A Missionary’s Quest to Remake Motor City

Posted on April 15, 2013

THE best way to experience all that is strange and a little otherworldly about downtown Detroit is to walk the streets around 5 p.m. on a weekday. At that hour, you’ll notice not just the peculiarity of what is around you — notably, the gorgeous, Art Deco skyscrapers alongside empty, decrepit buildings — but also what is missing. There is no traffic here. As the workday ends, cars trickle out of underground parking lots and speed off to nearby highways, but in a volume that doesn’t cause delays.

It is just one small sign of how far Detroit’s fortunes have fallen: the birthplace of the mass-produced automobile, the city that gave us the infuriating, bumper-to-bumper commute, is now so sparsely populated that it doesn’t have a rush hour.

Dan Gilbert would like to change that. No, he’s not interested in a honking pileup of S.U.V.’s. Mr. Gilbert, 51, a Detroit native and the fantastically wealthy founder and chairman of Quicken Loans, wants to revive two square miles that were once the thrumming heart of this city. To do so, he has already spent roughly $1 billion acquiring nearly three million square feet of real estate, and is ready to close another deal, for the Greektown Casino-Hotel and nearby parking lots, that will add one million more square feet to his holdings.

His real estate company, Bedrock Real Estate Services, is renovating properties, building apartments and wooing corporate tenants. A seven-mile light rail system is in the planning stages, underwritten by a number of businesses and business leaders, including Mr. Gilbert, as well as foundations and a federal grant.

Along with his employees, civic groups and public-spaces gurus, he is devising strategies to “activate” streets with outdoor seating and ground-level retail stores. Taxpayers will kick in a yet-to-be-determined sum for parts of this rehabilitation program, but it will be a fraction of what Mr. Gilbert contributes.

His plans, according to academics like Brent D. Ryan, author of “Design After Decline: How America Rebuilds Shrinking Cities,” amount to one of the most ambitious privately financed urban reclamation projects in American history.

Opportunity Detroit, as Mr. Gilbert has branded it, is both a rescue mission and a business venture that, if successful, will yield him a fortune. When he started buying in 2011, the city was having what he has described as a “skyscraper sale.” Among the bargains was the Dime Building, a 23-story neo-Classical gem of glazed brick and terra cotta trim, designed by Daniel Burnham — of Flatiron Building fame — and completed in 1912. In August 2011, Bedrock bought all 330,000 square feet of it, reportedly for $15 million. There are high-end apartments in Manhattan that cost more.

If this area turns around, no one will profit quite like Mr. Gilbert, but the risk looks as great as the potential reward. Even with its auto industry in relatively robust, post-bailout health, Detroit has been on a long, distressing slide. A quarter of its population left in the last decade, and it has $14 billion in long-term debt. The financial situation is so dire that Michigan’s governor recently appointed an emergency manager. Detroit remains a national symbol of municipal decline, a victim of macroeconomic trends, poor planning and political corruption.

Mr. Gilbert is undaunted. Part-owner of a handful of casinos, he is familiar with big bets and steep odds, and, as they say in poker, he is all in. In 2010, he started moving his employees from a nearby suburb, and 7,600 people on his payroll now work downtown.

“Not a single one of them has told me, ‘I don’t want to be here,’ ” he said in a recent interview in his office next to downtown’s Campus Martius Park, formerly among the city’s busiest gathering points and a focus of his campaign. “Kids coming out of college want that urban core excitement, more and more.”

DRESSED in a red-checked button-down shirt and a blue blazer, Mr. Gilbert is 5 feet 5 inches of restless energy. He has slicked-back dark hair, a Hollywood smile and dolorous eyes that give him the look of a man in need of sleep. Growing up in Southfield, a nearby suburb, he spent little time in the city. One of his earliest memories is of his father, who owned a nightclub-restaurant in the city, explaining the Detroit riots as the violence unfolded over five days in 1967, leaving more than 40 people dead and 2,500 stores burned or looted.

It was a searing moment in the city’s history, one that highlighted racial disparities that still haunt Detroit.

“People my age, we would hear from our parents and grandparents who were raised in Detroit about how great this city was, from 1900 to the 60s,” Mr. Gilbert said. “But none of us had any memory of that. And it wasn’t until my late 20s and early 30s, when I started traveling for business, to places like New York City and Los Angeles, that I realized how much we were missing. As I started visiting these great American cities, it hit me — man, how did we blow this so badly?”

He seems to consider it his duty to rebuild what a previous generation allowed to fall apart. He aims to turn downtown into a high-tech hub, where young entrepreneurs both live and work. (He and a handful of companies are offering rent and mortgage subsidies to people willing to live downtown.) These pioneers will have easy access to high culture: the city’s leading museum, the Detroit Institute of Arts and the Detroit Opera House are nearby, as are stadiums for the city’s professional baseball and football teams.

About 80 small companies have already settled into buildings owned by Bedrock, many of them start-ups funded by Detroit Venture Partners, a venture capital firm co-owned by Mr. Gilbert. A Twitter office is here, too, as is a branch of Uber, the online taxi-calling service. National brands, like Nike, are being courted.

A master salesman, Mr. Gilbert describes a reinvigorated downtown as though it is inevitable, but there are more than a few skeptics. They include Mr. Ryan, who teaches in the department of urban studies and planning at M.I.T.

“Urban renewal always happens as a symphony of events, and part of the symphony is innovative, optimistic developers with the ability and willingness to transform historic properties,” he said in a recent interview. “But another part is a strong regional economy. You can’t fight the fact that Detroit is a de-industrializing market and it isn’t facing dramatic, positive transformation.”

Mr. Gilbert, though, is not just any innovative, optimistic developer. This is a guy who at age 12 organized a pizza delivery service, with children on bikes rushing store-bought pies to neighbors. (Local restaurants eventually shut down the operation with a complaint to the health department.)

He remains just as driven, but now his self-made fortune stands at $3.5 billion, according to Forbes. He has learned from mistakes of previous efforts to reimagine downtown, and he and his staff will apparently have a largely free hand. Government officials have promised to expedite permits for renovations, signs and so on.

“My job,” said Dave Bing, the Detroit mayor and former National Basketball Association star, “is to knock down as many barriers as possible and get out of the way.”

THE week I went to Detroit to interview Mr. Gilbert, in mid-March, the city was undergoing its latest in a long series of this-must-be-rock-bottom moments. It started on Monday, March 11, when a former mayor, Kwame Kilpatrick, was found guilty of racketeering, extortion and other crimes. Three days later, Gov. Rick Snyder of Michigan introduced Kevyn Orr, a Washington bankruptcy lawyer, as Detroit’s emergency manager.

The appointment was greeted with some vocal resistance, like that of a few dozen protesters who poured into the Coleman A. Young Municipal Center on March 28 for 90 minutes of chants and protest songs. A federal lawsuit contending that the appointment is unconstitutional was filed by a number of unions, local activists, clergy members and others.

But many locals seemed to decide that usurping local politicians’ power was a fine idea. Even Mayor Bing immediately pledged support. He and others — Mr. Gilbert included — seem to regard the city as an addict and Mr. Orr as a hard-nosed counselor leading an intervention.

The day before Mr. Orr’s appointment was announced, Mr. Gilbert met in a conference room for his twice-a-month Detroit real estate meeting, with about a dozen people who work for him, plus a lawyer and leasing agent. If Detroit 2.0, as this group often calls the effort, has a planning committee, this is it. The conversation started with a long discussion about the terms of a lease with a specialty grocer, then segued into a look at a handful of buildings, some for sale, others already under contract.

“There was a massage parlor in that one,” said Matt Cullen, president of Rock Ventures, one of Mr. Gilbert’s companies, as the group looked at a photograph of one less-than-spiffy building.

“How would you know that?” Mr. Gilbert needled.

Mr. Gilbert speaks with an accent that is Bill Murray-esque, and his default expression is, too: deadpan, which somehow makes him look perpetually on the verge of saying something wry. An inveterate prankster, he recently had a few dozen farm animals, including goats, chicken and geese, hauled into the office of a neat-freak colleague who was turning 50.

“You could smell that they were in the building,” says Bill Emerson, the C.E.O. of Quicken Loans, who was not the target of the prank. “Some days, I think Dan is just a big kid at heart.”

If so, he is a big kid who really likes to win. Mr. Gilbert is majority owner of the Cleveland Cavaliers of the N.B.A., and gained brief national fame when the team’s star, LeBron James, announced in 2010 that he was decamping for the Miami Heat. Mr. Gilbert issued a statement to fans personally guaranteeing that the Cavs would win an N.B.A. championship “before the self-titled former ‘king’ wins one.” He added: “You can take it to the bank.”

Fortunately for Mr. Gilbert, there is no bank for errant predictions. The Heat won the N.B.A. championship last year.

Thirty minutes into the Detroit real estate meeting, talk turned to Moosejaw , a Michigan seller of outdoor apparel that is the first large retailer to open in downtown in the Gilbert Age. A representative of the chain had been quoted a few weeks earlier in a local newspaper, talking in upbeat but not quite superlative terms about the site, in a building on Woodward Avenue, one of the city’s grandest streets and a primary focus of Detroit 2.0.

The comments weren’t rosy enough for Mr. Gilbert. He turned to a woman newly hired as a liaison with retailers and urged her to reach out to Moosejaw’s management. “Tell them we’ll do promotions, we’ll do whatever they want,” he said. “If the one store that moved in were to move out? Forget about it. We’re dead.”

In late March, Mr. Gilbert would announce that Moosejaw had signed a long-term lease. But the chicken-and-egg problem of his vision is that retailers won’t come unless there are people on the streets, and people won’t walk the streets unless they are lined with retailers. (There is pre-Gilbert retail on ground floors, including a CVS store, but lots of empty spaces, too.)

The solution is what Mr. Gilbert calls the big bang: bring in as many stores and people, at the same time, as quickly as possible.

Of course, both retailers and people need to feel secure, and Detroit’s dicey reputation is no secret; its murder rate was among the highest in the country last year, and among the city’s highest in nearly two decades. So there’s a command center in Chase Tower, a Bedrock-owned building where a bank of monitors are watched by security guards, with live feeds from video cameras downtown. It was the one part of Mr. Gilbert’s operations deemed off-limits during my tour.

THESE guards keep an eye on what is actually one of the safest parts of the city. Few people live downtown, which means that the area is largely empty at night, and during the day it is filled with white-collar workers. There are rough patches, and a block-wide hole where the Hudson’s department store once stood. But the place feels more sterile than threatening.

It’s the rest of Detroit that could use 24-hour surveillance. One of the looming and unanswered questions posed by Mr. Gilbert’s campaign is what, if anything, they will mean for the 137 square miles of the city that are not in his blueprints. To get a sense, I sat in the passenger seat of the Prius owned by George Galster, a professor in the department of urban studies and planning at Wayne State University and author of “Driving Detroit.” Professor Galster is steeped in the arcana that shape neighborhoods, like zoning laws and topography, and as he explained early in this three-hour drive, he is the fifth consecutive George Galster to live in Detroit.

“My great-great grandfather came here from Germany in 1851,” he said, easing to the side of Mount Elliott Street, not far from downtown. He put his car in park and pointed to the moribund remains of a large, once-grand building of bricks and wood boards.

“This was the church my great-grandfather built,” he said. “This is the church where my parents met. It’s where I was baptized.”

Today, it is a hovel that looks too dangerous to enter.

“This is what is horrible about Detroit,” he says, putting his car back into drive. “It takes away your memories.”

The surprise about this city is that most of it doesn’t look like a city. It looks like a suburb that has gone bankrupt. It’s filled with single-family homes — some inhabited, many not — that sit on streets where other houses have been razed, excavated and plowed over. Once, two million people lived here. Now, it’s down to about 700,000, spread around an area large enough to accommodate every acre of land in San Francisco, Boston and the Bronx, combined.

There are a handful of strikingly lovely neighborhoods, like Sherwood Forest and Indian Village, which is studded with gorgeous Tudor Revival homes. At the opposite end of the spectrum, there are stops in what has become a perversely popular tour of ruins, like Michigan Central Station, designed by the same architects behind Grand Central Terminal and now so hollowed out that you can actually see through it.

Most of the city, though, is flat and featureless. It lacks what urban planners call “good bones,” large structures in dense neighborhoods. Parts of it appear to be in the midst of an evacuation.

“We’re looking at a lot of torched buildings,” Professor Galster said.

Burned homes are among the 5,000 to 8,000 dwellings that are abandoned in Detroit every year, according to Professor Galster. And this highlights one of the city’s chronic maladies: a continuing exodus of population and tax base.

There are many causes — the decline of the auto industry and white flight among them — but the one that Professor Galster returns to time and again is development in the suburbs.

“The villains are the rules of the game,” he said. “Developers find it far more profitable to build in farmland in the suburbs than in vacant land in the core. It’s easier to acquire big sites without worrying about hidden basements, or gas stations, or a reputation for violence, or corruption or inefficiency or the potential racism of your customers.”

It makes financial sense for developers, but it is disemboweling the city, he said. Which is why he believes that without reform to housing and development laws, neither Mr. Gilbert nor the emergency manager, nor any combination of earthly forces, can salvage Detroit.

What if downtown is resuscitated and no improvements are made to any other part of the city? It’s a possibility that concerns the Rev. Wendell Anthony, president of the local chapter of the N.A.A.C.P.

“What we don’t want to see is two Detroits, one for those who are downtown and one for those in the neighborhoods,” Reverend Anthony said. “I don’t think that is what Mr. Gilbert wants, either. But I know that unless we have viable and strong neighborhoods, downtown will be merely a city near a river. It has to spread, it must spread to the neighborhoods.”

The uncomfortable reality is that Mr. Gilbert is a white guy trying to change the choicest parts of a city that is 83 percent African-American. A white guy who lives in an affluent village about 20 miles from downtown. But as he explains, his project is just a beginning.

“This is not the only solution,” he said. “The education system needs to be addressed. But what we’re doing is a big part of the solution. I can’t think of a great American city that doesn’t have a great downtown.”

WHEN Dan Gilbert was in the fourth grade, he bought candy at wholesale from the father of a friend and sold it at retail prices to classmates. It was the start of a nearly obsessive quest to create enterprises and earn profits. He estimates that he’s either invested in or started 70 companies in his career. One early and ill-fated venture was running a short-lived bookmaking operation with some friends while a freshman at Michigan State University. It ended when he was arrested by an undercover agent. He served probation, the charges were dropped and there was no conviction.

“We were college teenagers,” he said.

Subsequent ventures were more mundane, and far more successful. He later earned a real estate agent’s license and, while at Wayne State University Law School, worked part time at a Century 21 office. At some point, he realized that the serious money was in selling mortgages, not homes. So he and two partners, including his younger brother, Gary, went into the mortgage-origination business together. Mr. Gilbert and his partners took out ads in those once-ubiquitous free magazines that listed houses for sale, something that none of his competitors did.

“From the very beginning we could make the phones ring,” Mr. Gilbert said, “even if we didn’t know what to do once they rang.”

The company, called Rock Financial because it sounded sturdy, would eventually become Internet-based, selling mortgages in all 50 states. It was acquired by Intuit for $532 million in 1999, says Mr. Gilbert, and renamed Quicken Loans. Three years later, after the dot-com bubble burst, the company was sold to a group of investors led by Mr. Gilbert for a sum he put at roughly $55 million.

This year, Quicken Loans will do $100 billion worth of mortgage business, says Mr. Gilbert, making it the third-largest home lender in the country, behind Wells Fargo and JPMorgan Chase, according to Mortgage Daily.

Quicken Loans now employs nearly 2,500 mortgage bankers. One morning last month, 300 of them were working on the third floor of the Chase Tower, and a swing through the office was like a visit to a frat party at a telemarketing firm. There were many men and some women with headsets, talking to customers and staring at computer screens — nothing novel there. But a karaoke machine sat in an aisle. Guys threw footballs to one another; one employee shot at colleagues with a Nerf gun. Basketball pennants were draped from the ceiling, as part of a March Madness theme.

“You should have been here last week,” said one broker, Nerf gun in hand. “The theme was spring break. I was wearing shorts, a hat, sunglasses.”

Mr. Gilbert espouses a philosophy of instilling fun in the workplace, one piece of an elaborate corporate culture that he has fine-tuned over the years, and describes, every few months, in a surprisingly entertaining, seven-hour monologue to new employees. One of more than a dozen core principles described in “Isms in Action,” as the lecture is titled, is summed up as “Obsessed with finding a better way.”

That could work as a pretty good motto for Opportunity Detroit. It is being designed and unveiled with the city’s past missteps in mind. One of the most infamous is the Renaissance Center, a huge, mirrored complex of towers built in 1977 and currently the headquarters of General Motors.

“One critic said it was the pre-eminent example of terrible urban planning,” said Mr. Cullen of Rock Ventures, who formerly worked for G.M. and helped champion the idea of buying the RenCen, as everyone here calls it, and moving the company in. “The building basically sucked the remaining people out of downtown and stuck them in a fortress.”

Mr. Gilbert wants to return the area to the pedestrian haven that it was decades ago. If he succeeds — he expects significant results within four or five years — the place will again resemble the scene captured in a photograph that is plastered on a wall not far from his office. It is a huge, sepia-toned shot of Campus Martius, snapped in 1917. Looking at the picture, you realize that it includes the neighborhood where you are standing, though at a time when it bustled with men and women in hats, strolling amid billboards, retailers and a lineup of trolley cars.

This urban idyll was a few years from extinction by the time Dan Gilbert was born. If his quest to bring it back to life proves anything, it’s that you can feel nostalgia for a place you’ve never actually been.

David Segal, The New York Times.