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D O W N T O W N    R E V I T A L I Z A T I O N

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New Urbanism
Brings Downtown Back

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In Denton, Texas, an old night club was renovated into the Cupboard, a health-food store.

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b y    T R A C Y     H E A T H

Looking for a competitive boost? Don't overlook downtown areas, which offer cost and labor benefits.

Funny how you can't see the forest for the trees -- or in some cases, the opportunity for all the vacant buildings. But with urban sprawl becoming the latest buzzword (albeit a negative one) in corporate and commercial real estate, businesses have begun to take another look at those oftentimes blighted downtown locales. What they're finding may surprise you.

Most U.S. cities are investing -- with a little help from their private-side friends -- in their downtowns, and now more and more of those areas are becoming the bustling business centers they once were. Take, for instance, downtown Detroit, which was once losing 116,000 jobs a year.

Like most comeback cities, Detroit began its recovery with the construction of major leisure attractions such as the city's new, two-stadium complex for its professional baseball and football teams, the Detroit Tigers and Lions. That single US$505 million public-private investment has since turned a few business heads and has served as the stepping stone for downtown Detroit's rebirth. Now more than a dozen of the city's historic towers, including the Buhl, First National, Penobscot and David Whitney buildings, are undergoing major renovations in preparation for occupation or conversion (the David Whitney will become a new downtown hotel). And with more businesses and people moving downtown, the city's tax base is growing, and the streets stay busier, which in return is lowering crime rates.

Now industries like the all-important auto business are moving back to downtown Detroit. General Motors is leading the way, moving its world headquarters from a midtown location to downtown Detroit's Renaissance Center. The automaker is also investing some $2 billion to transform several parking lots just east of its office into a district of riverfront shops, lofts, offices, condominiums and restaurants to be called River East.

Also in downtown Detroit, Compuware Corp. will build an $800 million headquarters campus at Campus Martius, a five-block downtown development of offices, hotel, shops and restaurants similar to GM's River East project. The company will build a $400 million office tower as part of the project.

In Detroit, much like in Cleveland, San Diego, Atlanta and other redeveloping metros, initial downtown investments were public-private efforts. However, as many have learned, once those first investments are made, self-sufficient downtowns are just around the corner. "A lot of these investments are paying off," says Jeffrey Finkle, president and chief executive officer of the Council for Urban Economic Development (www.cued.com). "They're paying off with new buildings going up in the downtowns; we've got employment rolls going up in downtowns; we've got tax base stabilization so the community at large is stronger. And we have communities using tax increment finance to help build some of the infrastructure that is being added in downtowns such as parking garages."