The Road to Revitalization

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With new developments like the District Detroit taking shape, the Motor City follows many other cities down the road to revitalization. Much opportunity lies ahead for the arena, new restaurants, retail, and residential redevelopments in the heart of Detroit, and speculation for the city’s future has everyone wondering what will come next. No two cities are alike, but historic revitalizations elsewhere have been interesting, to say the least.

title-source_city-revitalization-2SoHo, Lower Manhattan

When one talks of “urban renewal,” the case of the Lower Manhattan neighborhood of SoHo often comes to mind. While it’s now home to some of the priciest real estate in New York City, that wasn’t always the case. Often dubbed the “SoHo Effect,” the district has become a somewhat cautionary tale.

As historian Stephen Petrus recounts it, the 43 blocks south of Houston Street shifted rapidly, from decaying warehouses and factories prone to fires in the 1960s to one of the world’s great art centers in the mid-1970s, and later one of the world’s top shopping destinations.

For those that bought SoHo property at the right time, the redevelopment was a boon. A 1962 city planning study found rents for derelict industrial buildings averaging below $1.00 per square foot per year. Yet between 1960 and 1970, buildings had quintupled in value, selling for an average of $150,000. Four years later, they sold for $450,000. Over the course of 1971, Petrus reports that as the neighborhood improved, rents for 2,500-square-foot lofts doubled from $150 to $300 per month.

A bustling retail sector emerged next, with about 65 shops and 26 restaurants by 1978, many of which were independent, hip, and bohemian. Yet as rents kept climbing, the hip independent boutiques were eventually priced out as well, with global retailers moving in to court luxury consumers and international tourists. Commercial Observer wrote last year that Prada and Nike recently set records with $1,025- and $1,200-price-per-square-foot rentals, respectively. However, those high rents may finally be peaking. Demand has softened and vacancies have increased over the last few years.

Williamsburg and Greenpoint, Brooklyn

As one long-time resident tells it, the northern Brooklyn neighborhoods of Williamsburg and Greenpoint came close to the edge in the 1980s, overrun by crime and empty factories. However, concentrated policing efforts, rezoning moves by the administrations of Mayors Rudy Giuliani and Michael Bloomberg, and an influx of college-educated professionals helped turn the tide, making the neighborhoods some of the most sought-after living, working, and shopping quarters in the city.

By 2005, the area was dubbed New York’s “Creative Crescent,” and efforts were underway to keep artists, performers, and freelance creatives from being priced out of the revitalized area they helped to create. Meanwhile developers were busy with a slew of retail, residential, and light industrial projects, made possible by the rezoning of many lots to mixed-use designation.

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When the 2008 recession hit, the future of more than 70 high-end Williamsburg projects was affected. However, developers soldiered on, and Hotel Williamsburg, with its $300-a-night rooms, and its adjoining condo, the Residences at the Williamsburg, where one-bedroom units first sold for $446,500, were soon completed. More skyscrapers followed, and by 2014 the neighborhood was completely reinvented, with retail rents among the highest in the country.

Though Williamsburg underwent transformation first, both it and Greenpoint to the north were part of the same 2005 rezoning plan overseen by Bloomberg. And while the 2008 financial crisis caused significant delays, things have picked back up in recent years. In 2015, Greenpoint entered the beginning stages of its own development boom.

By 2025, the neighborhood will reportedly add 8,000 new apartments, according to the New York Post. Like all such desirable New York residential projects, demand is high. More than 58,000 applied for 105 spots in a rent control lottery in a new development. Across the neighborhood, prices have shot up from between $400 to $600 per square foot to between $750 to $1,000 per square foot for single and multifamily townhomes, attracting cosmopolitans and professionals as buyers.

Silver Lake, Los Angeles

Across the country in California, the Central Los Angeles neighborhood of Silver Lake is also undergoing change. The neighborhood had a grittier reputation in the 1980s and 1990s, but around 2002 L.A.’s housing boom had a transformative effect as demographics shifted toward more creative professionals. Many celebrities also call Silver Lake, dubbed America’s “best hipster neighborhood” by Forbes in 2012, their home.

Change accelerated around 2013, according to the Los Angeles Time. New restaurants and upscale clothing retailers appeared, attracting visitors and leading to parking problems. The local neighborhood council became fractious at times, with Gen-Xer members like Hollywood film director Charlie Herman–Wurmfeld sparring with baby boomer councilmembers like actress Anne-Marie Johnson, over the direction of the revitalized community.

Today, real estate continues to climb in what has become one of the city’s most coveted neighborhoods. A 50-year-old tamale restaurant, El Chavo, sold earlier this year for $7.5 million. New owners developed the property into a hip ceviche bar, more in line with the tastes of trendy diners. Renowned architect John Lautner’s 1956 “Silvertop” home design sold in 2014 for $8.5 million after a bidding war. Other notable residential sales of $1 million or more are common, but neighborhood valuations have yet to reach SoHo or Williamsburg proportions. Still, even some projects are being priced out. Flea, bassist for the Red Hot Chili Peppers, last year elected to move his nonprofit community music conservatory into the neighboring Los Feliz district, only about eight blocks away. Flea’s school had wanted to buy an adjacent Sunset Junction property for expansion but gave up citing the financial burden.

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Closing Thoughts

No two cities are the same, and each case of revitalization and urban renewal typically offers a mixture of opportunities and challenges. For commercial landlords and early residential property buyers, opportunities are bright, and long-time residents can also benefit from rising property values. Residential renters and retail tenants are often among the first to enjoy the fruits of development: safer neighborhoods, more job opportunities, civic revitalization, and so on. However, availability and affordability is always a concern as development accelerates. Redevelopment requires a delicate balance, and as writer Alexis Clements noted a few years back, the “SoHo Effect” is never the same twice.