How Tech-Driven Real Estate May Save Las Vegas and Detroit
Southwest and Midwest. Neon and steel. Sun-drenched sin and post-industrial despair. Las Vegas and Detroit on the surface have little in common. But in the past five years both have been the subject of urban renewal attempts by tech sector kings. Here's how their approaches have matched and diverged.
Reviver: Zappos founder and CEO Tony Hsieh
The plan: Make Sin City’s ailing, off-Strip downtown a beacon for young techies and the trendy restaurants, cocktail bars and boutiques that cater to them with the $350M Downtown Project (or DTP). One esoteric goal was to produce 100K “collisions of ideas” per acre each year.
The scoop: Hsieh embodies the old “work hard, play hard” chestnut. But his love of a good party (including Burning Man) to some people undermined his lofty goals for the neighborhood.
Winning bets: Since its 2012 founding, DTP has invested in 300 local businesses employing 800 people in a zip code that contained roughly 1,200 businesses when the project started. The community-minded retail and entertainment center, Container Park, has brought density, yoga, entertainment and Strip-style bombast to a once-forlorn neighborhood.
Setbacks: The Downtown Project laid off 30 of its 300 employees last fall, leading to a torrent of bad press for Hsieh’s utopian vision. Some of it came from inside. Former “director of imagination” David Gould wrote in an open letter that the original mission was undone by “a collage of decadence, greed and missing leadership ... There were heroes among us, and it is for them that my soul weeps.”
More setbacks: Zappos was initially praised for moving its HQ to downtown from suburban Henderson. But it’s now under fire for gentrifying the area with young, affluent tech workers. A New York Times opinion piece yesterday criticized the new downtown as “a community of alikeness. With increasing rents, $15 cocktails and a private, members-only dog park, this kind of livability has a price tag, and it is certainly not one most people in [nearby] Paradise can afford."
Reviver: Dan Gilbert, the founder and chair of Quicken Loans
The challenge: Born in the Motor City, Gilbert has led an ambitious plan to reverse decades of population loss, business exoduses and stubbornly high crime rates that have long made Detroit synonymous with urban decay.
The jumpstart: In 2010, amid intense global economic uncertainty, Gilber moved Quicken's HQ from the suburbs to the city's downtown, in the Compuware Building which at the time was half vacant. Roughly 1.7K made the initial relocation.
Real estate bonanza: Within two years of the Quicken move, Gilbert's Rock Ventures group scooped up the Madison Theater Building, Chase Tower (now known as the Qube, above), Dime Building and the Federal Reserve Bank of Chicago Detroit Branch building. And while he can't claim sole credit for this statistical turnaround, of the 48 largest buildings in Detroit that were empty in 2009, 31 are now occupied.
Trickle down: Twitter, Microsoft and Detroit standby Chrysler are among the marquee tenants Gilbert has helped bring into downtown Motown's fledgling renaissance.
Where things stand: Gilbert has bought over 60 downtown buildings spanning 9M SF at a cost of $1.3B. His own companies employ 12K people in the percolating core. And he's especially intent on diverting bright young things from the Bay Area and NYC to Detroit, whose appeal to the youth rests on its gritty underdog status and bargain basement rents.
The next...: As in Berlin and Brooklyn, artists and their patrons have started taking advantage of Detroit's abundant cheap, cavernous spaces, dotting downtown with lofts. They include Galapagos Art Space, which just announced a move to the Motor City (and the building above) from that increasingly unaffordable former artist haven of...Brooklyn.
