Saturday, July 13, 2024
HousingReal EstateUrban Planning

Can Second-Floor Apartments Make A Comeback? A New SDBA Grant Program Thinks So.

A trip down Southwest Detroit’s West Vernor Highway is a survey of the city’s past, present, and future. Starting from the Ford megaplex in Dearborn, we can continue the whole way to Michigan Avenue, where Ford is refashioning the iconic Michigan Central Station into an icon of future mobility. Along the way, you can see some of Detroit’s most diverse mix of housing and architectural styles, ranging from 1910s Beaux Arts, to unambitious but sturdy 1920s storefront blocks, to artfully renovated buildings paying homage to the neighborhood’s substantial Mexican demographic. The mix of buildings also has a lot of second-floor apartments that are have, sadly, mostly sat vacant for decades. This is what Greg Mangan and Juan Gutierrez and I are talking about as we try and reach out to local business owners to let them know about a new program that will provide a $10,000 grant to fund the renovation of second-floor apartments.

A new grant program being offered by the Southwest Detroit Business Association and the City of Detroit Housing and Revitalization Department offers property owners $10,000 if they obtain a certificate of occupancy for a second or third floor housing unit. Housing in mixed-use buildings fell out of popularity in the late 20th century amid urban decline and a suburban urban development paradigm that prioritized single, isolated uses, rather than shared uses. It’s been coming back into vogue perhaps as long as it’s been going out (read: Jane Jacobs in 1959). But we’re in Michigan, so, you know… things are slower.

A Brief History of the Second Floor Apartment

The idea of living upstairs from the establishment you manage is a relatively simple, but sound, value proposition. It makes a whole lot of sense. This has long been the case with, say, clergy, lighthouse keepers, innkeepers, or really any person whose livelihood was substantially dependent on them being locked into one specific location for a specific reason, most or all of the time. It’s a sensible way of thinking, right?

Enter, of course, the postwar development paradigm. Suburbia abounded, and in suburbia, former farmland was paved over with a combination of land uses that were aggressively divided. City planners at the time (N.B. “developers”) believed that the uses, like the races, were best kept secret (I say this tongue-in-cheek but the irony of the comparison should not be lost in thinking about the racist legacies of redlining and postwar suburbanization). Residential meant “single-family homes.” Commercial usually meant strip malls. Even the strip malls of yore that featured a zero-lot-line design (where the front door and fa├žade are right on the sidewalk as opposed to set back across a lawn or a parking lot) were still car-dependent, low-density, single-use development.

Prior to suburbanization, cities developed around the competing paradigms of affordable land and necessity of housing for workers. The only major separation of uses in the prewar era was the regulation of undesirable uses– which, given how many factory towns existed into the 20th century, was focused more on making industry less gross rather than making sure it stayed far away from housing. Again, workforce, right!?

A single-story, zero-lot-line storefront typical of the midcentury age of suburbanization, as imagined by Midjourney AI. A new SDBA grant program will provide property owners with $10,000 to renovate second-floor apartments.

Canadian-American activist and urbanist Jane Jacobs was the first person to emphatically call out the value of the mixed-use neighborhood or building during a time (the late 1950s) when cities were being challenged as stinky, crowded places that represented an obsolete urban form. And since that time, while we’ve seen large sections of cities like Detroit empty out for the suburbs, we’ve also seen a renewed interest in the value of mixed-use development and mixed-use neighborhoods. It’s nice to be able to have things close to you! A business owner might opt to live upstairs from the business she manages, but she might also own the building and decide to lease the apartment out to someone else. A mixed-use building:

  • Makes for a safer streetscape, in that it allows more consistent, round-the-clock occupancy of a building that shares residential and commercial users.
  • Makes for a more financially stable asset, in that it generates revenue from two separate sources. Diversification in a single package! It’s the real estate equivalent of an exchange-traded fund, maybe! (Uh… maybe a stretch).
  • Makes for a stronger local economy, in that people who live in the neighborhood can also shop in the neighborhood.
A satellite street view of West Vernor in Southwest Detroit. Note the low density of most stretches of this section of street, evidenced by a high prevalence of parking lots and even grass lots fronting on this major corridor. Clark Park is at the far east-southeastern corner (the map is tilted slightly). A new SDBA grant program in conjunction with the City of Detroit will offer property owners $10,000 to renovate apartments upstairs from storefront spaces.

While tenants can be a challenge to manage, there is an added layer of security in having people present upstairs from your business some portion of every day, not to mention the additional rental revenue to the building owner. Who can, you know, hopefully invest it in more nice things, like making our cities more equitable and sustainable places to live! A new family living on the block means more demand for local services, which also creates more jobs, as you start to aggregate more than one or two units and start think in terms of dozens or hundreds.

Former SDBA president Kathy Wendler (left), SDBA's Greg Mangan, and SDBA's Juan Gutierrez (right)
SDBA’s Juan Gutierrez (right) and I met up with Greg Mangan at the construction site of the new La Joya Gardens mixed-income project, which will bring 53 new housing units to what was formerly a vacant lot. We also ran into former SDBA president Kathy Wendler (left), who was also stopping by.

$10,000: Small Construction Budget; Huge Amount Of Free Money

One of the store owners we talked to in the 7600s of W. Vernor raised an eyebrow at the amount of the grant.

“It’s gonna take a lot more than $10,000,” he said with a groan, and my mind conjured up images of forgotten, dusty offices, kitchens with aging, midcentury , cabinets. Lurid linoleum, chipping, forgotten. And, while these apartments sit vacant, the regional housing market still struggles with a lack of centrally-located, affordable housing units.

Yes, it may well cost more than $10,000. But in a world where we are frequently told that there is no such thing as a free lunch, it seems that there is such a thing as a free $10,000 grant. That could cover brand new HVAC work, or a bunch of electrical and plumbing, or a brand new kitchen. It could cover new windows, or perhaps the cost of separating entrances to the business from the entrance to the apartment, as one owner brought up.

Rehabbed or Pre-Habbed? Two Approaches To Distressed Real Estate

Oh, and that’s where I come in! I, Nat M. Zorach, AICP, MBA, am offering consulting services as part of the process, free of charge to the building owners. This begins with working out construction estimates and ends with a virtual tour of the finished space in Matterport. Remember the whole “rehabbed vs. pre-habbed“? I would love to bring this to the conversation in Southwest Detroit, whether to highlight the spaces that are being renovated, or to identify new spaces that could be converted from vacant and disused to productively reimagined. As a longtime destination for new immigration to Detroit, Southwest is a vibrant arena of new ideas and competitive markets that I’m looking forward to seeing in action in these spaces, both figuratively and literally.

The program covers multiple commercial corridors in Southwest Detroit other than Vernor Hwy. including parts of Junction St., Springwells, and beyond.

Want to chat about your building? Hit me up directly, or hit up SDBA and submit your application for the grant.

Nat M. Zorach

Nat M. Zorach, AICP, MBA, is a city planner and energy professional based in Detroit, where he writes about infrastructure, sustainability, tech, and more. A native of Lancaster, Pennsylvania, he attended Grinnell College in Iowa, the Kogod School of Business at American University, the POCACITO transatlantic program, the SISE program at the University of Illinois Chicago, and he is also a StartingBloc Social Innovation Fellow. He enjoys long walks through historic, disinvested Rust Belt neighborhoods at sunset. (Nat's views and opinions are his own and do not represent those of his employer).

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