East Riverfront Investing Guide

For Dominic Pangborn, the potential of the East Riverfront was evident, if not immediate.

Hired to provide the graphic design for the Harbortown development in the 1980s, Pangborn moved his office to the riverfront. Impressed with the size and scope of Harbortown, particularly in view of the investment of Ford Motor Co. in the nearby Renaissance Center, he thought, “Buy the nearest property closest to the project. If they’re putting a billion dollars into this project, I can’t go wrong.”

Twenty years later, he’s still waiting for riverfront development to assume its full potential, but he and others are finding more and more reasons to be optimistic.

Pangborn is so optimistic, in fact, that he’s developing a $5 million Asian Village, an 18,000-square-foot complex that will include a gourmet restaurant and shops for artisans, as well as parking facilities. Once again, Pangborn’s impressed by the scope of a corporate investment on the East Riverfront – this time via General Motors, which spearheaded a $500 million renovation of its headquarters in the RenCen and has plans to develop 13 acres. “That’s why I built the Asian Village there,” says Pangborn. “I want to be with people who are committed, like GM.”

There is anticipation in the spring rubble. Pylons are being driven into the ground at the river’s edge for the planned Detroit RiverWalk, and two continuous miles of the project should be complete by the year’s end. Private for-profit and nonprofit development proposals are being discussed.

On the for-profit side, a series of mixed-use proposals to build condos, lofts and single-family homes along the riverfront has created a buzz. The projects include:

• Dwight Bellyue’s @twater Lofts, a $430 million project to put 480 condos on a former cement-silo site, plus 43,000 square feet of retail.
• Former Piston Dave Bing’s 108 townhomes and condos, a $41 million project.
• Pittsburgh developer Chuck Betters and NFL star Jerome Bettis’ $25 million project to but 64 condos, retail and restaurant space.
• River East, 13 acres of GM’s land to be developed by DREP, a local wing of Chicago’s Mesirow Stein Real Estate Inc. and Morningside Equities Group.

On the nonprofit side, the Ford and Kellogg foundations have announced $17 million in grants to support community revitalization in the area, complementing philanthropic investment in the Detroit Riverfront Conservancy.

People will come

Conventional wisdom for retail marketing – “show me the rooftops” – holds true for the city’s East Riverfront, says Mike Dempsey, project manager, Detroit Economic Growth Corp. Dempsey has worked on several projects in the area. While he would like to see retail development sooner, it’s likely to lag until the residential units are constructed.

It may be premature to open a small business in some parts of the East Riverfront, but it’s not too early to invest, says Gideon Pfeffer, a local mortgage broker who has invested in a Harbortown condo and plans to open an office in the area. “The people are going to come,” he says, and smart investors will realize there are “opportunities waiting to happen.”

Pangborn says that while large investors are able to acquire property, there’s not much available for small investors. The area is two years away from seeing any significant added residential population to support retail businesses, but investors “won’t be able to afford it in a couple years,” Pangborn says. He suggests to smaller investors or entrepreneurs: “Why not buy across Jefferson (or) buy a piece of Asian Village?”

Dempsey suggests looking at the planned mixed-use developments, which call for retail on ground level anyway. It may make more sense for retailers to watch the development plans unfold and engage developers with proposals for shops and services. “That way they won’t have to go from soup to nuts – they can just lease the space,” he says. “We’re aiming for a fairly dense district, relatively speaking. … The (near) East Riverfront is possibly one of the greatest areas of potential growth for the city.”

Leland Bassett is principal of a public relations firm that moved from its riverfront office to larger space in Harmony Park. However, with the right location and the right offer, he’d move back. With the prospect of considerable infill development and the RiverWalk, which symbolically and literally links the area, the dots may finally connect, says Bassett.

“What it takes to connect the dots is a critical mass of activity and residential communities so that you have 24-hour activity. That is happening,” he says. “The condo/loft phenomenon along the riverfront is very exciting, very real, and I think have reached a critical mass.”

Downtown Detroit, especially the East Riverfront, is an ideal culture for entrepreneurs, according to Sabra Sanzotta, a realtor who specializes in loft and condo properties in Detroit. “There are so many people starting small businesses,” she says. “As a small business, network is important. I’ve never seen stronger networks than you see here.

“One reason people like the East Riverfront is because it’s a community within a community. It’s secure, almost a little insulated, in a good way. There’s a high sense of neighborliness … When something happens, the neighbors all know about it within days. They hold parties within their developments more often than I see anywhere else.”

Sanzotta says small businesses can survive the remaining lean years if they’re prudent. “Ramp up at a rate that’s sensible. Now is the time to start something small. It’s ripe for local entrepreneurs.”

Booming future

A while the riverfront waits for its population boom, some businesses have thrived because of the stream of traffic along Jefferson. Judging from the stream of commuters stopping in all day going to and from the East Side communities — including the Grosse Pointes, Indian Village, the West Village, Harbortown and other riverfront communities — places like Starbucks, located at the corner of Grand Boulevard and Jefferson, show there’s a market for businesses that can lure traffic.

Powerhouse Lifestyle and Fitness Center owner Fred Wilkerson says the there’s been enough traffic to survive, but he foresees a booming future. “I see a foundation being laid to step it up,” he says. “I see promise down here, especially for what I want. I want as much traffic around my club as possible, so I can bring people in.

“If they’re building homes, condos and shops, people are going to be coming here, passing by us,” he says. “Even if they’re not interested (in looking for a health club) if they’re passing by, at some point they’re going to come in. If they’re people living down here and coming here to eat, and frequently coming back and forth, you benefit from that traffic.”

The prevailing attitude for business owners and investors along the Riverfront seems to be hurry up and wait. The wait, they say, will pay off big time.

“It’s a little early, but if you don’t get in now you won’t be able to get in, says Steve Radden, owner of Magnolia, a restaurant offering upscale Southern cuisine. “It’s like anything else, once things start boomin’, everything’s going to go way up.”

Radden is about to get in a little deeper as he develops eight condos next to his restaurant. “I think it’s going to be really booming in the next couple years,” Radden says. “The first year is going to be a little rough because they’ll be putting in the infrastructure – the roads, the sewers, the power. It’ll be a mess down here. But once it’s complete, it’s going to be beautiful, and I’ll be sitting right in the middle of it. Anyone who can afford to ride it out will be sittin’ pretty.”