Detroit is back from the dead. But not everyone is feeling it

By Nathaniel Meyersohn, Matt Egan, CNN

New York (CNN) — Hudson’s Detroit, the Motor City’s first new skyscraper in nearly half a century, is a symbol of Detroit’s transformation from bankruptcy to boomtown.

The $1.4 billion project includes a recently opened office building as well as retail on the site of the former J.L. Hudson’s department store and a skyscraper that will eventually feature high-end condos and a five-star hotel.

Detroit “was probably at the bottom of the barrel in this country – from crime and unemployment to everything in between,” Dan Gilbert, the billionaire who has helped catalyze Detroit’s revival, said in an interview with CNN. “It’s been a 180-degree comeback.” Gilbert’s real estate company developed the complex at the former Hudson’s, a shopping mecca for generations that closed in 1983.

Detroit’s population is growing for the first time in nearly 60 years. General Motors is moving its headquarters to Hudson’s. JPMorgan is growing in Detroit, too, having announced a big push to invest $100 million in the city more than a decade ago.

But Detroit’s improbable comeback remains incomplete. Its downtown has made a remarkable recovery from the city’s 2013 bankruptcy – the largest municipal bankruptcy in American history. Meanwhile, some parts of the city have been left behind. Others are still vacant.

Detroit’s rise and fall

Detroit was once the fourth-largest city in the country, home to America’s automobile industry. In 1950, Detroit’s population topped 1.8 million.

By 2013, Detroit’s population had fallen to 700,000.

Numerous factors hurt Detroit over many years, including a shrinking tax base, high unemployment and poverty, and rising health care and pension costs for city employees. Detroit’s reliance on the auto industry hurt the city as free trade agreements, automation and incentives from southern states sent jobs away.

People with resources also left Detroit for the suburbs. Detroit’s population declined roughly 28% between 2000 and 2015, while the population in the surrounding six counties grew 3%.

Detroit’s financial woes led to steep cuts in basic city services like trash pickup and snow plowing. An estimated 40% of street lights were not functioning by the time Detroit filed for bankruptcy in 2013.

During the financial crisis in 2009, Detroit’s unemployment rate skyrocketed to 29% as the auto industry teetered on the brink of collapse. The average price of a home in Detroit stood at just $7,500.

In bankruptcy, the state took over control of local government, and a state-appointed manager oversaw city spending and operations. Detroit shed $7 billion in debt and thousands of retired city workers were forced to take pension cuts.

The city exited bankruptcy after a year and has rebounded over the past decade, thanks in part to investments from JPMorgan, Gilbert’s Bedrock and other companies and philanthropic organizations.

Downtown vs. neighborhoods

Gilbert, the co-founder of Rocket Mortgage and owner of the NBA’s Cleveland Cavaliers, went all-in on Detroit when many left the city for dead.

After moving his mortgage lender’s offices downtown, Gilbert went on to buy more than 100 downtown properties, spending $7 billion along the way.

“We certainly jump-started it,” Gilbert said. “A lot of businesses followed from suburbs and other parts of the country.”

JPMorgan, which had a long-standing relationship with Detroit, later stepped up its investment in the city in what has become a model for corporate investment in underserved communities.

Leveraging data and research, JPMorgan’s years-long effort has helped tens of thousands of Detroiters get apprenticeships or jobs, led to the creation of preservation of thousands of affordable housing units and provided aid to countless small businesses, according to the bank. In 2021, JPMorgan opened one of its first community branches in Corktown, Detroit’s oldest neighborhood. The following year, JPMorgan launched a virtual call center in Detroit.

In January, General Motors is scheduled to move its global headquarters to Hudson’s Detroit. The move comes 16 years after the bankruptcies of General Motors and Chrysler that intensified Detroit’s downfall.

“GM and the Detroit’s DNA are interwoven. The two things just go together,” said Dave Masseron, GM’s vice president of infrastructure and corporate citizenship. “The city is on an upward trajectory for the first time in my lifetime. It’s a great time to be here.”

But Peter Hemmer, a law professor at Wayne State University, said that corporate and philanthropic investments have been concentrated downtown and have not done enough to help the neighborhoods that need it most.

A report last year commissioned by the Detroit City Council that private investments downtown “have not lifted the city to share in any levels of prosperity.”

The city has experienced an influx of White, Hispanic and Asian residents over the last decade. But Detroit, long a majority Black city, has seen its Black population has decline. Since 2013, the largest loss in population has been among Black residents, with 72,000 fewer over that span.

The median income in Detroit is $38,000, half the median income of its broader region. Only 26% of Detroit’s households are middle class, compared to 39% in the region. And 18 out of Detroit’s 139 square miles of land are still vacant, according to Detroit Future City, a nonprofit organization.

High-paying jobs are often held by people who live in the suburbs and commute into Detroit — while the salaries of Detroit residents, regardless of where they work, are lower. Nearly 70% of Detroit-resident workers traveled outside the city for jobs.

“Overall, we have seen fairly widespread increases in both housing wealth and income,” said Sam Stragand of the Detroit Partnership on Economic Mobility at the University of Michigan’s Poverty Solutions. “There are still pockets of the city with little activity in the mortgage market” and lagging areas in housing wealth, home repairs and high vacancies.

New mayor

Hudson’s opens at a moment of major change in Detroit. The city will have a new mayor for the first time since it filed for bankruptcy.

Mike Duggan, who was elected mayor in 2013 as a write-in candidate and was the first White mayor in a city that was 80% Black, stepped down after three terms to run for governor of Michigan as an independent.

Detroit has passed 11 consecutive balanced budgets under Duggan, who has won praise from business leaders.

Mary Sheffield, president of the City Council, won the mayoral election Tuesday to succeed Duggan, making history as the first woman to lead the city. She has been a strong ally of Duggan’s and ran on a platform of expanding the city’s economic recovery.

“This is a really critical moment for Detroit to make sure we can sustain the momentum we are on,” said Ashley Williams Clark, vice president of Detroit Future City. “We need to ensure that growth is not just in real estate and physical development, but paychecks and increased home ownership rates.”

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