A State Of Disrepair: Detroit’s Forgotten Commercial Properties

From the grandeur of 1800s design to the bold architecture of the twentieth century, Detroit, Michigan, is renowned for its impressive selection of architecture. But sadly the past …

From the grandeur of 1800s design to the bold architecture of the twentieth century, Detroit, Michigan, is renowned for its impressive selection of architecture. But sadly the past 20 years have seen many of these impressive buildings left vacant and awaiting economic revival.

From shops, offices and nursing homes to theatres, train stations and temples, the total figure of abandoned and derelict buildings in Detroit currently stands at 40,000.

In a matter of decades the city declined from a thriving metropolis fuelled by the prosperous automobile industry to one of America’s most distressed and dilapidated cities. 

Destructive financial decisions, an over reliance on a single industry and leadership blunders culminated in crippling debt that led the city to file for bankruptcy in 2013.

Constituting the largest municipal bankruptcy in America, Detroit’s debt currently stands at approximately $18-20 billion and in July last year the city filed for chapter 9 bankruptcy to help the city restructure its debts.

The economic turmoil also led to demographic decline and the latest figures show that the population has plummeted from 1.5 million people in 1950 to around 700,000 today.

The rising obsession with dystopic and post-apocalyptic urban landscapes has bred a new art form called ‘Ruin Porn’ and with a growing underground following, the internet has seen an influx in websites like Abandoned America.

Founded by self-declared ‘staunch preservationist’ David Kohrman, Forgotten Detroit is his ode to the past, opposing demolition and new development in favour of preservation and renovation.

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Stating on his site that his intent ‘is to preserve the memory, and hopefully shape opinions in favour of the preservation of these landmarks’.

To many in the commercial real estate industry, abandoned buildings are representative of failure, however, to opportunist investors they are a potential goldmine.

This has been reflected in the influx of interest in downtown Detroit from both local and out of town investors.

Dubbed Detroit’s ‘Dinosaur Buildings’, the city’s collection of giant, empty buildings equate to well over 1 million square feet – some of which have been vacant for decades due to the immense costs required (tens of millions in upfront funding).

Brian Holdwick, executive vice president of the Detroit Economic Growth Corp (DEGC) told Detroit Free Press:

"The market I think is right there for smaller mid-sized projects … It’s the large dinosaur buildings that there’s (no financial tools) there to address."

But for some of these larger buildings, there has been another story; recent renovations include The Westin Book Cadillac, the Doubletree Fort Shelby, the Broderick Tower and the David Whitney Building.

Without a doubt, taking on one of these buildings and redeveloping it is a mammoth task and in many cases financing is required to close the gap between the costs that lenders are willing to lend and existing funds.

Financial help can be found from the Downtown Development Authority and other incentives, however, as the economy continues to improve ‘the funding is harder to come by, mainly because state lawmakers have significantly cut various tax credit programs and incentives available to local agencies such as the Detroit Economic Growth Corp’ according to the Detroit Free Press.

For projects such as the Broderick Tower it is estimated that the financing came to approximately 50 per cent of the total cost, however, the average is now predicted to be at around 20 per cent to 25 per cent, according to Holdwick.

Just one of the key investors in downtown Detroit with over 80 property investments is billionaire and businessman Dan Gilbert. The latest addition to his five year investment spree is the famous 38 storey Book Tower and adjoining 13 storey Book Building on Washington Avenue which he bought last year for a reported $30 million.

Designed by architect Louis Kamper, the man who gave Detroit its reputation of ‘Paris in the West’, the Book Tower was his first commercial design and the tallest and grandest building in Detroit. 

President of Beal properties, Steward Beale estimates the cost of renovating the Book Tower at approximately $140 million as Gilbert plans to transform the famous landmark and surrounding buildings into a ‘game changing mixed use development’ with 50,000 square feet of commercial space and 275 lofts and parking.

The recent developments have been regarded by many as a blessing in the wake of bankruptcy with the recent rejuvenation providing jobs and putting money back into the city’s economy. However, The New York Times describes Detroit as a ‘city rescued from financial collapse but still struggling’.

The city’s bankruptcy came to a close at the end of 2014 but only time will tell whether the investment momentum will continue or run out of steam.


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