Eastern Market's New Landlords Have Artists Packing and Tenants Nervous

December 04, 2018, 7:17 AM

Painter Michelle Tanguay packs up her unit in the Rocky Peanut Lofts

By Violet Ikonomova
and Joe Lapointe

On Russell Street, the main drag of Eastern Market, a strolling pedestrian on a chilly Saturday night in late November could have viewed two distinct moods in a signature Detroit neighborhood on the cusp of major change.

Inside Supino Pizzeria on the corner by the Fisher freeway service drive, guests celebrated at a birthday party for young Sanford Nelson, the investor who – with his father and other partners – has spent at least $20 million buying 15 buildings in the neighborhood.

The popular restaurant is now one of Nelson’s tenants. At his party, he wore a fedora and a Detroit Hustles Harder camo windbreaker by streetwear brand Aptemal Clothing, another of his tenants. Around him stood chic women in high-heeled boots carrying designer bags. Nelson posed for pictures with one on each arm, receiving congratulatory kisses on the cheek.

Nearby sat a chocolate cake in the shape of one of the market’s sheds. The inscription in the icing said “Shed 30,” in honor of Nelson’s milestone birthday.

Three blocks north, on the corner of Division — across from the real Shed 3 — the same Russell Street pedestrian would have seen a much different message in the glow of the street lights.

A mural on a building now owned by Sanford Nelson and his investors. (Photo: Joe Lapointe)

There, a pop-art mural covered the entire east side of the building. Among the collage of images was a large, yellow dollar sign dripping in green slime. Another showed a small, neighborhood party store closed down with the word “Doom.” The word “never” was painted twice, in large letters, on each side. “Never!!” shouted the one on the right.

This anti-gentrification mural was painted in 2017 by the artist Daniel Bombardier of Windsor. He said he didn’t intend it as a direct comment on the changes in Eastern Market — more of an overview of what happens during the decay-and-rebirth cycle in a city like Detroit.

But Bombardier said his notion proved prophetic for Eastern Market, where there’s anxiety that optimistic new investors will force out artists, residents and small businesses from what were once cheap, bohemian digs.

“What I was painting about is actually happening with the owners of those buildings,” Bombardier said. “The money’s coming in now and it’s pretty much just a monster. It is kind of poetic.”

There’s a bit of poetic justice here, too. Bombardier’s mural is displayed on another building bought by Nelson. If the new owner wished, he could paint over it or tear down the whole place and build something new.

A hot new address, if you can pay

Nelson’s group is among several major investors pouring money into the nearly 130-year-old Eastern Market as a development boom spills outward from Detroit’s downtown core. Detroiters sometimes view with trepidation any changes to places like this. And big changes are coming to the Market.

Over the next several years, a series of new mixed-use developments and pricey renovations of old buildings are expected to transform the historic neighborhood, bringing 1,600 new residential units and new tenants who can afford market-rate rents. This summer saw about 20 buildings sell for more than $1 million a piece.

The concern is that rising costs will drive out the artists and entrepreneurs who’ve helped shape the market’s personality over the past several decades. Nelson’s purchase — said to be the largest transfer of existing property in the market’s recent history — is the first test of whether the district can grow without losing its authenticity, a stated goal of its stewards.

Sanford Nelson takes a selfie on a recent trip to Cuba. (Photo: Twitter)

So far, results are mixed.

When Nelson’s company startled occupants last summer by announcing rent hikes of as much as 150 percent within 30 days, some residential and business tenants in his properties fled. Five months later, others are packing up their belongings or anxiously waiting to learn their fate.

Michelle Andonian, a photographer who lived and worked in the market for 40 years and has received a grant from the Knight Foundation to document its history, moved after Nelson informed her of the impending increase. She says he didn’t say specifically how much the rent would go up — but a neighbor paying $700 per month for a similar unit was told her rent would rise to $1,770. Last month, Andonian packed her loft full of art supplies and prints into three 20-foot rental trucks and left Detroit for a property out-state.

Though she doesn’t oppose Detroit’s positive progress – “Never in my life did I think I could see what I see now” — Andonian mourns its downside.

'We've been pushed out'

“It’s sad that the people who love this city and have been here for generations can’t afford to be a part of it,” she said. “We’ve lost our neighborhood. We’ve been pushed out of our little community.”

The properties acquired by Nelson were previously owned by the family behind Rocky Produce, which purchased the buildings in the 1950s and was known for leasing space to artists and young entrepreneurs at extraordinarily low rates. As of this summer, some businesses in Nelson’s portfolio were still paying as little as $5.40 per square foot. By contrast, the rate for commercial space in a renovated building in Eastern Market is climbing toward $25-$30 per square foot, according Dan Carmody, president of the Eastern Market Corporation, the nonprofit public-private partnership that oversees the Market. A renovated, two-bedroom loft there can currently lease for $2,300 per month.

The rents stayed cheap largely due to deferred maintenance — and they’ll likely rise as repairs are made. Exterior work at a building beside one bought by Nelson — where the previous owner says the facade is sliding, causing bricks to fall and windows to spontaneously shatter — will total at least $300,000, according to the former owner. Renovation of the five-story Viola Building at Gratiot and Russell will reportedly cost $1 million.

Though some of the affected tenants are hopeful new investment will address these issues and activate much of the market’s unused space, many harbor resentment toward their new — or former — landlord for how things went down. Many of Nelson’s tenants first learned they’d be paying rent to someone new from an article chronicling his June real estate transactions. Nelson first made contact with most of his tenants by a letter announcing a series of meetings at the Germack coffee shop on Russell, where he informed some that their rent would go up almost immediately.

Selective deal-cutting

“It was very discombobulated,” said Autumn Bowman, who until recently operated the Eastern Market Wellness Center, a holistic therapy center on the second floor of a Division Street building. “We all got different leases, wildly different offers to move into other space. Some of us were not given that option.”

Nelson counts several longstanding Eastern Market businesses among his new tenants.

Indeed, Nelson has cut deals with some tenants and not others.

Popular, highly visible businesses have received reasonable lease agreements; Supino reportedly will remain in its corner spot at Russell and the Fisher service drive for at least five more years. Lesser-known businesses — like the Kung Fu Academy, which had a prime street-level location around the corner from the pizzeria — were told they could temporarily relocate to other Nelson-owned properties.

Nelson said the same to Signal Return, according to founder and board member Toby Barlow. (Barlow says Nelson has indicated he may raze the Division Street building that houses the letterpress shop to build residential units. Existing state and federal historic designations cannot prevent that, but preservationists have recommended that a more stringent local designation be adopted.) Russell Street Deli isn't sure of its fate as its lease comes up for renewal, but owner Ben Hall is hopeful that Nelson, who eats at the restaurant with his father, will be fair. Other businesses did not want to discuss possible arrangements with the Nelson group on the record. One business owner who hadn’t heard much in the five months since the meetings said they did not want to “wake a sleeping giant.”

Bowman, owner of the wellness center, was offered no accommodations. Within 30 days, she said she was told, her rent would rise from $700 to $1,200 per month. She relocated just outside the market to Gratiot and Chene.

“Basically I’m not a profitable business in (the Nelson group's) eyes,” Bowman said of why she was forced out. “I was working, doing massage, renting out the space just to pay the bills. I wanted to have a community space and give other people the chance to grow their following. That's more important than making big bucks.”

Pushback from a powerful voice

When Bowman and other tenants got word of the rent hikes over the summer, Roula David – executive festival director of Murals in the Market – threatened to cancel the September event. It’s one of Eastern Market’s signature events and the murals shape much of the area’s identity, transforming its many brick and cement-block walls into Instagram-ready backdrops.

Tensions between the Eastern Market arts community and the area’s new landlord were evident in this banner hung from the market's water tower. (Photo: Courtesy)

David’s group even sent back a check for $1,800 donated by the new landlord to the festival.

The action, David believes, helped push Nelson to postpone some planned rent hikes until the new year.

“I have a really big problem when people say `We want to create an arts district’ and they kick out all of the artists first,” David said. “These developers in these really sensitive places, they have to figure out how to make this work . . . or we’re going to lose everything that makes Detroit awesome.”

David — who is affiliated with the former Gratiot Avenue gallery, Inner State — said Nelson’s moves came as a shock, particularly because she’d known him to be a patron of the arts. Some of his tenants report he’d purchased work from them.

Though David may have bought some artist tenants time, the end of the year is approaching, and with it, what some call “the end of an era.”

The artists’ lofts above Supino are almost all vacant now. Last month, in the live-work space of painter Michelle Tanguay, one of building’s last two holdouts, boxes were stacked to the ceiling and large canvases bearing her distinctive portraits were wrapped and ready for transport. Tanguay, who has sold art to Nelson, was moving while eight months pregnant.

“It’s quiet now,” she said. “This was such a lively place, even this building. There were artists working here. There was this energy. People are just kind of scared. Everyone knows the good old days are over.”

The artists’ lofts in the Atlas Building on Gratiot are also emptying, ahead of a planned renovation — possibly to convert the building into a boutique hotel.

But Lois Teicher, an 80-year-old sculptor who has worked in a studio in the building for nearly four decades, is optimistic her new landlord will make good on his promise to move her studio into a new space inside the Market proper with affordable rent.

That’s even though her rent has held steady at $350 since 1982. Today, Nelson told Teicher, her 1,400-square-foot space would rent at a market rate of $2,500 per month.

Last week, she packed her tools in her studio, its ornate columns holding up a 16-foot ceiling above high windows that let in streams of milky sunlight.

“They are very nice,” Teicher said of Nelson’s group and the Eastern Market Corporation. “I have no complaints. I have no anger. It is what it is. It’s progress.”

Among her tools sat a stack of black-and-white photographs showing Teicher on the roof of the Atlas building shortly after she moved into her studio on the ground floor.

Back then, she said, the entire Atlas block was a colony of ambitious artists, writers and what Teicher remembers as “a great community of motley people” attracted to a then-declining neighborhood offering low rents, urban funk and creative spirit.

As she led a visitor out the back door to the alley with the uneven pavement and the deeply rutted parking lot, Teicher stressed that she’s experienced only kindness from her new landlord and that she considers this a blessing.

“I can’t complain,” she said. “It’s heartwarming. It almost makes me cry.”

The market, or mercy?

But can Nelson profit on his investment while offering space to artists and others who cannot afford the new market rate?

“You are right, ‘market price’ will be out of reach for some artists,” Nelson wrote in an email. “Which is why I am committed to setting aside space for artists that they can afford to both live and work in Eastern Market. . . . The simple answer to how I will achieve this is that I am just going to do it.”

Nelson did not consent to a formal interview, but offered substantial answers to questions submitted to him by email. He wrote that he plans to preserve as much of the market’s traditional feel as possible.

Then and now. Lois Teicher has been in her loft studio on Gratiot since 1982. Her rent has held steady at $350 per month. (Photo: Courtesy)

Nelson said his company –  FIRM Real Estate, LLC – is committed to offering artists space “not just below market rate, but truly affordable.

“Because we have such a large portfolio, we have the ability to dedicate space for artists, both in existing building and eventually in newly constructed buildings,” he wrote.

“It is an incredibly special and unique neighborhood,” Nelson wrote. “It is its own enclave . . . Who wouldn’t want to live right next to a farmers’ market?”

He suggested that more residential options will bring a permanent population that will increase customers for small businesses in the neighborhood on more days of the week.

“Eastern Market does see a lot of traffic but it is mostly a seasonal and few days a week thing,” Nelson wrote. “Eastern Market should be a 24-7, 365, diverse and bustling community.”

Behind the retail counter at the Rocky Peanut Company on Russell, Nick Navalta, a longtime employee, wholesaler and a relative of the family that founded it in 1957, is excited about that prospect.

He said the downtown restaurant boom has helped Eastern Market and more housing will cause retail businesses to prosper.

“The market is its own gem,” he said. “It was sort of hidden, but now more people know about it. ... It’s just insane. Everybody just comes down here now.”

The Rocky family retained ownership of the building, Navalta said.

But the crowds who visit the market on Saturdays don’t stop at places like Complete Food Service, a wholesaler on Division near Orleans owned by Steve Polasek.

Changes in the market, he said, have not “from the wholesale stand point ... improved our business whatsoever.”

“I’m not a retail guy,” he said. “I’m not set up for walk-in.” Foot traffic actually hurts Polasek’s bottom line.

But Polasek recognizes the demand for something different. “Millennials like the idea of walking to work and living close to where they work,” he said. “They don’t mind living above a bike store.”

Meanwhile, Barlow, of Signal Return, fears pricey apartments could jeopardize the market’s identity as a food hub with an underlying arts scene.

“You’ve still got this rich, active, vibrant market and transforming that to a bougie residential center is going to fundamentally transform what that neighborhood is,” he said. “There’s kind of no denying that.”

Painter Michelle Tanguay packs up her unit in the Rocky Peanut Lofts above Supino Pizzeria. (Photo: Courtesy)

He says he hopes attentive and aware people are “making sure that things that are precious are not lost.”

The market in the Market

Over the next several years, Eastern Market and its Gratiot border will absorb more than 10 times the 150 residential units that exist in the area today. A single yet-to-be-announced Nelson project, on the block of the Bert’s Marketplace complex on Russell and Division, is expected to more than double that, according to Carmody. Additional mixed-use projects by other developers that could each create hundreds of new units are slated for the former Eastern Market and Metro Cold Storage buildings at Adelaide and Orleans Streets, the area of Gratiot and the Dequindre Cut, and the southwest corner of Gratiot and Russell.

The developments will have between 20 and 40 percent of their units set aside as “affordable,” meaning individuals making as much as $40,000 per year could qualify for reduced-cost rents.

But new residential and retail space will rent at far higher square-foot rates than the produce wholesalers and other food-related businesses that put the market in Eastern Market. With that in mind, Carmody’s development corporation has crafted a plan to provide lower cost options with the goal of maintaining the area's identity as a food-distribution hub where traditional, small and medium-sized business can survive, and all Detroiters feel welcome.

“Those are traits that don’t exist in a lot of places. Around the rest of the country . . . authentic food-making and distribution places have disappeared when the urban real estate markets of others cities became super-charged, as is finally happening now in Detroit after 50 or 60 years of disinvestment," Carmody said, pointing to bygone food hubs like the Meatpacking District in New York and Union Market in Washington. “There’s always tension around change, but part of the plan is to create a template around . . . vacant area.”

Land on the market’s eastern edge, much of it vacant or abandoned and city-owned, may offer a place for business growth to be rooted. The Eastern Market Corp. is extending the district's boundaries east to Joseph Campau and north to Canfield, adding 100 acres to a site that is currently 185 acres. Several large wholesalers that need leases of $7 to $12 per square foot and may be operating in outdated buildings no longer fit for food uses will relocate or expand to this area from the market’s historic core. The market corporation also has plans in place to eventually hold 25 percent of commercial space at below market rates with help from philanthropic investments in several food accelerators planned for the area. 

Some of the vacant land could also attract more residential development. 

City planner Maurice Cox cited the Dequindre Cut, a north-south path for pedestrians and bicyclists fashioned on the east side of the market from an old rail spur.

“It’s a vibrant core,” he said. “Live near the greenway. We’re following where the market wants to go . . . Let it hug the Dequindre Cut.”

So far, just one of the four major mixed-use projects that have been announced will be built there — the rest will be much closer to the market’s historic core. One will be smack dab in the middle of Russell Street — where Carmody says the Nelson group hopes to build several hundred units.

Less Marketplace, same Bert

The development would be situated on the block dominated by Bert’s Marketplace & Jazz — an institution that might not survive the transition in its current place or form. On Saturdays, barbecue sizzles on grills out front while customers take turns at the karaoke mic. And that’s just the beginning.

Inside, amid 24,000 square feet of rambling space connected by irregular corridors, “Mr. Bert” Dearing has merged a complex of restaurants, bars and banquet rooms with an ad-hoc museum of African-American Detroit history, much of it about music, sports and politics.

A mannequin wearing one of Aretha Franklin’s dresses shares the space with a room dedicated to black Detroit police. Photos line the walls of the long-demolished Paradise Valley district and Black Bottom. One shows Dearing as a little boy doing business there.

Linden Nelson (Photo: Twitter)

“That’s me,” he said. “Shining the pimp’s shoes.”

Black Bottom and Paradise Valley didn’t survive the evolving city, yielding to Lafayette Park and I-375. And Bert may have to move again, too. Much of his collected stuff soon must move to another location, he said, because he won’t have so much space when his landlord, Nelson, decides the fate of his building.

But Nelson has negotiated an agreement with Dearing, he said, that will insure Dearing’s continued presence.

“Bert Dearing is a true Detroit icon,” Nelson wrote. “We are committed to Bert and Bert will always have a presence in Eastern Market. I know that Bert is equally as excited as we are about the future of Eastern Market.”

Dearing, 44 years older than his new landlord, was less effusive but positive. He’ll have less space, but he’ll still be standing in the transformed Eastern Market. “We’re in business together,” Dearing said. “We’re partners.”

Leave a Comment:

Photo Of The Day