Reflections on Two Days in Detroit

Detroit-

I've spent the last 2 days on a comprehensive tour of Detroit, focusing on how to revive decaying industrial towns. I'm going to quickly write down my quick impressions and thoughts while they're fresh. I'm not pretending these ideas are new, nor are they unique. The story has been told by others.

The abandoned Detroit Train Station

Detroit has been decaying for decades. It is clear that it has become a 'hollowed out' city. Whereas the City of Detroit once held around 2 million people in its heyday- the 1950s- today there are less than 750,000. While this pattern is familiar in inner cities around the country, there's nowhere I've seen that has had a worse time of it than downtown Detroit. This depopulation has been accompanied by a de-industrialization that means there's no jobs downtown. Whereas cities like New York or Washington DC retained the jobs downtown, even as the middle class fled to the suburbs, Detroit lost its jobs as well as its people.

Of course, many rustbelt cities felt the same loss of heavy industry, but Detroit's seems worse because it was accompanied by poor planning decisions and a counterproductive rivalry between the suburbs and thew inner city.

Longstanding racial issues mean that decisions like Chrysler's move from downtown Detroit to Auburn Hills, 30 miles outside of town, take on more significance than just a business decision. Likewise, it would make sense to rationalize the bus systems by merging the City of Detroit system with the SMART bus system which serves the suburbs and the central city, but decades of grievances and bureaucratic inertia seem to have conspired against any rational action. There seem to be many more examples.

4 years ago, in 2008, these problems all came to a denouement with the collapse of the big 3 car companies: GM, Ford, and Chrysler. Although they all survive, and Ford never went into bankruptcy, all three faced a similarly impossible business environment. Their profitable models, large trucks and SUVs- the only autos which they had a clear advantage over imports- became unattractive to American consumers as gas prices shot past $4 per gallon in the early part of 2008. Then, the credit crisis destroyed the remaining spending power, and total vehicle sales in the US dropped below 10 million per year. Downtown detroit had already been decimated, but this dealt a blow to the whole region.

Today, 3 years after the CEOs of Ford, Chrysler, and GM had to drive to Washington to ask for a bail-out, the industry seems in better shape, but it remains unclear if it is sustainable in its current shape over the long term. It does seem, however, that Detroit itself has learned a lesson. A combination of investors, foundations, and individuals are trying to pull Detroit out of its tailspin. The evidence I've seen is promising.

As I wrote in a blog post yesterday, Quicken Loans is trying to remake downtown Detroit, along Woodward Street into the main street that it should be. Right now, it is characterized by empty storefronts, vacant lots, and decrepit buildings. But- that means they are cheap.Bedrock Real Estate, a venture spearheaded by Quicken's owner Dan Gilbert, is buying up everything it can fronting Woodward. This will give them the ability to remake the street into their own image. They claim to want 'characteristically Detroit' businesses to move in. And, because they will own the property, they'll have the ability to pick and choose. This model for urban redevelopment is more sustainable than government-led development because they can follow a single vision instead of dealing with the problems of any government.

In Midtown Detroit, a different set of actors are pushing redevelopment. Here, a couple of miles further up Woodward, the development is being spearheaded from a combination of charitable foundations, cultural institutions, and non-profit business incubators. Using Wayne State University as an anchor, they have pushed a style of development that looks likely to yield a more 'funky' atmosphere than downtown. This area has more of a feeling of Williamsburg, Brooklyn to Downtown's Times Square feel. Non profits like Tech Town and the Green Garage are succeeding in helping entrepreneurs start new companies while the Midtown Corporation is trying to seed a new cultural district. They've successfully filled the available housing and retail options, but they're still left with many vacant lots. Unlike elsewhere in Detroit, where old buildings can be repurposed, much of midtown will require new growth in order to fill-in the rest of the district.

Unfortunately, the coming successes of theses areas is not a model that can be replicated across the entire city. There is simply never going to be enough people to fill the city. The truth is that Detroit was built in the 1950s as the city built by cars, and built for cars. Unlike the old pre-industrial towns like Philadelphia, Baltimore, or San Francisco, there was never the density of a vibrant urban core to fall back on. Detroit was built so that every factory worker could be paid enough to buy his own car, and ultimately his own house, with a yard. But, when the jobs went away then people started to leave, and started a downward cycle. It drove down home values, down to the point where a house in much of Detroit, only miles fromWoodward Street, is worth more as scrap than as a place to live.

We drove through an area near eastern market, and it was unbelievable. Mixed in with boarded-up houses and burned-out shells there were isolated houses standing alone. They didn't exist in pockets- instead, they were seemingly random as to which houses would remain, and which would be ground into the dust of the encroaching urban prairie. You cannot believe that this was once a great American city.