Detroit's development rush is being sparked by a tight multifamily market, where the vacancy rate is around 5 percent, and limited availability of large blocks of office space that don't require substantial upgrades or renovations.
At least $5.4 billion in real estate development and redevelopment projects are underway or proposed in and around downtown Detroit the next three years, according to report recently released by an international real estate firm.
The report, prepared by CBRE Inc., says that figure includes 6,091 multifamily residential units, 1,196 new hotel units and 2.1 million square feet of office space.
Of the $5.4 billion, $4.23 billion is in mixed-use building construction and conversion. Multifamily construction makes up $892.9 million, while office ($202.6 million), hotel ($100 million) and retail ($4 million) round out the pack of more than 70 projects under construction or proposed.
The development rush is being sparked by a tight multifamily market, where the vacancy rate is around 5 percent, and limited availability of large blocks of office space that don't require substantial upgrades or renovations. Much of the multifamily demand is being driven by downtown workers who want to live near their offices.
John Latessa, president of CBRE's Midwest Division, said that while the numbers in some sectors "jump off the page," it's important to remain cautious.
"There has been so much interest in the Detroit markets in a broad range, from retail to residential and office," he said. "The story is still unfolding, and this is to capture where we have been to date, at least through 2020."
He continued: "The other big question that everybody asks is whether it's sustainable." Experts will have to revisit "these project numbers and counts and these various buckets (residential, office, retail and hotel) to be sure they are carrying on."
Samuel Beck, the CBRE research coordinator who authored the report, said data was gathered from news stories and other sources and entered into a spreadsheet to come up with the figures used. The report lists more than 70 projects in varying stages of the development process.
A substantial portion of the investment is being led by Dan Gilbert, founder and chairman of Detroit-based Quicken Loans Inc. and Rock Ventures LLC, and the Ilitch family, which is working on the multibillion dollar District Detroit project spread over more than 45 blocks with a variety of office, residential, hotel, retail and other uses. Other prominent developers including The Platform LLC and The Roxbury Group have made headway with projects in Midtown and the New Center area, among others.
Source: Crain's Detroit Business