Next Stop: Detroit
The wealthiest man in Michigan is only about 5-foot-6, but right now he is towering over not one but two Detroits.
There’s the real one seen through the floor-to-ceiling glass windows of the gleaming indoor basket-ball court that is the Silicon Valley-esque centerpiece of the head-quarters for Rock Ventures, the parent company of Quicken Loans. Dan Gilbert gazes proudly upon the skyline’s glorious jumble of classic skyscraper architecture that leads the eye through an urban canyon to a glimpse of the Detroit River. From our perch on the 15th floor of One Campus Martius, what’s down below might surprise folks who have read all the horrible headlines about Motor City in re-cent years and think of it as a vacated waste-land of blowing tumbleweeds: People. Lots of them. Bustling from one place to the next. Going to work. Lining up at food trucks. Having conversations at café tables on and around the manicured lawn of a city park.
And then there’s the Detroit inside. Just a few feet from those windows stands a scale model of the city’s downtown made of plastic and glue that is both smaller and much, much larger. The model encompasses about two square miles—what’s visible out the nearby windows and much more—of skyscrapers mostly built more than a half-century ago, which, as of five years ago, were almost all entirely vacant. If the roofs of buildings or empty plots of land are colored orange, that means Gilbert’s companies own them. There’s so much orange, it feels like Halloween.
Natural journalistic instinct compels our photographer to ask Gilbert to stand by his mini Detroit and pose. This is empire in miniature and emblematic of a monumental effort—what many are calling the revival of a once-great and left-for-dead American city—that could land in the first line of his obituary. A shot of Gilbert looming large would depict him as a saintly figure using his powers and largesse to bring life, commerce, and mojo back to Detroit. But Gilbert refuses—or, more accurately, his handlers refuse to let him.
I understand why. Gilbert is uncomfortable taking too much credit for whatever transformation is taking hold here. But he is the one who decided in 2010 to relocate the Quicken Loans headquarters and 1,700 employees from a nearby suburb to this high-rise on this central business district flanked by empty, decaying office towers. Once there, Gilbert—who made his fortune by marrying the Internet with real estate—began a $2 billion shopping and construction spree that has left him with more than 95 properties that have or are being renovated into office space, living space, and retail. On a startlingly routine basis, the Detroit media reports new acquisitions by Rock Ventures and the openings of high-end sold-out apartment complexes and brand-name stores.
Gilbert is a fairly easygoing, cas-ual fellow, and he bristles just once during our hourlong sit-down in his office. When I recite some of the accolades he’s received and the fact that many admirers and detractors refer to today’s Downtown Detroit as “Gilbertville,” he protests. “How do I feel about that? I don’t like calling it that. That’s probably not a healthy thing for anybody involved,” he says. “All of a sudden, it almost implies nobody else is going to join in and care. It’s not something that one person can do on their own.”
Perhaps, but it clearly required one person to start.
Dan Gilbert, 54, was raised in the predominantly Jewish enclave of Southfield, Michigan, the elder of two brothers who started the mortgage empire together before Gary Gilbert parlayed his share of the fortune into a successful film-producing operation with hits like Garden State and The Kids Are Alright. The Gilberts’ story is that of so many families from these parts in the mid–20th century—the brothers were born in Detroit, but the family decamped to the suburbs by the late 1960s, as almost a post–World War II rite-of-passage for the upwardly mobile white middle class.
One of Dan Gilbert’s earliest memories was of his father, who owned a bar in Detroit, staying home from work because the city was aflame during the 1967 riots, which left 43 people dead and more than 1,000 buildings destroyed. A decade later, the bar was sold, and, with the exceptions of Gilbert attending law school at Wayne State in the 1980s and then the relocation of Quicken Loans in 2010, the family had little business in an increasingly broke and broken city. Gilbert, his wife, and five children have remained in the suburbs; they live about three miles from the house where he was raised.
“You’ve got to be maybe six, seven years older than me to remember what people describe as the great glory days of Detroit,” he tells me when we are seated around a table with his back to a window sill that holds a collection of sports memorabilia—including a basketball signed by members of the Cleveland Cavaliers, the NBA franchise he, his brother, and the pop star Usher co-own. There’s also a giant image of Gilbert’s own face as rendered in the style of Fathead, a custom-poster company he bought that’s popular with college kids. That image, however, is dated; it doesn’t include the white stubble that makes Gilbert’s chin appear as though it has been dipped in milk. “In my living memory,” he continues, “the old, great Detroit never existed.”
Many factors sent Detroit into its tailspin. One is white flight, which was made possible, ironically, by the very product that made so many so prosperous in these parts: the mass-produced automobile. A six-decade-long exodus began during which the city’s population went from 1.9 million to the current 700,000 and went from 84 percent white to the current 83 percent African-American—a demographic that, through redlining and other racist housing practices, was largely denied the upward mobility afforded whites through government-backed mortgages. Generous retirement pensions for public employees won by once-powerful unions during the salad days came due at a time when there were fewer—and less affluent—people living in Detroit to pay taxes to fulfill those obligations. The manufacturing base, which employed 296,000 Detroiters in 1950, employed only 27,000 by 2011, the result of car factories relocated to the suburbs, other states, and overseas. Serial corruption in local government time and again sent elected officials, including a recent mayor, to prison.
Poverty begat rampant crime, abandoned housing,and such paltry
tax revenues that basic city services like fire, police, water, and electricity became unreliable or non-existent. Of
the Big Three automakers, only General Motors has its corporate headquarters in the city—and only because Congress made staying put a condition of the 2009 bailout.
Gilbert stepped in at an opportune moment. In the latter part of the last decade, the leases on Rock Ventures’ office space in the suburbs was running out, and he debated whether to renew them. By this point, he was a long way from his days buying and re-selling candy to his friends in elementary school; his novel idea in the late 1990s of using the Internet to sell home mortgages had blossomed into a billion-dollar-a-year operation and vaulted him onto the Forbes 400 list of billionaires. (He’s No. 286 as of this year with a net worth north of $5 billion.) “We had a choice,” he explains. “We could extend those leases and just kind of stay where we’re at and grow. We could find a piece of land and build some kind of enclosed campus. Or we come downtown and try to impact it as much as we could, any way possible.”
By this point, Rock Ventures had branched out into casinos, sports franchises, and venture capital for tech start-ups. And Gilbert was constantly hearing from millennials he was trying—and failing—to recruit that they were turned off by the prospect of working and living in the cookie-cutter suburbs with their dull nightlife and incessant traffic. To be competitive “in the kinds of businesses we’re in, technology and marketing and other new economy businesses, we really need to be in the urban core,” Gilbert says.
Indeed, while Gilbert braced himself for protests from his employees, he recalls nobody complaining or quitting because of the change of location. And once he relocated his offices, he says, he noticed that “all these beautiful, incredible, architectural wonders were available, and available very inexpensively. We had to put money in them to get them where they needed to be, but they were close by, and we started picking them off as they became available. Mostly they were repossessed. I think most of them were.”
Beyond all that, Gilbert and his companies became an active part of efforts to revitalize the city. Rock Ventures put up $10 million of the $140 million cost of building a 3.3-mile streetcar system to improve mass transit, a route due to open in 2017 as the qline in honor of Quicken Loans. The company installed some 500 security cameras and hired nearly 200 private security guards to watch over and patrol the area around Rock Ventures HQ, offering the sort of comfort and safety that the Detroit Police Department had long failed to provide. Gilbert co-chaired the Detroit Blight Removal Task Force that, in 2014, concluded an effort to determine how much it would cost to demolish the thousands of vacant, structurally unsound buildings that are decaying across the 144 square miles inside the city limits. And on the day in 2014 that a bankruptcy judge approved a multibillion-dollar settlement that restored the city to solvency, Gilbert exulted on Twitter: “A new day in Detroit! Time to build. Innovate. Create wealth & jobs. There’s never been more opportunity.”
Before sitting down with Gilbert, I am taken on a hasty tour of the bustling area surrounding the high-rise that is Gilbert’s HQ by a frenetic fellow named Bruce Schwartz who dubs himself “The Detroit Ambassador.” Schwartz was a third-grade classmate of Gilbert’s who has held a range of executive posts over the years and is now the guy who meets journalists like me, celebrities like Madonna and Warren Buffett, and urban-planning student groups from Harvard when they come calling for an up close look at how this piece of Detroit has come back to life. “Yes, we’ve had some hard times,” Schwartz says, probably for the millionth time, “but now there’s a lot of momentum, a lot of great things happened.”
In quick succession, we blitz through a series of examples of those “great things.” There’s the 103-year-old Chrysler House, a 23-story office tower that once housed the Dime Savings Bank headquarters and where a tech start-up now uses an old basement-level safe-deposit-box vault as a conference room. Up the block is what’s now known as the Qube, an Albert Kahn–designed tower formerly occupied by Chase Bank, where Quicken Loans moved 4,000 employees into several brightly-colored floors of hipster-style office space complete with abstract art and funky furniture. Schwartz also leads me into an alley to show me Z Parking Garage, a 10-floor structure whose walls are adorned with the work of 27 street artists from 13 countries, including Shepard Fairey of the Obama “Hope” poster fame.
Through it all, Schwartz rattles off a list of ways things have changed. Dozens of companies, both big and small, have taken leases in the many Rock Venture buildings. Rocket Fiber, a start-up funded by one of Gilbert’s subsidiaries, Detroit Venture Partners, has laid cable for what is believed to be the world’s fastest Internet, a draw for tech companies as well as potential residents. Rents in this immediate area have skyrocketed.
“If I told you four years ago that someone would pay $5,000 a month to live there, you woulda said no,” Schwartz accurately surmises, pointing to some of the Gilbert-rehabbed apartment buildings. “Now this is the high-rent district.” Bob Marsh, CEO of the Detroit Ventures Partners–funded LevelEleven, a sales-tracking app company, echoed that: “Go back five or 10 years, there wasn’t any reason to come downtown at all. Someone’s got to make the first move. Knowing Dan’s way, he was going to get other people to follow. People follow him.”
It’s not just people associated with Gilbert who are heaping praise on him. His efforts are the “most ambitious privately financed urban reclamation projects in American history,” raved The New York Times. “Detroit’s Savior,” a USA Today headline screamed. “He is providing hope for Detroit’s future,” declared the local ABC affiliate in naming him 2013’s Newsmaker of the Year. The Atlantic asked whether Gilbert is “Detroit’s new superhero”—and then pretty much answered the question affirmatively.
Gilbert does have critics who insist all he’s done is carve out an affluent enclave from a vast, still overwhelmingly poor and violent city. “The city and downtown are not the same thing,” says Wayne State assistant English professor John Patrick Leary, whose writing focuses on poverty and inequality. “What’s this doing for unemployment or underfunded public schools? I don’t know how much.”
Joshua Akers, a University of Michigan assistant professor of urban studies, agrees, insisting Gilbert has enjoyed fat government subsidies in exchange for what Schwartz declares to be altruism. “I don’t think it’s something that’s leading to a renaissance to the city,” Akers tells me. “Gilbert is taking advantage of the system. He’s playing the long game, and it looks like it’ll pay off for him.”
Schwartz begs to differ. “Dan is doing this because he cares about the city,” he argues. “If you do the right thing and you do good, you’ll do well in the end. Our philosophy is: Money follows, it doesn’t lead.”
On a hot afternoon, the choir practice room in the world’s largest Masonic Temple is overcrowded. The elevator is broken, so everybody had to climb five flights of stairs. If there was ever any air-conditioning, it’s not on. The windows of this 90-year-old Gothic Revival edifice are sealed, there are no electric fans, and sweat rolls off just about every brow. An organizer of this event kindly hands out a few bottles of lukewarm water, and strangers share them with a surprising magnanimity.
In other words, these people really, really want to be here. They idle in the stifling air because they are waiting for Gilbert to preach his gospel about why Detroit is on the verge of something improbable, important, and, perhaps, very lucrative. It is Detroit Startup Week, so the crowd on this Wednesday afternoon includes a lot of young techies with big ideas.
Yet when Gilbert, who somehow does not look as sweaty as the rest of us and whose only concession to the heat is to doff his sports coat and roll up his sleeves, finally bounds onto the small platform, he isn’t there to give a lecture. He didn’t fly up from Cleveland, where the Cavs had won another semifinal playoff game the night before (on their way to their first-ever championship), just to talk. No, despite the title of this session, “Dan Gilbert: What Makes Detroit An Attractive Place to Launch a Fintech Company,” he explains immediately that he will be moderating this panel. For the next hour, he does his best to shift the focus to the four entrepreneurs who have built successful new companies in and around his properties, three of whom he has provided with venture capital. He asks about their families, their business models, their views on Detroit.
Yet when the Q&A segment begins, most of the inquiries are for Gilbert. Rumors had just sprung in the press about Gilbert’s possible interest in buying the search engine Yahoo!, which he neither confirms nor denies but hints could mean more jobs in Detroit were it to happen. Someone asks how to get start-up money, of course. And mostly, the room is riveted as Gilbert offers encouragement.
“There is Plan A and only Plan A,” he tells his flock. “If I have a Plan B, I’m failing already.” He takes a beat, then goes on: “And Plan A is to make Detroit an attractive place again. There’s no Plan B.”