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Developers pull plug on apartment, condo projects in Detroit 

click to enlarge Boom gone bust: Work has stalled at The Mid and other Detroit developments.

Steve Neavling

Boom gone bust: Work has stalled at The Mid and other Detroit developments.

In recent years, politicians and deep-pocketed developers sticking shovels into the ground and smiling for the cameras — breaking ground for thousands of apartments and luxury condos in a city that only recently emerged from bankruptcy and a crippling recession — had become a common sight. Greater downtown Detroit, they proclaimed, was fertile ground for a massive and expensive transformation.

Then, as 2,200 new apartment units were built between 2018 and 2019, reality set in. Construction costs soared, taxpayer-funded incentives dried up, and bank loans were tougher to get.

"It's a perfect storm of things that are causing recent projects to pull back," James Van Dyke, executive vice president of the Roxbury Group, one of the most successful development companies in Detroit, tells Metro Times. "We have more demand for housing than we had in 2000, but we don't have the incentives in place, and the construction costs are too high."

Metro Times identified more than 20 stalled, scaled-back, or scrapped residential projects in Midtown, downtown, Cass Corridor, Lafayette Park, Corktown, and the riverfront, where the vast majority of the developments were planned.

With so many building projects happening simultaneously, developers are having trouble finding enough skilled-trade workers in Detroit.

"It's wonderful that we have such a growing demand (for work), but it takes time to educate, train, and certify workers," Eric Larson, CEO of Downtown Detroit Partnership and the successful Larson Realty Group, tells Metro Times. "This is going to take time."

In a city that has struggled for decades with high unemployment rates, the availability of new jobs is promising. To connect Detroiters to those jobs, Mayor Mike Duggan has invested millions of dollars in adult training programs for future plumbers, carpenters, laborers, and electrical workers. Duggan's administration is also working with labor unions to increase their memberships with Detroiters.

"The city and the industry are working very well together and are encouraging people to get into the business," Larson says. "People are feeling more comfortable investing their time to get trained and certified because there is a consistent pace of work."

Woodward projects

Some of the most ambitious residential projects in Detroit have been along Woodward Avenue, where investors trumpeted the tax-subsidized QLine streetcar and Little Caesars Arena as catalysts for new development. While there have been successes along Woodward, such as The Scott at Brush Park, a 200-unit apartment building, there have been notable disappointments.

One of those projects was the Mondrian @ Midtown, a five-story building that was supposed to offer more than 100 apartments and commercial space on the ground level. In 2014, the development company Queen Lillian II LLC announced that construction would begin the following spring. It didn't.

In December 2016, the company announced it had received $3.5 million in state aid and would begin construction on a modified version of the apartment building in the spring of 2017. Today, the site is still a grassy field, with a five-year-old sign that reads, "Coming Soon! New luxury apartments and retail."

Metro Times couldn't reach Queen Lillian II for comment.

A block north on the east side of Woodward is another stalled project, The Mid, a $377-million development with a pair of chic, high-rise buildings with a boutique hotel, 250 multifamily residences, and 60 high-end condos. The project was announced last March, when investors said the initial phase was supposed to be completed by the end of this year.

Today, the large piece of land is dotted with chest-high weeds and muddy pools of water. The banner around the chain-link fence along the property is coming undone, tattered and flapping in the wind.

Turkia Mullin, a real-estate executive working on the project, says the development team is "committed to having construction underway by the end of February."

"Like any construction project this development is one of the largest moving forward and involves complex planning," Mullin said in a written statement to Metro Times. "While there hasn't been much physical activity at the site, we are working with the lenders on the Design Drawings documents and have decided to wait until the Construction Documents were 100 percent complete before securing a Construction Manager."

In early January, Mullin told Crain's Detroit Business the project has been modified and likely won't include condos. There was no further explanation.

Another empty plot of land on Woodward is just south of Little Caesars Arena, where the Ilitch family's business empire pledged to build a 350- to 400-room hotel with retail shops two years ago. Now the Ilitches' Olympia Entertainment is asking the city of Detroit for permission to delay until September 2022 a decision on what to do with the block-long property between Henry Street and the I-75 service drive.

As of yet, the Ilitches have failed to deliver on a promise to develop more than five apartment buildings near the arena. Those buildings remain vacant, despite the high demand for apartments.

About three blocks east of Woodward in Brush Park, Mayor Mike Duggan announced in April 2015 that the city struck a deal with a team of developers to renovate the historic and abandoned Brewster Wheeler Recreation Center, where boxing legend Joe Louis learned to fight. The $50-million plan called for up to 150 residential units, a restaurant, bar, culinary arts studio, and community space.

Construction never happened, but investors told Crain's Detroit Business that they're still working on financing.

In an adjacent development, called Brush Park South, a 2016 plan called for more than 150 apartments. But developers have been unable to secure the financing, and the land remains vacant.

Two major apartment projects planned for East Jefferson never came to fruition. In 2017, developers announced they were building a 213-unit apartment and a small-format Meijer store. It was supposed to open by last year, but construction never got off the ground. In late 2019, developers said they still plan to move forward with the Meijer store, but the apartment building had been nixed because of rising construction costs.

Platform LLC, which recently finished a mixed-use development with 231 apartment units in New Center, wasn't as successful with its plans for a 240-apartment tower at the site of a demolished Big Boy on East Jefferson near East Grand Boulevard. The tower was scheduled to open this year, but it never got off the ground because of escalating construction costs.

The Platform LLC shelved plans for 56 luxury condos with apartments at Cass and York in the TechTown neighborhood because of construction costs and a shortage of workers. It's frustrating for developers because there's still a strong demand for housing. But rebuilding greater downtown Detroit won't happen overnight.

"It's going to take more than a generation," Van Dyke says.

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March 25, 2020

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