Rock-Bottom Real Estate Creates Opportunity in Detroit

Detroit image via Shutterstock

Detroit image via Shutterstock

Jerry Paffendorf and Dan Gilbert have radically different visions of urban renewal, but both seek to leverage the depressed Detroit real-estate market to spur entrepreneurship and opportunity. Paffendorf, a refugee from the Silicon Valley startup scene, created a website called “Why Don’t We Own This?” which offers prospective buyers an information-rich online map of auction property. The idea behind the site is to encourage innovators to buy and renovate inexpensive properties to use for creative or entrepreneurial endeavors. Paffendorf renovated one of his own properties to create a performance space called the Imagination Station. As if to underscore the blight of widespread arson that continues to afflict Detroit, the house was recently gutted in a fire. But Paffendorf (who appeared last year in a video tour of Detroit with Techonomy contributor Erick Schonfeld) continues to work with his startup, Loveland Technology, to help revitalize Detroit’s landscape.

Meanwhile, Gilbert, the founder of Quicken Loans and a speaker at the inaugural Techonomy Detroit conference, moved 1,700 of his employees to downtown Detroit in 2010, making him the city’s third-largest landowner. “We always said to ourselves we’re not going to move down here just because we want comfortable office space. We want to make our mark on the entire area,” said Gilbert in a recent Fast Company piece about Detroit movers and shakers. Gilbert went on to explain his approach to using real estate as a linchpin for bringing back Detroit:

“At the time, real estate prices were so low that it was what I’d call a skyscraper sale. We picked up one, a beautiful building that needed a lot of work, for $8 a square foot. That’s ridiculous! In New York, they rent for $90 a foot. Since we needed space, we went on a buying spree.

“We’re trying to recruit companies and create a downtown retailing experience. Chrysler is here, Twitter has come, Blue Cross Blue Shield has moved several thousand people here. We’ve got lots of interest from restaurants. We’ve got a major New York City coffee shop opening. We’re not doing this in a hodgepodge fashion.

“As the commitment to downtown grows larger, everything becomes easier. It’s inch by inch, brick by brick. The more people come in, the more difficult it is for skeptics and pessimists to have a credible position. We offer a lot of internships—600 interns from across the country. You can intern in Chicago or New York and do fine. But if you come here, you have an opportunity to affect the outcome. That is a big selling point for this generation.”

Fast Company reports that Gilbert has invested over $1 billion in downtown Detroit, with over 60 companies moving into his buildings. A “creative corridor” is sprouting up between downtown and Midtown, with artists and entrepreneurs pioneering a rough-and-tumble alternative to Brooklyn and Austin. Gilbert’s efforts may lay the groundwork for grassroots innovators like Paffendorf to rebuild Detroit’s Imagination Centers.

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