In the City of Detroit, it seems, Rock Ventures, the umbrella entity of Quicken Loans, an online mortgage lender, is behind almost every major real estate transaction.
Dan Gilbert owns Quicken Loans, and Jim Ketai works with Gilbert as managing partner of Bedrock Management, the real estate entity the two men co-founded. Today, only General Motors owns more land than Rock Ventures does in the city’s central business district.
February was especially significant for Bedrock, marking the second-year anniversary of the acquisition that kicked off its buying spree. Among its acquisitions: the five-story Madison building, which now tellingly houses the offices of nearly two dozen tech companies, including Twitter.
Chris Bentley, AN’s Midwest editor, spoke with Ketai about the company’s recent acquisitions and its vision for a new Detroit.
Courtesy Bedrock Management
It is now difficult to find a vacant apartment in downtown Detroit. But what is the limit of this kind of downtown development? At what point do you catalyze something beyond employees of Quicken companies?
We definitely need more residential here. This is the draw for the young professionals right now. They all want to live in an urban environment. We’ll probably do residential in a few of our recent acquisitions. We’re looking at potentially doing something on the site of the former Hudson department store. It’s currently an underground parking deck and then two residential towers. Everything we do has ground-floor retail.
We’re thinking about some kind of architectural contest for that site. There are great architects here, but it would be a great idea to open it up to someone with an unbelievably clever idea.
How important is Detroit’s historic building stock? A lot of your acquisitions are older buildings—is there an incentive, or an obligation, to restore and preserve the city’s historic architecture? How much work needs to be done on recent acquisitions?
Pretty much everything we’ve done so far has been in historic buildings. We have not torn them down. We have invested the money to restore these buildings, some of which have sat for decades and were in really bad shape.
We believe that is part of the nuts and bolts of Detroit. The hardware is there. We want to maintain the character of Detroit. Look at Charlotte, North Carolina—they’ve knocked most of that down and started to build anew, but it just doesn’t have that same charm, that same feel. I think one of the special things about Detroit is the architecture. As long as a building can be restored, we will restore it. It costs us a lot of money to restore some of these buildings, but some, if you were to start over and build from scratch, would cost more.
The whole concept of what we’re doing here is to build a population of office and residential tenants, so you have to cater to the tenants’ needs.
And everything we do, we do as ‘eco-friendly’ as possible. We’re going to put solar panels on the 1528 Woodward building, with a monitor on one of the floors showing how much energy is coming from the solar panels.
Ray Rushing; Doug Warner
You mentioned office, residential, and retail. What more is needed?
Probably the largest need right now is residential. The demand for office space is very strong—we’re running out of space. We’re probably 97 percent leased, portfolio-wide.
The strategy seems to be building out Detroit’s tech corridor. What would you say to tech companies, say Apple, about the city’s tech sector? Its potential?
That’s what we’re targeting right now: high tech. It used to take 50 years to build these manufacturing businesses, and now you can build up a huge tech company in five years. We want the Googles and Groupons to do it in Detroit. The talent is here, there are great universities, and you have the ability to hire these people at considerably lower rates than in San Francisco or some of these cities where this has been happening for a long time. Detroit is a great place to incubate and build these technology businesses.
Do you see inequality as a long-term threat to Detroit’s comeback? How do you make sure the city as a whole enjoys the benefits of some localized, albeit impressive, turnarounds in real estate?
Is the whole city going to benefit? Absolutely. It’s bringing that vibrancy back to the city, which brings revenue back by way of taxes and spending dollars. We’re working on placemaking—from dog parks to festivals—and I think that will continue to stretch.
You’ve got to start somewhere. You can’t do a bunch of little pockets. Our theory is, start down in the central business district (CBD), and it will spread in every direction. It will help out not just the urban core in Detroit, but the neighborhoods and the suburbs, as well. You need a strong urban core for it to work.
On Bedrock’s homepage, a message reads, “It’s time to escape the soul-crushing suburban sprawl.” But Detroit is a bit of a sprawl itself—is redevelopment going to remain confined to certain nodes, or is there hope for a citywide comeback? Won’t certain areas inevitably fall by the wayside?
The whole metro area is a sprawl, but it doesn’t have that feel when you’re in the heart of the CBD. I think it will continue to grow. Midtown has also established itself. We’re going forward with the M-1 rail, which will be a great connection between midtown, New Center, and downtown, and that will spur economic development along the whole rail. Eventually the rail will get north to Royal Oak, Birmingham, Pontiac, and that will spur more economic development as transit-oriented development always does.
How unique is Detroit’s situation? What can other cities, especially those in the Midwest, take from Detroit’s experience?
All real estate is unique, but what’s happening in Detroit could happen in a lot of cities.
Chicago has already made itself; New York is New York. Other cities that are coming back—like Baltimore, Cincinnati, and Cleveland—those are cities that could follow suit with what we’re doing here.
We’re certainly not a Chicago, and I don’t know that we ever will be. We’re going to be Detroit. And we’re not going to be the old Detroit; we’re going to be a new city that has re-created itself into a technological hub, with unique shops and things you can’t get in the suburbs.
We do need some chains and franchises, but you need a lot of unique, entrepreneurial people to come downtown and be the first to create something. In Charleston, South Carolina, for example, they’ve got all sorts of unique restaurants and shops you can’t find anywhere else.
What do you know that other developers don’t?
Part of it is timing, and part of it is having the belief that it can be. We believe in what we’re investing in. We have moved 7,000 team members down here and we’re constantly pushing other companies to become part of this movement. It’s not just us—Blue Cross Blue Shield, General Motors—there are other companies that have made the move downtown.
And we very much encourage other developers to do what we’re doing. This can’t be just us. It’s really important that other people become part of this growth. These are the early stages, and it’s growing into something very valuable. We feel we can do good and do well—and it’s going to pay off in the future.
What are your childhood memories of downtown Detroit?
Unfortunately, my generation missed a lot of the downtown. I would come down to go to Tiger games, or hockey games, but that was about it. I did go to the Hudson’s department store and I thought it was the neatest thing ever. When my parents were growing up, downtown was such a vibrant place and they were in the city all the time, but my childhood was mostly in the suburbs. Now it’s changing again.
We’re going to expand our target area, which is Jefferson up to Grand Circuit Park, and it’s probably going to lean east. We’re under contract to buy the Greektown Casino. We’ve got lots of retailers and restaurants interested, and we’re working to find the right spots for them. There’s still lots to be done here.