Good news / bad news time:
Downtown, Midtown and Corktown are popular places to rent an apartment or loft. Rising demand makes developers eager to build residential projects.
But that's not helpful for young professionals because of basic economics: Demand + scarcity = higher costs, as JC Reindl and John Gallagher report on the Free Press' front page under the headline "Detroit in Demand."
Rental rates in downtown Detroit-area buildings have risen so high, some young professionals who breathed new life into the city core just a few years ago are now being priced out of the market and forced to move — a type of middle-class gentrification that has some developers eager to build new residential projects.
Development experts say demand far exceeds existing rental units in choice areas . . . where influxes of mostly young, well-paid professionals drove rental rates to new heights in new, existing and soon-to-open apartment buildings.
In many cases, landlords are asking $200 to $400 more a month for apartment leases than they were just a year or two ago because of the high demand and almost nonexistent new supply. . . .
Renters already in the middle class and enjoying professional careers now are being displaced by those even farther up the income scale who can afford the higher rents.
The reporters speak with Ryan Cooley, owner of O’Connor Real Estate and Development in Corktown:
“Our office routinely turns down probably two people a day, letting them know we just can’t help them find something to rent. There’s just a lot of 20-year-olds wanting to live in the city.”
This shift could ultimately be good for the city -- and prospective tenants -- in the long run, the reporters note.
Rents are inching closer to the magic $2-per-square-foot level, a price developers say could allow new residential projects to get built without reliance on the subsidies, tax credits and nontraditional funding sources that are currently required. Once there is more supply of apartments in the popular neighborhoods, the thinking goes, rent prices would stabilize.
In their Page One centerpiece, Reindl and Gallagher also present an example of unintended consequences:
As recently as two years ago, major employers in downtown and Midtown created incentive programs to persuade their employees to relocate into the city’s core. Live Downtown and Live Midtown have enticed nearly 1,500 workers to rent apartments or buy condos in the central city through cash grants. The programs have played a role in driving up rents.
-- Alan Stamm
Related commentary today: