In Detroit, Urban Flight in Reverse

Posted on July 30, 2012

After three years in the suburbs, Nathaniel Wallace, 32, bought a rehabbed loft near downtown Detroit this summer. The IT contractor paid less than $200,000 for the three-level home, which has more than 2,800 square feet of living space and a rooftop view of the Comerica Park baseball stadium. It was an easy decision, he says: “People see Detroit as the cool place to be.”

The city is almost bankrupt. It tops the FBI’s list for violent crimes in U.S. cities with populations of 300,000 or more. And between 2000 and 2010, Detroit lost 25 percent of its residents. Yet in the past several years young professionals have started rehabbing vacant lots and opening yoga studios, gradually reclaiming pockets of the city’s core. “The feeling,” says Wallace, “is that we’ve gotten to the other side—we’ve gotten past a lot of the stuff that plagued us for a long time.”

In Wallace’s neighborhood, known as midtown, 95 percent of the 5,884 housing units are occupied, more are being built, and 26 new shops and restaurants have opened in the last two years, according to Midtown Detroit, an economic development organization. A Whole Foods Market (WFM) scheduled to open by 2013 is the first national chain grocery the city’s managed to attract in years. It’s not far from the Detroit Institute of Arts, Detroit Public Library, and Detroit Symphony Orchestra.

The result: safer streets. According to the Wayne State University Police Department, which shares patrols of the area with Detroit police, major crimes in midtown have dropped 38 percent from 2008 to 2011. That compares with a 16 percent drop for the city as a whole, FBI statistics show.

Businesses with offices downtown are trying to keep the renewal going. Nine large employers, including Detroit Medical Center, Blue Cross Blue Shield of Michigan, Compuware (CPWR), and Quicken Loans have pledged $2 million a year for four years to pay employees to move to midtown and downtown. Workers get $2,500 in their first year of renting and $1,000 if they stay for a second. Those who want to buy get a one-time payment of $20,000. (The median home price was $9,500 in June, according to the multiple listing service Realcomp.) Just under 400 people are participating in the program so far, according to Midtown Detroit.

State Representative Jimmy Womack hopes the rehab efforts spread outward, where vacant homes draw drug dealers and thieves strip properties of copper pipes, furnaces, and aluminum. “We’re falling apart as a community,” says Womack, who was robbed on July 8 near his home six miles north of downtown.

“Statistically we’re holding ground,” says Detroit Police Chief Ralph Godbee Jr., “but those statistics don’t mean anything to that individual business owner who had an armed robbery or a gun shoved in their face.” Because of budget cuts, the department’s ranks have shrunk from 4,000 in 2005 to about 2,600 officers, and more cuts are expected this year. Several neighboring law enforcement agencies have pitched in to help with patrols.

Downtown resident Shellee Brooks says she’d like to move a couple miles west into a house she owns on the street where she grew up, but she isn’t sure she’d feel safe. So she’s overseeing the rehab of three homes in her old neighborhood—for the next wave of urban pioneers.

The bottom line: An influx of new residents and businesses in a revitalized area near Detroit’s downtown resulted in a 38 percent drop in crime.

By: Chris Christoff and Hasan Dudar, Business Week