Archived

This topic is now archived and is closed to further replies.

Allan

Developers see downtown nearing tipping point

Recommended Posts

Allan    0

Developers see downtown residential nearing tipping point

Housing construction in Detroit is approaching a tipping point that will drive more residential and commercial projects, developers and real estate watchers say.

"I think we're closer than we've ever been," said Detroit developer Peter Cummings. "There's a real market for new housing in this city at a more than 1,000-unit-a-year clip."

Andy Farbman, executive vice president of the Farbman Group, said that getting 5,000 to 10,000 new housing units would provide the critical mass to inspire more private development with less government assistance.

"It's easier to grow from a position of strength," he said. "We've got a lot of vibrant pockets. ... Hopefully it just continues to expand."

With 991 new housing units in 2003, Detroit was the third-most-active community in the region, according to the Southeast Michigan Council of Governments. That includes all types of housing from single-family homes to loft apartments.

"Things are starting to take place. Entrepreneurial investors are seeing opportunities," said Matt Cullen, general manager of economic development and enterprise services for General Motors Corp.

The developers of new housing projects say sales have exceeded expectations.

For example, the owners of the $18 million conversion of the Kales Buiding from office space to downtown apartments have already taken several deposits on apartments - even though the project won't be ready until September. Brad Egan, land development manager for Ferlito Construction Co., one of the project's developers, said that getting past the initial round of pioneering projects will help clear the way for more housing construction.

For example, when the Kales project was seeking financing, the group had trouble getting a fair appraisal because there wasn't another high-rise conversion project with which to compare it. Now, other developers can point to that project's success, Egan said.

"We've got enough historic buildings that we could renovate," he said. "Once we reach that critical-mass point, you'll see a lot of younger people moving into the city."

On the riverfront, Harbortown recently reported it has sold 190 out of 272 units in two existing apartment towers converting to condominiums. It also is getting strong interest for a four-tower, $300 million addition planned for Harbortown. The company increased the size of the planned addition because of the strong demand.

"We've never sold anything at this pace," said Jamie Murray, president of Farmington Hills-based Slavik Murray Investment Co. "We haven't even tapped this market yet."

Bernie Glieberman, president and CEO of Novi-based Crosswinds Communities Inc., another active Detroit builder, said the company's market studies from a few years ago found demand for at least 15,000 more people to live downtown.

"It's a long way from its peak," he said. But, Glieberman said, Detroit has reached an important point where many potential buyers consider the city a "fashionable or cool place to live."

What can be frustrating about Detroit's residential and overall resurgence is that so far it tends to be isolated in islands, said Eric Siegel, vice president of investment services at Trammell Crow Co.'s Detroit office.

"You have pockets of momentum, and we're sort of at a point where you want to connect the dots," Siegel said.

Projects that tie neighborhoods together, such as streetscaping and riverfront improvements, will help fill the gaps, he said.

"One by one, our neighborhoods are going to reach a tipping point," said Cullen, who pointed to areas such as the cultural center and riverfront as examples.

On the riverfront, Cullen used the example of a request for proposals out for GM land east of the Renaissance Center. Several years ago that would have brought little attention. Today, there is tremendous interest, he said.

Continued improved collaboration between nonprofits, corporations and city and county agencies also is key, Cullen said. He cited the collaborative work on the Campus Martius Park as one example.

"I think that's what's starting to move the needle on these things," he said. "This level of cooperation that is starting to show itself - we need to push for that."

Still, developers consider privately initiated housing the key catalyst, even greater than public projects, retail or restaurants.

"If the residential will work, everything else will work," Cummings said. "Great cities are great because of a 24-hour-a-day population."

Jennette Smith: (313) 446-0414, [email protected]

http://www.crainsdetroit.com/c gi-bin/article.pl?articleId=25 107&a=a&bt=real+estate&searchR esults=Q6hE43j7oTCeE&arc=n

Share this post


Link to post
Share on other sites



  • Recently Browsing   0 members

    No registered users viewing this page.