Downtown Detroit is projected to enjoy $5.4 billion in capital investment between now and 2020, with more than 6,000 new apartment units, 1,200 new hotel units and 2.1 million square feet in new office space in development.
The figures are from a CBRE Group Inc CBG report that identifies job opportunities, a limited supply of the kind of real estate that’s in demand, and public and private investment as key drivers of development in Detroit’s core.
Tech firms are behind much of the city’s employment growth, research coordinator Samuel Beck said in the report issued last month.
“Their expansion is increasing the demand for creative and innovative office space throughout the [central business district] and Midtown areas,” Beck said.
Gilbert, Ilitches At The Forefront
The CBRE report identifies Quicken Loans Chairman Dan Gilbert and the Ilitch family — the owners of Little Caesars Pizza and the Detroit Tigers — as the primary players in Detroit development.
Gilbert’s companies own more than 80 properties and represent an investment of more than $2.2 billion, Beck said.
The Ilitch family’s District Detroit development, centered around the soon-to-open Little Caesars Arena, is an investment that’s expected to total more than $2 billion, Beck said.
The arena will be the new home ice for the Detroit Red Wings once it opens later this year, as well as for the Detroit Pistons, pending NBA approval of the basketball team’s move back to the city from suburban Auburn Hills.
CBRE estimates that the QLine, the 6.6-mile streetcar line that went into service May 12, will result in $7 billion in economic development over the next decade.
The development highlighted in the CBRE report stands in high contrast to conditions in the city outside of downtown and its surrounding neighborhoods.
A Brookings Institution study released last year found that, following the Great Recession, metro Detroit has the highest rate of concentrated poverty in the nation.
Detroit exited a $18-billion bankruptcy on Nov. 7, 2014 when then-U.S. Bankruptcy Judge Steven Rhodes approved the city’s plan of adjustment.
Real Estate Numbers Trending Up
As companies such as Quicken Loans — and Benzinga — have relocated to downtown Detroit, the supply of prime office space has fallen, according to CBRE. The firm predicts that the environment of higher lease rates, lower vacancy rates and a dearth of large contiguous spaces could lead to “a plethora” of new office construction.
“With the vacancy rate declining over 1,300 basis points and with nearly 2 million square feet of positive absorption since 2010, the submarket boasts higher asking lease rates than that of the suburban submarkets,” Beck said.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.