The Motor City may want to celebrate with a victory lap. The city's efforts to court technology-based businesses and expand its job base are beginning to pay off. The decision by Quicken Loans to relocate its headquarters and 4,000 employees from nearby Livonia to downtown Detroit is part of a major push by local leaders to stimulate investment and diversify a market heavily dependent on manufacturing jobs.
Michigan has lost 150,000 auto-related jobs in the past seven years, according to Dana Johnson, chief economist for Comerica, which moved its banking headquarters from Detroit to Dallas in 2007. “It's been a very grim period for southeastern Michigan.”
The state's unemployment rate climbed to 7.4% at the end of 2007, the highest in the country. Meanwhile, U.S. automakers are losing domestic market share to foreign competition. Toyota's sale rose 2.7% last year in the U.S., vaulting it past Ford Motor Co. into second place behind General Motors.
Quicken, the nation's largest online mortgage company, was being wooed by several states. The decision to stay in Michigan was part sentiment, part business sense. Chairman Dan Gilbert is a local boy, and the state and city offered Quicken a package of incentives worth an estimated $200 million over 20 years.
“There's a new energy in downtown Detroit,” Gilbert says. “A thriving central area, where the threads can be tied between entrepreneurs who have creative ideas and people with capital seeking to invest, is essential to our city's future.”
The company's venture, “Detroit 2.0,” involves two sites — the vacant lots of the old Hudson's department store and the former Statler Hotel. Quicken has up to a year to select one site for the headquarters and another two years to draw up site plans. Gilbert hopes to develop the other location for emerging technology companies and venture capital firms.
Mayor Kwame Kilpatrick says that while manufacturing will always be a key component of the city's economy, new investment is essential. Other elements of the rejuvenation plan include the recent opening of the $800 million MGM Grand Detroit casino-hotel, expansion of the Greektown and MotorCity casinos, restoration of downtown hotels, and the rebuilding of Detroit's historic riverfront.
The non-profit Detroit Economic Growth Corp. is helping to identify available properties and provide information on financing and incentives. Detroit Investment Fund, a private capital fund, offers low-cost loans of $500,000 to $2 million for growth-oriented companies willing to relocate to Detroit.
Steven Chaben, regional manager for brokerage Marcus & Millichap, says that investment by out-of-state companies is off to a good start in 2008. New York-based Northern Group recently announced plans for Cadillac Centre, a $150 million mixed-use project on Campus Martius Park in the heart of downtown.
State officials hope that by strengthening Detroit's core, suburban areas in southeastern Michigan also will become more attractive to investors and lure younger workers interested in the amenities that a large urban center offers.