Corktown's expectations, rents rise with depot purchase
When Greg Mudge opened his deli 10 years ago in Corktown, he doubted anything would happen with the vacant Michigan Central Depot that towers over the neighborhood. Now that Ford Motor Co. is planning to renovate the old train station and occupy it in 2022, he wonders what will happen when his lease expires a year later.
“We’ll ride it out,” the owner of Mudgie’s Deli & Wine Shop on Porter Street said. “In my head, I figure, if what Ford says will happen does, then the rent increases won’t matter. I’m not worrying about it. In the coming months, I’ll enjoy the construction business.”
As Corktown renters wait to see what happens in Detroit’s oldest neighborhood over the next few years, property owners have seen increases in their land value since rumors began last fall that the Dearborn automaker might be their new neighbor, according to real estate experts.
On June 11, Matthew Moroun confirmed Ford had purchased the building from his family. A day later, Dominick Procopio of Re/Max listed an 8,712-square-foot lot at 2100 15 St. neighboring the train station for $2 million. That’s nearly five times the $420,000 Cobblestone Detroit LLC of New Jersey paid for the property in June 2017. Procopio said the owner of the land had refused earlier offers from Ford and the Morouns to buy it.
“I’ve gotten calls from someone who owns diamond mines in Africa, people on Wall Street, and a South American commodity investor,” Procopio said, adding that he’s received a half-dozen calls about the property from investors. “There’s a voracious appetite for investors who are trying to get into the city from all over the world.”
High demand for commercial and residential properties has tripled prices in Corktown over the past five years. The historic community has benefited from downtown’s revitalization and become a popular spot for hip bars and independent restaurants, despite no major anchor to draw patrons.
That’s about to change. With Ford now planning a 2.1 million-square-foot campus in Corktown, speculators and developers already are looking to invest. Increasing prices, however, may threaten current residents and tenants in a community long considered a stable home to members of the working class.
“Everybody wants to live in Corktown,” said Emma Kinnison, a real estate agent for O’Connor Real Estate owned by Ryan Cooley. Cooley helped open Slows Bar BQ, which often is credited with kick-starting Corktown’s resurgence. “People are actively looking for what’s available.”
Prior to Ford’s acquisition of the depot, retail rents hovered near $20 per square foot, up from the mid-teens a few years before. Now, rents are rising above $25 and approaching $30 per square foot, depending on the space’s condition, said Ben Rosenzweig, a retail broker for Colliers International in Detroit. If the market continues to do well, he said, that could rise as new construction projects open.
Bill Swanson, Kinnison’s colleague at O’Connor, said Corktown has seen a bump in prices as commercial speculators take interest in the area following Ford’s announcement. The Blue Oval plans to open retail space in the train station’s first floor and fill the former office tower with 5,000 workers, half of whom would come from Ford’s Dearborn campus. Swanson said he expects price increases in 2022 when the automotive company plans to open the old depot.
“That’s 5,000 people,” he said. “Many are going to need a place to live.”
Residential rents have risen in the community between $100 to $200 every year for the past five years. Properties typically go to the highest bidder within a week, Kinnison said.
A one-bedroom recently went for $1,200 per month and a two-bedroom for $1,600, though Kinnison said it probably could have gone for $1,700 if the owner had insisted the rent not be set “too high.”A two-bedroom renovated apartment made available last week was asking $2,000 per month.
Paul Ryder, owner of PJ’s Lager House on Michigan Avenue, bought his 4,800-square-foot bar and music venue in 2007 for $350,000. Now, the 64-year-old said he would pack up and retire if someone wrote him a check for $2.2 million.
“A lot of people said I was out of my mind when I bought the building,” Ryder recalled. “‘It needs too many repairs. The market isn’t there.’ Realistically, I got a pretty good bargain.”
Now the area should attract Ford suppliers. The middle-class workers the automaker draws would also want grocers, restaurants, entertainment venues and good schools.
“The mixture is younger, more advanced, tech-savvy,” said Jeff Holzmann, managing director at iintoo, an investment network. “They want to work in a cool, hip building that’s easy to get in and out of.”
Some developers got an early start. Construction began in May on Larson Realty Group’s $30 million project on the former site of Tiger Stadium called The Corner. Offering 111 residential units and 26,000 square feet of street-level retail, the development would set aside 20 percent of its available units for those earning less than 80 percent of the area’s medium income. Sixty percent of the retail space would be available at 50 percent of market rental rates.
Billionaire Anthony Soave’s Elton Park project at Michigan and Trumbull avenues is a $43.8 million five-building development with 151 housing units and 124,000 square feet of retail. Twenty percent of the residential units are planned to be available at affordable housing rates.
In September, the city of Detroit began to require residential developments that receive certain incentives to designate at least 20 percent of available units as “affordable” to combat gentrification and the displacement of low-income residents as new developments increase prices.
Ford expects a third of its costs would be covered by tax breaks. With plans to include 300,000 square feet in residential space in its Corktown campus, it likely would be subject to the ordinance. The automaker, said David Dubensky, CEO of Ford Land Co., has no concrete plans now to ensure affordable rent prices.
Preserving the character of the neighborhood, however, is something Ford is discussing, said Craig Dykers, the project’s lead architect and founding partner of Snøhetta. Dykers already has made several visits to Corktown to get a feel for the neighborhood and people, stopping in the local restaurants and speaking with artists at Ponyride, a co-working space in the neighborhood. He plans to speak with city planners and local groups to make designs that fit the area.
“We don’t want to displace people,” Dykers said. “There’s smaller restaurants that have been holding on. We shouldn’t be doing things that take away from them. New retail and beverage facilities should help support other establishments already there. ... There are ways around this. We can make something accessible and affordable.”
Deb Walker, a 65-year-old lifelong Corktown resident, said renters are voicing their worries as some lease deadlines approach. Walker, who represents the community on the Corktown Business Association’s board, helped host a community meeting after Ford’s June 19 formal announcement at the depot to allow residents to share concerns and questions about coming changes.
“I think it will bring more vibrancy, more people,” Walker said. “Hopefully, it will help energize businesses already there.”
That is a concern shared by many community members. Unique businesses are what made Corktown a desirable neighborhood for Ford, Walker said: “We don’t want to lose that flavor.”
She likes the idea one resident suggested at the community meeting that Ford subsidize rent prices in areas that experience a large increase. Members of Detroit City Council also have said Ford should take similar measures.
For now, the community is preparing for construction and the thousands of people expected to work in the depot. Deveri Giffords, co-owner of Brooklyn Street Local on Michigan Avenue and president of the Corktown Business Association, is planning to double her restaurant’s hours to meet growing demand.
Businesses and community members said they also want to make connections with Ford, inviting representatives to neighborhood meetings so they can meet the locals. The business association has written a letter to the company, and Walker said she plans to bring a poster-size card to the next Corktown city planning meeting for people to sign.
“The Corktown Business Association had a welcome letter to Ford, but no one to send it to,” she said, noting it would like to deliver the letter in person. “We do want to welcome them to the community.”