Written by Amanda Maher
On September 15-16 in Detroit, ICIC will host our 11th Inner City Economic Summit, Revisiting the Promise and Problems of Inner City Economic Development, providing a firsthand, in-depth look at the private investments that are transforming downtown Detroit. At the Summit, Matthew Cullen, President and CEO of Rock Ventures, will discuss the private businesses and organizations driving the city’s development. Rock Ventures’ founder and chairman Dan Gilbert, who is also founder and chairman of Quicken Loans and owner of the Cleveland Cavaliers, began investing in downtown Detroit when many had lost hope in the city after decades of reinvestment.
For Cullen and Gilbert, it’s personal: both grew up in the area and know the city’s culture and heritage. In 2010, in the midst of an economic downturn, they relocated Quicken Loans’ headquarters, and 1,700 employees, to downtown Detroit. In 2011, Rock Ventures purchased the historic Madison Theatre Building, turning it into a collaborative technology hub to host a number of businesses. So far, Cullen has managed over $1.8 billion in investment in downtown Detroit.
Redevelopment of these sites has been strategic. Rock Ventures has invested in a narrow geographic area along the Woodward corridor and is converting a number of outdated industrial buildings into mixed-use projects that include housing, office and restaurant/retail space. Special attention has been paid to preserving the historic façades of these buildings, and downtown Detroit now offers the live-work-play environment that is attractive to many workers, but in a funky, authentic atmosphere unique to Detroit. Entrepreneurs, artists and startup companies, initially lured by the low cost of living, have slowly helped downtown Detroit prosper once again. As the buzz has grown, so has the number of companies that have followed suit.
Blue Cross Blue Shield of Michigan, General Motors and Compuware have relocated thousands of employees to downtown Detroit. Twitter opened an office in the M@dison Building, owned by Rock Ventures. Detroit Venture Partners, Skidmore Studios, Detroit Labs and Grand Circus are among the companies helping Gilbert to realize his vision of a “WEBward” corridor – the transformation of Woodward corridor into a hub for tech companies. Gas Station TV is among the most recent companies to join the migration, moving 80 employees from Birmingham to Detroit.
As smaller companies have begun to repopulate downtown Detroit, larger corporations have followed suit. Fifth Third Bank and Ally Bank are among the first financial institutions to relocate their headquarters downtown—no doubt lured by the opportunities to work with the startups and entrepreneurs fueling the core’s rebirth. “We saw it as a chance to help drive the revitalization of a major American city,” said the president of Fifth Third Bank.
A number of other investment groups have also realized Detroit’s potential. The Ilitch family, whose companies include the Little Caesars chain, the Detroit Red Wings, the Detroit Tigers, MotorCity Casino Hotel and Olympia Development, broke ground this past fall on “The District Detroit.” The $650 million project will include a new arena for the Red Wings and a mixed-use development that includes office, housing, retail and parks. This sports-entertainment district spans 45 blocks near Woodward Avenue, and will stitch together five neighborhoods otherwise divided by the Fisher Freeway.
“This project is about so much more than a world-class sports and entertainment arena; it’s about transforming a core part of our city for the benefit of the entire community. The new Detroit arena and The District Detroit will create 8,300 construction and construction-related jobs, as well as at least 1,100 permanent jobs. To date, the Detroit Downtown Development Authority has approved nine contracts worth $121 million, of which Detroit-based and -headquartered businesses have won more than 88 percent — or $106 million,” said Mike Ilitch, Chairman of Ilitch Holdings, in a statement released by his company.
Roger Penske, owner of the Penske Corporation, also wants to build downtown. Already a major investor in Detroit, he has publicly discussed the possibility of purchasing an office building in downtown Detroit and adding an automotive museum, a nod to the city’s history.
Private investment has also helped to draw public funding for infrastructure. In fact, much of the redevelopment would not have been possible had it not been for the promise of the M-1 Rail, a 3.3-mile streetcar that would run along Woodward Avenue. When the city faltered on the brink of bankruptcy, Gilbert, Penske and Ilitich spearheaded a fundraising campaign that drew $90 million in private and philanthropic contributions to offset the cost of the $137 million project. With this funding on the line, public money poured in, including $25 million from the federal government.
The M-1 Rail’s construction was structured to bring work to small businesses – work was subdivided into 45 smaller subcontracts in order to help local firms better compete against the larger, more well-established firms that typically win procurement bids of this size.
This work in downtown Detroit is only the first step in re-establishing business and investment in a 139 square mile city that is otherwise plagued by vacant homes, empty storefronts and high crime. Restoring these neighborhoods will be no small feat. “For Detroit to be economically successful there needs to be revitalization and investment in the neighborhoods as well,” said Steven Rosenthal, a principal at Bedrock Real Estate, a real estate company owned by Gilbert, which recently announced their intention to redevelop Brush Park, a vacant 8.4-acre parcel just outside of downtown Detroit. The project will include the restoration of four historic mansions, plus new retail, green space and over 300 rental and for-sale residential units.
Our Summit will provide guests with the opportunity to see Detroit’s redevelopment firsthand, with commentary from leading experts, including Matthew Cullen, and an opportunity to hear the latest thinking in urban economic development. This event is free but registration is required. Register here and view the agenda here.
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