Bedrock Detroit on the City’s Ongoing Recovery
Insights from CEO Kofi Bonner on the multifamily market’s steady growth.
Detroit’s multifamily market remains in a good position for a rebound, according to the latest Yardi Matrix data. After reaching a high mark in September last year, rent growth cooled off as the seasons changed. As of January, the average rent was $1,165, up 9.2 percent year-over-year. Investment activity amounted to $339.6 million in 2021, on par with the five-year average and highlighting renewed interest and demand for multifamily product.
The metro’s job market shows steady signs of betterment, with unemployment at 5.4 percent as of December, according to preliminary data from the Bureau of Labor Statistics. Although lagging the national rate, the figure marks an improvement over the third quarter.
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To gain more insight into Detroit’s multifamily market, Multi-Housing News reached out to Kofi Bonner, CEO of Bedrock Detroit, one of the city’s most active full service commercial real estate firms. The company currently has major projects underway in the metro, across several property classes, from multifamily to mixed-use and retail.
Where does the metro’s multifamily market currently stand, almost two years into the health crisis?
Bonner: Overall, we’ve seen demand for multifamily housing increase since the start of the pandemic. Specifically, demand is near an all-time high for apartments in Detroit. This is a continuation of a year-long performance of robust demand setting records, with new deliveries increasing 5 percent year-over-year.
Detroit has been an active development market, with multifamily inventory expanding 6.5 percent since 2015. Last year, 2,566 new units entered the market. This year is on pace to set a record for new deliveries.
Are multifamily rental rates back to pre-crisis levels?
Bonner: Yes, rents are above pre-pandemic levels in the Detroit market. They are forecasted to continue to increase by up to 15 percent by the end of 2026.
Three years ago, Bedrock received approval from HUD to acquire the site of the former Brewster-Douglass Housing Projects on the east side of Detroit. How is the project progressing?
Bonner: Bedrock remains committed and passionate about the Frederick Douglass project in Detroit’s historic Brush Park neighborhood. We are actively evaluating development plans for the project and expect to have updated plans and associated details later this year.
Plans at Brewster-Douglass call for the inclusion of an early childhood education center. What can you tell us about this component of the development?
Bonner: Child care is an essential component of family-friendly developments. Bedrock is considering how to best incorporate amenities supportive of families, including parks and play areas.
In your view, what areas of Detroit could also benefit from similar developments?
Bonner: Detroit still has ample room for growth in the multifamily sector. Detroit has fewer residents in its central business district compared to cities of similar size. The submarket’s vacancy rate, healthy absorption of new developments and rental growth all indicate a market that still has plenty of room to grow. This will also continue Detroit’s push to be a 24-hour city.
How does Bedrock’s effort of sustaining local small businesses tie into creating new communities?
Bonner: Bedrock is committed to supporting local entrepreneurs as they are the heart of Detroit’s culture. More than 100 small businesses have participated in the Downtown Detroit Markets program, a reoccurring seasonal activation providing a platform for entrepreneurs to test their concepts before committing to a full brick and mortar storefront.
Bedrock also works with small businesses to host longer-term pop-ups in open storefronts to further enhance downtown’s bustling retail and entertainment scene. In addition, Bedrock is committed to creating an equal opportunity and inclusive procurement for local small businesses within our communities.
Bedrock partnered with the World Economic Forum last year to establish a Global Center for Urban Transformation in the city. How do you expect this project to impact Detroit’s multifamily market?
Bonner: Organizations like the World Economic Forum committing to development in Detroit showcases the momentum and our extraordinary growth. The World Economic Forum will leverage its global network of leading companies, governments, civil society organizations and academic institutions to support Detroit as the city seeks to continue to rebuild its economy and forge more resilient communities. This type of commitment further enhances development in the city which will, in turn, have a positive effect on Detroit’s multifamily market.