http://www.guardian.co.uk/world/2013/apr/15/detroit-precarious-recovery-dan-gilbertDetroit's precarious recovery: 'It just feels like something is happening here'Dan Gilbert has a vision for his city's future – and the money to fund it. With tech companies moving in and a new financial controller in charge, can downtown Detroit help save the city?
Sandra Patterson's face lights up at the mention of Dan Gilbert. She works the car valet desk at Detroit's Greektown Casino Hotel, which the entrepreneur has just taken over. "It's like he's sprinkling rose petals all over my city," she says beaming. "He's really rooting for Detroit."
And how. A self-made billionaire Gilbert, 51, was born and raised in Detroit. His father owned Saskey's, a bar in the city, and his grandfather ran a car wash. In the 1990s Gilbert and partners including his brother Garry started a mortgage business that became Quicken Loans, now the US's largest online retail mortgage lender.
Three years ago as Detroit seemed on the edge of destruction he moved his headquarters downtown and began snapping up swathes of real estate. His Bedrock property management company owns 22 buildings with more than 3m square feet in the city. He's attracting big names back into the city. Gilbert convinced Chrysler to take office space downtown and renamed a building after the car firm; he recently toured the city with Microsoft's Steve Ballmer. He's effectively created a business campus in the heart of a city some had written off as dead. A death that had been a long time coming.
Detroit had a population of nearly 2 million in the 1950s, and now it's below 700,000. People and their money fled to the suburbs decades ago. The city is struggling with $14bn in long-term liabilities, falling tax revenues and declining services, 60% of its children live in poverty. It's a decline that has been a long-time in the making.
"People around 55 and down have no memory of what people call the good Detroit. You'd hear from your parents and grandparents how incredible Detroit was," says Gilbert. For his generation those golden years were just stories. "The 1967 race riots are my first memories," he says.
Gilbert's vision of Detroit's future is of a city filled with young people from local universities, the majority of whom now skip town on graduation. This summer he'll have 1,100 interns working downtown, and he's convinced many of his tenants to follow suit. The company gives employees who buy property in the city $20,000 on condition they live in the city for five years. Occupancy rates downtown are close to 100%.
"Detroit has the bones, the infrastructure, the people, to be a very special city. We have to do a lot of clean up then we have to start playing offense. The part that is difficult is here already. Look at these buildings. It's laid out well; there are parks. It's like a lot of great hardware with no software," he says.
Gilbert is Donald Trump, Andrew Carnegie and Robert Moses rolled into one and could well prove just as controversial. Much of the city remains a bombed out, burned up mess. While something, anything, is better than nothing for many, not everyone is happy that Gilbert and Mike Ilitch, billionaire founder of Little Caesars pizza and owner of the Detroit Tigers, have been snatching up buildings like they are playing real life Monopoly.
In a recent New York Times op-ed Mark Binelli, author of Detroit City Is the Place to Be: The Afterlife of an American Metropolis, warned the city was ceding power to "an unelected oligarchy, whose members might, no matter how ostensibly well intentioned, possess questionable ideas about urban renewal". Others worry that in a city that has proven adept at creating ghettos, Gilbert is creating a yuppie enclave, walled off from the rest of the city.
The sweep of Gilbert's influence is dizzying. Bruce Schwartz, Quicken's "Detroit relocation ambassador" has known Gilbert since childhood. "He was reading money magazines in the fifth grade," he says. As he gives me the guided tour of Gilbert's empire Schwartz looks like a band leader from some late night comedy show in his pork pie hat, black baseball jacket and glasses that turn to shades whenever we step outside. Everyone knows him, and he knows everybody. He rattles off the names of big brands looking at Detroit real estate. Nike are thinking of opening a Nike Town, and Aloft, Starwood hotel's hipper brand, have bought a building; Shake Shack, the phenomenally popular New York burger restaurant chain, is considering opening a venue.
We walk past the abandoned Metropolitan Building on John R Street, a potentially magnificent 15 story gothic revival building finished in 1925 abandoned for decades and covered in graffiti. "The city will give us that," says Schwartz. "We could knock out the bottom floors, open them up to the alleys behind, put in some bars, some seating. We could build lofts, office space." How many other major cities allow such flexible city planning?
Just up the street from the Metropolitan is the M@dison building, home to a new generation of Detroit-based tech startups. The bright, cool warehouse is papered with scenes of Detroit in its heyday and packed with 20 somethings determined to make the city a new tech hub.
Josh Linkner, CEO and managing partner at Detroit Venture Partners, has backed 17 of them so far. Another venture backed by Gilbert, DVP was only the second tech-focused venture fund in the city after the car giant's GM Ventures when it launched in 2010. Now there are 12 venture funds chasing Detroit talent.
"You don't need a Silicon Valley Zip code to build a tech company," he says. Costs are half the price in Detroit than in the valley, there's talent galore coming out of the universities and proximity to some of the biggest consumer brands in the world, he says. "A hundred years ago Detroit was the Silicon Valley of the US, this is where technology was made. We need to get back to our entrepreneurial roots," says Linkner.
Twitter has taken space in Detroit. Uber, the smartphone-based taxi service, just took space in M@dison. Uber lets people track a taxi's arrival on their phone and rates drivers. No sooner had they announced the service was coming to Detroit than they had signed 1,000 new accounts. "It just feels like something is happening here, we wanted to be in early," says Ryan Graves, Uber's vice-president of operations.
There's so much potential, says Gilbert. Unlike most American cities getting to Detroit's waterfront doesn't involve crossing a dual-carriage highway. The city appears cooperative, if you have the right connections, and the federal authorities are taking notice. In January transport secretary Ray LaHood, on his way to the city's famous auto show, gave his blessing, plus $25m, to the long-delayed M1-Rail project that will carry people along Woodward Avenue, the city's main street downtown. The rest of the $140m cost is being footed by local businesses, including Gilbert's.
It's like Sim City but with real buildings and people. It's hard not to get swept up in the enthusiasm but while downtown has undeniable changed already, a lot of these plans are still just that. Woodward is a trail of closed shops, abandoned plus sized ladies footwear, a wig store, a pop up shop selling Detroit t-shirts that's open a few days a week. Strategically placed photos and art conceal some of the emptiness but after six when the workers have gone home, downtown Detroit still looks like a ghost town. Drive a little further and you are confronted by the fact that huge swathes of Detroit are dead – scary abandoned lots, burned-out houses. It's too early to say whether downtown's lights will shine for those living outside their golden circle.
Last month Michigan governor Rick Snyder declared Detroit was in a state of emergency and handed its financial future to a Kevyn Orr, a Washington lawyer who helped car giant Chrysler through its bankruptcy proceedings. Orr will have sweeping financial powers to slash budgets and services that will no doubt make life harder for those further down the economic ladder in a city where 60% of children live in poverty.
Gilbert thinks Orr's appointment is a turning point for Detroit. "I'm a big believer," he says. "He is finally going to do what needed to be done if not in the last several years then in the past decades. It's essentially good news for the city because it means this period is coming to an end."
Part of the problem he said was that until now no one even had a real grasp on how bad the city's financial position was. "The appointment might highlight the problem, but it didn't create it," he says.
For Gilbert Detroit's future started to turn four years ago. "There's a Time magazine cover October 2009 that says The Tragedy of Detroit. It show some of the ruin porn (as locals refer to all the photos of the burned-out city). To me that was the bottom." GM and Chrysler had gone bankrupt and were – as it was subsequently proved – on the way to recovery. "The city stuff took a little longer, unfortunately," says Gilbert.
For Gilbert, tales of Detroit's golden years were just stories. 'The 1967 race riots are my first memories,' he says. I catch up with Justin Duncan, real estate analyst at Friedman Integrated, at the launch of Opportunity Detroit, a Gilbert-backed plan for revamping downtown. An audience of some 400 business and civic leaders under the auspices of the civic group Downtown Detroit Partnership had just been presented with the outlines of a new Detroit with Parisian-style sidewalk cafes, pedestrian plazas and walkways. "We're all in," Gilbert tells the enthusiastic crowd gathered at City Theatre, across from the Detroit Tiger's baseball ground.
Duncan, 29, is cautiously optimistic about the plans but says what the city needs most is people. "The fact is this city shuts down at five. On game days, it's packed. Every other day, it's empty," he says. Gilbert agrees that unless the city can achieve density, the plans won't work. "Density, connections, collaborative stuff. That's what matters. Otherwise things get diluted. It's like throwing stuff in water," he says.
Duncan, now doing a masters in urban planning at Wayne State, also worries that the city could repeat mistakes from the past. "This city has a history of segregation. Areas are defined by their population. Black people live here, Irish people live there," he said. There's a risk that will happen again, he says, but he's hopeful a new generation of urban dwellers will break that mold. "People won't settle for that white picket fence in the suburbs anymore. They want to live in urban areas. They want diversity," he says.
"We are not saying this is the perfect plan. We have spent a lot of time on this project," says Gilbert. "I don't care who you are how big you are or how much money you have, you could never do this alone. Someone could give you all the money in the world and you still couldn't get it done. You need people, in business, education, in government."
"People look at Dan like he has the answer to everything. He can't do everything. He can do what he does very well, I can do tech startups – that's what I am good at, but we need more people to do other things," says Linkner.
Gilbert himself lives outside the city. He has five children in the schools system, and downtown Detroit isn't equipped to handle that. But he's looking at buying an apartment.
"I might be the first guy in the world to get a second home in Detroit," he says. There are a lot of people – with a lot of money – hoping he won't be the last.
