By Veronica Grecu, Associate Editor
More than one year has passed since the U.S. Department of Housing and Urban Development (HUD) removed Detroit from the “troubled designation list” due to improvements in the housing status and added it to the list of standard performing cities. Detroit’s revival plans have been focused around two major incentive programs – Live Downtown and Live Midtown.
Backed by some of the city’s most prominent companies such as the Detroit Medical Center, Henry Ford Health System, Blue Cross Blue Shield of Michigan, Quicken Loans Inc., Strategic Staffing Solutions, DTE Energy, Compuware Corp., Wayne State University, the programs have been offering financial help to employees wishing to relocate downtown or to the Corktown, Eastern Market, Lafayette Park, Midtown and Woobridge areas.
Under these programs, applicants would receive $2,500 in annual rent assistance or $20,000 as down payment on a home purchase. According to MLive.com, about $2 million has been spent so far and sources estimate that over the next four years the programs will spend an additional $8 million. With almost 700 young professionals having already received housing incentives, occupancy levels in the Downtown and Midtown areas of Detroit have reached unprecedented levels (97 percent and 96 percent, respectively).
Vacancy rates are expected to tighten even more now that Auburn Hills, MI-based Chrysler Group LLC has opened its new Detroit office at 719 Griswold Street in the former Dime Building, which is owned by Dan Gilbert’s Rock Ventures. Chrysler Group leased nearly 33,000 square feet of space on the building’s top two floors to accommodate nearly 70 employees from the company’s Great Lakes Business Center in Auburn Hills, as well as a large training room, a state-of-the-art board room and a kitchen. The newly relocated staff adds to the company’s almost 4,000 existing employees in the City of Detroit, where Chrysler operates the Jefferson North and Conner Avenue Assembly Plants and the Mack Avenue Engine Complex on St. Jean Street.
A recent report by Marcus & Millichap estimates that vacancy rates in Metro Detroit will fall 90 basis points to 4.5 percent by the end of 2012 as new job opportunities and low rent prices will persuade young professionals to relocate to the area, while new construction projects will keep a slow pace.
Click here for a more detailed report on Detroit multifamily activity.
Chart courtesy of Marcus & Millichap