John Gallagher and Greta Guest|The Detroit Free Press

Public relations professional David Lilly left New York City two years ago for a downtown Detroit neighborhood that was “a pretty lonely place,” he recalls.

Since then, more than 10,000 workers have descended on downtown, with hundreds snatching up available rental housing or buying properties as their new home address.

• GraphicDowntown gems

With the windfall of employed people, there’s a palpable difference in the look, feel and culture in the greater downtown district. Restaurants buzz at lunchtime. Clubs hop at night. Small-store owners are expanding operations, adding space and employees to meet greater demand for yoga, house wares, dry cleaning, food and more.

There are traffic jams in the morning — and after work on streets that were once abandoned after dark. New residents walk their dogs, buy coffee, get haircuts.

Outlanders have always come to the casinos and on game days flooded the streets as they hit bars and restaurants or visited Greektown. But now, there’s also something steadier, something more regular.

Ouse Gulli, owner of the CK Mediterranean Grille on the ground floor of the Compuware garage on Monroe, said his business has grown so much with the influx of new people that soon he’ll open a second location downtown.

“I can see a difference, and other business owners that I speak to can see a difference,” he said. “There’s definitely a synergy going on.”

Lilly — who lives in the Kales Building on Grand Circus Park — had his pick of multiple available apartments just two years ago.

“Today, if you wanted to live in my building, there’d be a waiting list,” he said. “I have a lot of new neighbors and friends, and you see a lot more activity on the street than you would have seen a few months ago.”

Even so, the greater district, which includes downtown and Midtown, still needs more of the everyday humdrum retail that builds permanent communities — groceries, pharmacies, dry cleaners, banks, Lilly and others say. “If you work at it, you can acquire most of the things you need to live comfortably by spending your dollars in the city,” he said, “but that’s not easy.”

Many say that will come as a critical mass of workers and new residents continues to build. A Whole Foods will open in Midtown next year, for example.

10,000 new workers

Since mid-2010, when Quicken moved its first employees downtown from the suburbs to the Compuware Building, about 10,000 new workers have transferred — close to 6,000 with Quicken or its related companies, 3,000 with Blue Cross Blue Shield of Michigan and scattered others with various companies.

Those companies seeded several incentive programs starting early last year, in the hope that workers would move with the jobs. The programs — Live Midtown and Live Downtown — so far have approved about 500 employees for incentives, with more than 100 applications pending.

Most of the newcomers used incentives for rental apartments.

But others, like Matt Bobzien, a 26-year-old systems analyst for Blue Cross, bought. He moved a year ago from Novi. His $20,000 incentive was enough to cover the full purchase price of a one-bedroom, 755-square-foot, condo at 1300 Lafayette. It has a sweeping vista of the river and Canada beyond.

“It’s a mile from work, a mile from Eastern Market and a mile from Comerica Park,” he said. “You can’t get any better than that.”

Under the program, he doesn’t have to pay the money back if he stays for at least five years. Bobzien said he sees no reason to leave. He walks to work and feels more productive from the exercise.

“The price was right. I have no mortgage payment,” he said. “It’s a nice thing to have at 26, let me tell you.”

Michael Martorelli, head of sales and leasing for the Park Shelton condos and apartments next to the Detroit Institute of Arts, said the incentives have helped fill some of the rental units there. And the incentives, he said, are helping to change perceptions of Midtown.

“In four to five years, this area will look so different, I don’t think those incentives will be needed,” he said. “The desire to live here will be greater than the incentives.”

Brittany Galisdorfer, 29, an employee of the University of Michigan in Ann Arbor, said she and her husband, David White, 30, an attorney, moved downtown a few years ago to be part of an urban community. They also live in the Kales Building and “love Detroit,” she said. They enjoy seeking out local activities, such as a running club Galisdorfer joined.

She said the district needs more activities in the mainstream.

“It can’t stay underground like it is now,” she said. “It needs to be at ground level, where you can walk down the street and see the stores opening or hear the music, as opposed to being off in a corner somewhere.”

Mario Lake, general manager at the Lofts of Merchant’s Row on Woodward, said incentives started driving demand last spring. He said about 20% of residents qualified in the 157-unit development, which is 98% occupied. “We’re getting a lot of Quicken employees and students at the universities because we offer a shuttle service to the schools,” Lake said.

Sue Mosey, president of Midtown Detroit Inc., which administers the incentives, said new residents tapped $1.5 million in Midtown and $900,000 in downtown. She said more applications are being reviewed.

Austin Black II, president and broker at City Living Detroit in Midtown, said there’s not enough available housing to meet demand.

“If there was more product, we would see more of these employees moving downtown,” he said. Inventories are especially tight in the lower price points, he said.

Optimism is catching

Nobody claims the greater downtown district has reached its peak, or anywhere close. Among other steps, business and civic leaders continue to push federal authorities for a Woodward Avenue light-rail line, calling it an essential piece of the new downtown.

And real estate developers say banks remain reluctant to lend in Detroit, for home mortgages and development. “Money from the banks is No. 1,” said Robert Slattery, a longtime Midtown developer.

Even so, on the front line of commerce and development, the Free Press found a flurry of small-business activity.

Coffee shops and other retail seem to open weekly, such as Chez-Zara, an espresso bar that opened this month on the ground floor in the M@dison, the once-vacant structure that Quicken Loans founder Dan Gilbert helped turn into an entrepreneurial hub.

Monica Breen, owner of Be Nice Yoga near the Majestic Theater on Woodward in Midtown, moved from her smaller studio in the Buhl Building downtown to a location with more foot traffic. She moved to the new spot in May, after seeing the impact of the incentives.

“I can see out our window a constant stream of foot traffic and bikers,” Breen said. “I wouldn’t have had the courage to move into Midtown if I didn’t see the result of those incentives.”

She’s tripled the number of weekly classes from seven to 21 and more than doubled her instructors to keep up with the demand. “I chose Midtown because of the vibrancy, the walkability and growth of other businesses.”

Larry Mongo, owner of the popular Café D’Mongo Speakeasy downtown, said the newcomers are changing the makeup of the downtown crowd — becoming more white, for one thing, and also more gay.

“Detroit’s becoming a very hybrid city now,” he said. “If you’re in business, you have to adjust to that.”

Mongo’s wife, Diane Mongo, who has operated hair salons downtown for many years, agreed that the typical client is now more often white. To adjust to that, the business is advertising for stylists more in suburban newspapers to find stylists who can work with white hair.

Retailers are adapting in other ways. Emily Linn, co-owner of City Bird, an art gallery that sells handmade gifts, on Canfield, said she and her brother, Andy Linn, opened another store, Nest, in December as they got more requests for housewares. They stock a mix of kitchen necessities, organic cleaning supplies, plants, candles and home accessories.

“We get a lot of support from the community. That’s one of the great things about doing business in Detroit,” she said. “It feels like there is a critical mass happening right now. It’s exciting.”

Incentives seal deals

The tight investment market, and still-modest rental rates for apartments, means new projects come online only with the assurance of tax credits and other city or state incentives.

Apartment developments opening soon — the Broderick Tower on Grand Circus Park, the Auburn in Midtown — all are benefiting from various incentives.

Developers remain upbeat about the market’s outlook. Lis Knibbe, an architect working on historic preservation projects, recently bought the vacant Sherbrooke apartment building near Second Avenue and Hancock in Midtown. She plans to renovate and reopen the 14-unit building by the end of this year. She’ll use private money and conventional financing, plus historic tax credits and other incentives for the $3-million project.

“It was exactly the size of project we were looking for.”

The influx of new people convinced her the investment was safe. “I just thought it was the right time to come into the city.”

That optimism appears to be catching. Chris Edmunds, property manager for the Millender Center apartments at 555 Brush St., said the property is full. “We’ve always been pretty good. We’ve got a great location,” she said. “Right now, we are filling them as fast as they come up.”

If the greater downtown area remains a work in progress, the progress is accelerating.

It benefits from a desire for urban living, a trend nationwide.

For his part, David Lilly, who moved downtown from New York City two years ago, cites urban living as a key goal.

“I think among everybody who lives downtown, there’s a real desire for something that feels authentic or original,” he said, “something other than the corporate programmed life that you might experience in suburban strip malls or places where you have only chain restaurants.”

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