Detroit's story is a tale of two cities, one growing and one withering but bound in a record $18.5-billion bankruptcy filing whose resolution will determine the future of both.
The city's downtown core and some historic neighborhoods have become hot spots for new businesses and residents. The influx has filled offices and apartments and is generating new restaurant and retail openings.
The other city is what's left of a once-vibrant manufacturing hub, abandoned by most of the populace, leaving blocks of vacant lots or derelict buildings on streets with no lights.
Growing the new and saving the old is part of the strategy recommended by Kevyn Orr, Detroit's emergency manager, who filed for Chapter 9 bankruptcy on July 18, citing shrinking revenue that won't meet soaring operating costs and funding requirements for retiree pensions and health-care coverage that make up most of the $18.5 billion debt. By the Aug. 19 deadline, at least 30 creditors had filed objections to the bankruptcy filing. A trial of that action's legality will begin on Oct. 23 under U.S. Bankruptcy Court Judge Steven Rhodes.
After the filing, Orr tried to reassure citizens by saying there would be no changes in services during the next six months. He already has tapped experts for advice on how to handle municipal operations going forward.
"The answer for Detroit has to come from Detroiters," says Ryan Gravel, senior urban designer at Perkins + Will, Atlanta. "There are a lot of interesting things happening in Detroit. They are doing a lot of things right."
Turnaround signs are emerging in the beleaguered downtown core, which shrank as businesses left for the suburbs. Local corporate stalwarts are moving back downtown, such as Quicken Loans, which is relocating 7,000 employees. Dan Gilbert, company founder and chairman, has bought about 20 buildings and parking garages and formed an investment group that has purchased even more.
Blue Cross Blue Shield of Michigan recently finished moving 3,400 employees back downtown to join 3,000 co-workers already relocated there. The health insurance carrier now owns three office buildings and leases space in two GM Renaissance Center towers, says spokeswoman Helen Stojic. "The move offered significant operational benefits for the Blues," she says. "It eliminated the redundancies of operating two separate campuses and reduces the company's real estate footprint by 400,000 square feet." The company also gains $30 million in long-term real estate costs and fills 6% of vacant downtown office space.
MSXI, a consulting, training and technology firm, announced on Aug. 15 that it will move 300 employees from suburban Warren to One Detroit Center later this year. That follows advertising agency Lowe Campbell Ewald's announcement in March that it will relocate 600 employees from Warren to a former J.D. Hudson Co. warehouse downtown early next year.