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Detroit & Houston: Cities with Common Problems, Solutions

Jonathan Brinsden

DETROIT – (Realty News Report) – For years Detroit was heavily dependent on one industry, just as Houston was. Residents of Michigan’s largest metropolis fled to the suburbs decades ago but are now returning to the central business district. Ditto Houston. And some of the city’s most successful entrepreneurs and philanthropic organizations helped drive changes in the Detroit landscape, just like Houston.

“Houston has faced its own challenges, and we see some similarities between the two cities” said Jonathan H. Brinsden, Chief Executive Officer of Houston-based Midway, during the 2018 ULI Spring Meeting in Detroit last week. “Like Houston, Detroit had a core group of citizens who rallied around the city, led by civic minded developers, entrepreneurs, and others.”

Brinsden noted two developers have been major forces behind Detroit’s recent resurgence — Dan Gilbert, a Detroit native whose real estate firm, Bedrock, has a portfolio of more than 90 properties in the city’s urban core totaling 15 million square feet and Chris Ilitch, whose Olympia Development of Michigan is involved in building The District Detroit, a $1 billion–plus sports-and-entertainment destination that includes Little Caesars Arena, a professional sports and entertainment venue, and Comerica Park, home of the Detroit Tigers.

“It is fascinating,” Brinsden adds.  “You have two local families making massive investments downtown and I get the sense they are not worried about making an immediate financial return. They’ll take their return over a much longer period of time. They are investing to build the future of the city, and that will be the legacy of those families.”

Energy used to dominate the Houston economy but unceasing efforts to diversify have taken hold. “Detroit’s economy was once automobile-centric but it is positioning itself as a center of technological innovation, such as the continued development of autonomous vehicles,” he added.

Like Houston, Detroit’s central business district is being revived by millennials and others who are choosing to move downtown. “In many ways we’re on the same path,” Brinsden said. “How do we continue to create an urban environment that is lasting and attracting a creative talent base for a thriving city? As Houston has shown, you need something compelling enough to make people want to be there.”

Detroit was the beneficiary of great philanthropic efforts by individuals and foundations and so was Houston. The Kinder Foundation — established in 1997 by Richard and Nancy Kinder — donated $70 million to help fast-track plans to improve the city’s Memorial Park including a nature bridge that will connect the park’s north and south sides and a trail/bridge system north over I-10, linking the White Oak Bayou Greenway trail system, Brinsden continued.  Previously, the Kinder Foundation donated $50 million in support of the Bayou Greenways 2020 project to create 1,500 acres of new and equitably distributed parkland, and $30 million to create a 2.3 mile linear park along Buffalo Bayou.

“Fortunately, in Houston we’ve had a great number of forward thinking developers who wanted to do good for the city as well as for their companies,” said Brinsden. “Their projects were game changers for the city.”

Not only that, but Houston’s private citizens are still making their mark on Houston’s development landscape – making a commitment to responsible, sustainable development. “Houstonians continue to show their willingness to make investments for a better Houston,” he adds.

Rendering of Buffalo Heights project.

Midway is working on two major ‘generational’ projects in Houston with two major Houston families, he adds. Midway was tapped to redevelop Buffalo Heights — a 50-acre mixed-use district near Houston’s Buffalo Bayou Park, Washington Avenue Corridor and Downtown on behalf of Russell Gordy, the project’s owner and founder and President of SG Interests. “We envision the development as a project that will weave a collection of well located individual assets into a more cohesive place with an authentic identity,” Brinsden said.

“Mr. Gordy is a strong believer in development that benefits the city and local residents,” Brinsden noted. “He wants a well thought out development that continues to make Houston a special place to both live and work.”

Midway is working on a ‘transformative’ project east of downtown at the former KBR site, a 150-acre abandoned office and industrial complex with a mile of frontage along Buffalo Bayou. While specific details are still being determined, the development, called East River, ultimately could be as large as 8 million square feet of shops, offices and entertainment venues. The project is a joint venture with Cathexis, a company owned by William Harrison, a  wealthy Houstonian with business in energy and real estate.

Redevelopment on such a large scale requires teamwork between private and public partners and a long time horizon. “Change doesn’t happen overnight, but change can be accomplished in Houston because of the cooperation between the public, private and philanthropic sectors,” Brinsden said.

There is one major difference between the two metropolitan areas, however — Detroit sought bankruptcy protection in 2013 — the largest by a municipality in U.S. history. In bankruptcy, the city shed some $7 billion in debt, and cut $7.8 billion from payments to its retired workers and $4.3 billion in retirement health care benefits. The Detroit city government recently was released from state financial oversight after posting three straight balanced budgets.

“That’s one factor that we don’t have in common,” Brinsden added. “Detroit is rising from the ashes of its historic financial crisis and Houston is rebounding from hurricane Harvey. I would not wish either of those hardships on any city, but the creativity and resourcefulness required to meet these challenges also spurred greater collaboration and new entrepreneurial energy.”

May 8, 2018 Realty News Report Copyright 2018

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