And Still They Build in Detroit

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Faith in urban living is building

 

During Michigan’s current real estate downturn, the long-beleaguered city of Detroit has provided a rare and unexpected bright spot.

Julie Fielek, who founded her family-owned construction business 22 years ago building custom homes in far-suburban Livingston County, has been working in the city for the last few years. That work has kept her company afloat.

“I wake up every morning and say, ‘Thank God for Detroit,’ ” she said last week on the site of Woodbridge Estates, a development of single-family houses and townhomes near Wayne State University.

For decades, Detroit was known more for population flight and abandoned homes than for new construction. Today, the Detroit market is keeping some home builders and real-estate agents in business.

Sales of existing houses were up 6% in Detroit last year, compared with a drop of 14% for all of Michigan and declines of 20% or more in Oakland, Monroe and Livingston counties.

New residential construction in the city, meanwhile, is at its highest point in more than 30 years. New permits for single-family construction are more than 10 times higher than a decade ago, while the total for southeast Michigan as a whole is down more than 60% over the same period. The city of Detroit led the seven-county metro region in new residential construction in 2006, the regional planning group SEMCOG reported Friday.

Detroit issued 739 permits for new single-family houses, townhouses and multifamily units, the most of any community in the region.

The reasons for Detroit’s emergence are complex. Builders like Fielek mostly attribute the upbeat market to a desire for urban living. That trend remade downtowns from Seattle to Baltimore during the last 25 years and has finally arrived in Detroit and suburbs like Royal Oak and Birmingham.

Builders say their typical customers are empty nesters and young professionals and other people who want to live, work, shop and be entertained in a pedestrian-friendly area.

“Everybody wants walkability,” said Herb Strather, a Detroit-based developer and partner in Woodbridge Estates.

Stephen Taglione, a partner in Abbey Homes, a Bingham Farms company that is building residential units in Detroit’s St. Anne’s Gate project in Mexicantown, agrees.

“There’s a growing segment of the market that wants that in-town lifestyle,” he said.

Believing in urban living

Urban living certainly attracted C. Morgan Houston and her husband, Lorenzo, who paid about $300,000 for a home in Woodbridge Estates more than a year ago.

“We are two minutes from everything that’s happening in Detroit,” she said. “We just came from the DSO the other night. We go to the different theaters, hot restaurants all up and down. It is great. My feet don’t even have time to hurt.”

Michael Dunne, a Seattle-based investor, said Detroit’s somewhat belated entry into the urban-living trend enticed him to bankroll several projects in the city done by Detroit developer Dwight Belyue, including the @water Lofts condominium project expected to break ground on the east riverfront in the spring.

“I saw it in Seattle in the ’80s, and I thought the developers were crazy,” Belyue said last week. “Detroit may be the last big city to go through that, but it’s just following the country. Having seen it, I’m a believer.”

To meet this demand, builders have provided new niche products, such as high-end condos at the Book-Cadillac Hotel. Moreover, the houses Fielek is building in Woodbridge Estates offer more high-end finishes and amenities than the lower-priced product previously offered in the city. Her units range from about $180,000 to almost $400,000.

Trend changes in big way

Tax abatements and other subsidies that support developments in the city make them more affordable. About 80% of all certifications for Neighborhood Enterprise Zone tax abatements in Michigan are for projects in Detroit.

Then there is the pent-up demand. Having built out Detroit to its borders in the 1950s and 1960s, homebuilders left the city for 30 years to concentrate on the suburbs. From 1985 to 1990, fewer than 10 permits for new single-family houses were issued in the city.

That’s changing in a big way. Homebuilders pulled 461 permits for new single-family houses in Detroit last year, the highest total since 1971. Most projects sell out at a brisk pace.

“Demand is twice the supply right now,” said Strather, the Detroit-based developer.

Of course, building in the city comes with challenges not found in suburban cornfields.

The Woodbridge Estates project, with streets named for Motown music stars, replaced the old Jeffries housing project, which already had been built atop previous construction. Digging basements for the new houses required clearing out generations of debris, including brick water mains from the 19th Century.

“The first basement we dug,” Fielek said, “I was out of town, and my son Matt called and said, ‘Well, we’re not in Kansas anymore.’ ”

Contact JOHN GALLAGHER at 313-222-5173 or gallagher@freepress.com.

Copyright © 2007 Detroit Free Press Inc.

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~ by Keith A. Owens on March 22, 2007.

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