unique as it is adding residential as it is also adding business which in turn keeps a balance it is a slow but steady process it will also discourage speculation in its very nature of advancement.

Small business is tough one almost needs to come up with a niche market to survive against the big box stores to make it you have to think out of the box.its never any easy answers or solutions.

[wolverine]

What kind of business does everyone imagine downtown? If you want to attract major chain retailers and bigger mid-high price restaurants that will sustain themselves beyond the worker population, you'll need at least 100,000 more residents downtown. That's a big number... you'd be building 20-60 story buildings on almost every block within the CBD

[BrushStart]

What kind of business does everyone imagine downtown? If you want to attract major chain retailers and bigger mid-high price restaurants that will sustain themselves beyond the worker population, you'll need at least 100,000 more residents downtown. That's a big number... you'd be building 20-60 story buildings on almost every block within the CBD

I'm just trying to figure out how we occupy the 30 or so vacant storefronts we already have. I don't really think that goal is overly ambitious. Maybe we have to add like 10k more residents and pry the properties away from the speculators.

[wolverine]

It doesn't seem to be working out all that well for independent retailers. Small cafes or fast casual restaurants may work out well because of low overhead costs and the cost to start up is far less expensive than sit-down restaurants. If you are talking about a small gain in 10,000 residents, your best bet is filling vacant storefronts with Coney Islands, subway sandwich shops, and Chipotles.

Why? Because these businesses can rely on downtown office workers, and are a convenient place to eat for residents after hours. Though my neighborhood is mostly hotel and residential, These places are always doing extremely well after hours.

As for retail, downtown may be able to attract businesses that cater to office workers. Jos. A Bank or Men's Warehouse. I know the shoe store didn't work out, so I won't suggest it. In time, it may work out again.

I'd like to point out that in Chicago's loop [[excluding the state street shopping area) there's hardly any retail. 99% of ground floors are filled with coffee shops, fast casual and sit down restaurants, CVS and Walgreens type of places, etc. Keep in mind, there's some condos and apartments mixed in with the sea of office buildings. If I look at parts of River North...a more balanced office vs residential environment comparable to Detroit [[minus the vacancy, you still find mostly bars, cafes, and restaurants, but not all that much retail.

I've been to plenty of major cities in the US, and unless you have a major downtown destination shopping district, the description pretty much fits what I described. You get mostly eateries and convenience stores, but very little retail. So for now...at least this decade, I'd completely throw out the possibility of a large number of clothing and shoe stores opening up on Woodward.

[LeannaM]

What kind of business does everyone imagine downtown? If you want to attract major chain retailers and bigger mid-high price restaurants that will sustain themselves beyond the worker population, you'll need at least 100,000 more residents downtown. That's a big number... you'd be building 20-60 story buildings on almost every block within the CBD

I know in St. Louis a few companies have set up data centers. STL's Downtown vacancy rate is about 22%. Downtown used to support a lot more people, so the power grid is there and it's underutilized, making electricity pretty cheap. The rents are fairly cheap as well. Granted, the businesses usually employ few people, but they pay rent and keep a building from going unused.

Detroit could look into some kind of data center companies. They don't employ a lot of people, but they also don't require customers coming into the building all the time. Most would probably prefer companies that bring a lot of employees and customers into the stores and on the streets, but data centers bring their own benefits.

Here's an article about data centers
http://gigaom.com/cloud/can-data-cen...e-urban-decay/

St. Louis' Downtown renovations slowed down quite a bit during the recession. Once that is over, St. Louis [[and probably most cities) could see an uptick in investment. As it is right now, both banks and people are often putting off investing in development. I would suspect that, as the economy gets healthier, investors will start spending again.

[Islandman]

The data center is a great idea. I know of a bank in Wyandotte that uses the first few floors of their office tower, and leases the rest of the floors to other companies for server farms/data centers. Given our relative rarity of natural disasters, this would be a great use of space.

[DetroitPlanner]

Economics is key here. I agree here with those who bring up demand as a major issue. Yes it is hard to find financing and you're living in a dreamworld if you think crime is not a concern.

So what can we do about this? Diversify! Detroit is starting to do this with the Quicken Companies, Blue Cross coming downtown. We need to do more than just play musical chairs because it is just as easy for suburban areas to draw business from Detroit than it is the other way around. The key here is to lift the economy for everyone and stop being such a one-horse town.

[mwilbert]

What kind of business does everyone imagine downtown? If you want to attract major chain retailers and bigger mid-high price restaurants that will sustain themselves beyond the worker population, you'll need at least 100,000 more residents downtown. That's a big number... you'd be building 20-60 story buildings on almost every block within the CBD

Presumably this scenario would involve people shopping downtown from neighboring areas as well. I would think it would be perfectly reasonable for people who live up into Midtown or Woodbridge or Corktown or east and west along the riverfront to go downtown to shop or eat if there were businesses there to provide those services.; I don't think you need everyone to live in the CBD to accomplish that. Still that is a small enough catchment area that you are probably only going to be able to support a limited amount of retail.

[bartock]

I suppose it is easy to say because it is not my money, and no offense to those who live downtown, but how much of a gamble would it be for a retailer like Old Navy to put a smaller version of their store in Campus Martius? It can start by keeping the commuter hours that exist in so many places downtown now. I think plenty of workers would go there during lunch. It is surprising to me [[and probably goes to BrushStart's first point) that no retailer has even put a flyer up just to see what would happen. The closest I guess would be CVS and the Barnes & Noble, but I think an affordable, identifiable retailer would at least have a shot.

[Planner3357]

I was in Rub BBQ the other night and found that the space to the west of it is undergoing renovation and will be a sushi lounge with the third floor being a night club. They are hoping to open in April. Also...the long awaited Shield's is coming along as I saw they installed their flat screens already.

[casscorridor]

- Downtown could support smaller corporate retailers such as Old Navy, GAP, Pier One, American Apparel and the Apple store.
- Downtown could attract one big box department store such as Target to act as an anchor.
- Downtown CBD doesn't need 100,000 more residents, but it does need 10,000 to feel vibrant and have consistant foot traffic. I think Greater Downtown [[corktown, midtown, rivertown, lafayette park, eastern market, woodbridge, midtown, new center) needs 100,000 more residents in order to feel like a coherent urban core and fill in vacant space and have foot traffic. But even the current population levels are enough to support a handful of chain retailers and a big box store that would serve the greater downtown area.

[p1acebo]

I was in Rub BBQ the other night and found that the space to the west of it is undergoing renovation and will be a sushi lounge with the third floor being a night club. They are hoping to open in April. Also...the long awaited Shield's is coming along as I saw they installed their flat screens already.

Rub Pub is amazing.

[canuck]

Yes, Bartock, I think smaller version stores from well-known retailers would definitely be a plus. Such a business could grow gradually and also the smaller store would still act as a banner recall for stores that vie in the burban malls, a sort of calling card.

All this can happen if the owners/developers act together in spite of the fact that they live in a competitive environment. There is always the fear of a Trust thing happening, but if there were a series of transparent guidelines say, that owners and renters agreed on universally; the competition would still be strong. When Hudson's was around, it acted as an anchor for the rest, folks would come from far and wide to buy furniture say, because they couldnt find that much variety in the burban malls. So apart from big stores, offices and entertainment, there must be ways of attracting and keeping folks in the CBD. The conditions that favor pedestrian flow also need to be addressed.
When the Woodward street rail happens, the retail on the avenue will come. The people mover is a good instrument for downtown circulation but is more remote than the streetrail which will create excitement.

I know that the Russell Bazaar and other venues have annual shows where craftspeople artists and engineers/inventors present their work to the public. Maybe a central venue that is not a museum, not a Cobo Hall could have punctual displays where engineering faculty students would show projects every month, inventors, artists and craftspeople show their wares. The car companies could also get in there and display some of their tech stuff. The idea is that this would happen in an area where folks congregate downtown. Make it extraordinarily well designed in an existing building, to make it a strong attraction and have high school students visit this with special bus tours. Designated city buses would bring students and special groups on pre-planned schedules. If this happened to be strong enough an attraction, the suburban schools might be showing their students that Detroit's downtown is a showcase for the arts and industry that for the most part happens behind closed doors. Again, a contemporary take on culture in the arts and industry with a Made in Detroit label, not a DIA or a museum of Industry, rather a showcase of contemporary Detroit makers of stuff...

I would also stress that new "Detroit Places of Interest" avoid being self-contained and removed from the street action. Convention halls and office buildings and Casinos are all somewhat closed to interaction. There needs to be more not less pedestrian attraction, I mean visual pull from the street. So zoning laws should be strict in that sense.

[DetroitPole]

Downtown Detroit is not a shopping destination. People in our region - in the United States, but here especially - go to big boxes and the mall for the most part, not downtowns. Add the stigma of Detroit in and you're sunk. There are still plenty of people who refuse to cross Eight Mile. The suburbanites who do like the main street-boutique shopping go to Ferndale, Royal Oak, and Birmingham, and I don't know how you'd get them to change their shopping habits and drive downtown to shop.
It is no act of God that they put the "Detroit Shoppe" in a ritzy shopping mall in a new money suburb 20 miles from the city center and not in downtown Detroit.
City residents, too, shop at the inner ring malls. The city itself is huge and many residents are closer to a suburban mall than downtown. Even greater downtown residents are no more than 10 minutes away on any number of expressways from a mall.
Parking is a big issue - sure, there is parking downtown, but in Metro Detroit, people act like it is their God-given right to park for free in a 20 acre parking lot.
I did some last minute Christmas shopping on Christmas Eve downtown and I was honestly the only person who wasn't homeless stumbling around. It was really sad.

[BrushStart]

DetroitPole, I don't think downtown needs to be a major shopping destination. Like Wolverine said, even in Chicago, 99% of the stores are not major retail stores. I think downtown's storefronts can be developed into other businesses though, such as bars and restaurants, coffee shops, art galleries, music shops, dry cleaners, movie rentals, bakeries, doughnut shops, book stores, pharmacies, etc. Those things would improve the neighborhood dramatically. In fact, if downtown could replicate the local businesses that line Joseph Campau in Hamtramck, it would be fantastic.

I don't think downtown will ever be a shopping destination until Taubman builds his big outdoor mall next to Ilitch's new ice arena. A place like that could survive in the CBD because it could capture all of the sports fans, both local and out-of-towners, in one area.

[canuck]

DetroitPole, that may be why no developer wants to venture a Detroit-centric business push. Fair enough, if that is what the mentality is, then Detroit's CBD will have to wait like a Sleeping Beauty until some smart aleck Prince reawakens it, or else a major energy crisis does. In the meantime the city needs to be protected by those who love it, and this means looking carefully at what is done to make it less car-driven and more amenable to small business implants.

What boggles the mind is that the same throw away mentality exists for high-end architecture as for the cars we drive and all the rest we dispose of without much emotion. Not a very strong case for civilization and democracy.

BrushStart, If Taubman does do a mall, one would hope he manages to connect it to downtown, maybe integrate a bunch of older buildings along a major avenue close to the new arena.

[BrushStart]

BrushStart, If Taubman does do a mall, one would hope he manages to connect it to downtown, maybe integrate a bunch of older buildings along a major avenue close to the new arena.

One can only hope.