Multi-billionaire Dan Gilbert, the founder and chairman of mortgage lending giant Quicken Loans,
is in the middle of one of “the most ambitious privately financed urban reclamation projects in American history,” according to a recent New York Times profile. After years of decay, he’s trying to revitalize two square miles in the heart of Detroit. Gilbert has already sunk $1 billion into the project, bought some 3 million square feet of real estate, and he’s only just getting started.
In part, it’s an intensely personal project. Gilbert grew up outside of Detroit, and heard constantly from parents and grandparents how great the city was in its heyday, only to see it get worse and worse.
On the other hand, should his billion-dollar gamble pay off, he could make a truly spectacular profit.
Why he might succeed, despite the odds
Because the city’s in such bad shape, Gilbert and his partners have almost free reign to carry out their vision. The city’s mayor, Dave Bing, told The New York Times that his job “is to knock down as many barriers as possible and get out of the way.”
Through his real estate company, Bedrock, he’s renovating buildings and aggressively courting tenants.
He’s already brought 80 startups into buildings he owns, and has moved 7,600 of his employees downtown.
People who have worked with Gilbert are enthusiastic.
“We have 12 people working for Detroit startups and organisations with another 15 or so on the way this year,” Venture For America Founder Andrew Yang told us. “We wouldn’t be there if not for Dan and his efforts to revitalize the city. He has single-handedly turned it into an environment where anything seems possible. It’s pretty amazing what you can with both will and resources, and he’s got plenty of both. He’s giving rise to a whole new vision of Detroit.”
To combat the city’s dicey reputation, Gilbert has built a command centre in one of his company’s buildings where security guards watch live video feeds.
And he’s participating in massive public works projects, including a light rail system underwritten by him and other business leaders.
If he succeeds, and manages to boost property values, he could make an incredible profit. Nothing illustrates that better than his purchase of The Dime Building. It was designed by Daniel Burnham, the architect behind the iconic Flatiron building. The 330,000 square foot building cost him only $15 million.
Massive obstacles, and one big problem
It’s difficult to overstate how difficult a job Gilbert’s taking on. The city’s been a poster child for poor management, corruption, and decline.
Large parts of the city are empty or burned out, and as many as 8,000 homes are abandoned each year. At rush hour, even the streets of downtown are pretty much empty.
The city’s population has declined from 2 million to around 700,000, spread thinly over a massive area. It has $14 billion in debt, and its finances are so bad that the state of Michigan appointed an emergency manager.
And even if Gilbert succeeds, the area’s economy is still fundamentally weak. Even as the auto industry starts to recover, there are few other positives, and most industrial jobs are gone for good.
Additionally, some worry that Gilbert’s narrow focus will create, at best, a tiny oasis in the safest and most developed part of an incredibly poor city. There’s a massive hunk of the population and land that he’s simply not addressing.
In some ways, Gilbert’s efforts mirror Tony Hsieh’s $350 million effort to rebuild Downtown Las Vegas. But as hard hit as that city was by the collapse of the housing bubble, it hasn’t seen anything like the half century of decline in Detroit.
Gilbert may manage to change downtown for the better, and expects significant results in the next four or five years. But if it takes more than a billion dollars and someone as committed as Gilbert to even begin fixing two square miles.
What would it take to fix the remaining 137 square miles?
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