The brown brick building resembled many of the vacant properties that abound in Detroit, with boarded-up windows, spray-paint graffiti and piles of rubble accumulated on the floors from crumbling walls and ceilings.

Vincent Mazzola, a broker at O’Connor Real Estate, knew that 2863 E. Grand Blvd. had been vacant for years, falling into disrepair. But Mazzola’s client, Method Development, saw enough potential in the circa-1925 building and the surrounding Milwaukee Junction neighborhood to buy it for $1.8 million in 2019.

Now, it’s hard to imagine the same structure — located about 2 or 3 miles north of Downtown — stood abandoned for decades. After repairs, including a new roof, and replacing the mechanical, electrical and plumbing systems, it reopened in 2021 as the Detroit Design District with 18 loft apartments and retail space that includes a comic book shop, a women’s clothing boutique and an interior design firm’s showroom.

Method got lucky to find the building and will reap the rewards of being an early adopter of the Milwaukee Junction neighborhood if it takes off in popularity, Mazzola told CoStar News. But he notes that “unfortunately, not every building in Detroit is a redevelopment opportunity.”

Detroit Design District is the kind of reclamation project that should be happening all across the city, not just in the Downtown area that has been the focus of stakeholders in recent years, according to local real estate brokers, developers and urban planners. Downtown's revitalization, including sports stadiums and casinos, has been a success, but neighborhoods like Milwaukee Junction also need capital and attention, they say.

Charitable foundations are also pressing for development to extend outside the central city, and the Kresge Foundation is one of the most active of those groups.

“A lot of the redevelopment you’re seeing is downtown and midtown, which is only about three square miles,” Wendy Lewis Jackson, managing director of the Kresge Foundation, told CoStar News. “Our focus is on the other 140 square miles of Detroit.”

A combination of factors has kept that from happening, including a lack of private capital and real estate speculators sitting on vacant lots with no immediate plans to develop them.

Detroit’s central business district has seen billions of dollars of commercial development since the city filed the largest municipal bankruptcy case in U.S. history in 2013. The bankruptcy filing was the result of a confluence of factors, including the struggles of the U.S. automotive industry, white flight to the Detroit suburbs and overall population decline.

The surge in commercial development Downtown has affected the entire Detroit area, pushing down the city's unemployment rate to 3.6% as of March this year, compared to 14.7% in March 2010, according to the U.S. Bureau of Labor Statistics.

The automotive industry has played a central role in Detroit for more than a century. Henry Ford refined the concept of the industrial assembly line in the early 1900s and built the first Model T on Piquette Avenue in the Milwaukee Junction district in 1908. Detroit's population soon skyrocketed as immigrants moved there to work at Ford, General Motors, Chrysler and other automotive factories.

Detroit's decline started in the 1960s and spanned decades. Urban renewal projects like the construction of Interstate 375 devastated Detroit's Black neighborhoods. The city was wracked by riots, crime and arson for years. Meanwhile, Ford, GM and Chrysler faced heightened competition from smaller, more fuel-efficient Japanese cars during the energy crisis of the 1970s.

Companies that made Detroit the "Motor City" are contributing to the rebound. GM plans to move its headquarters to Hudson's Detroit, a 1.5 million-square-foot mixed-use complex being developed Downtown by Bedrock, the local firm founded by billionaire Rocket Mortgage co-founder and Cleveland Cavaliers owner Dan Gilbert. GM signed a 15-year lease for several of the top floors of a 12-story office building to be attached to a 52-story property that, in addition to being Detroit's second-tallest building, would be home to the city's first five-star hotel and residences.

Ford plans to move research and development operations this summer into the renovated Michigan Central Station, a landmark former train station and office tower that sat vacant and blighted for decades. Its restoration, led by the American Institute of Architects' award-winning firm Quinn Evans, comes after Ford bought the long-vacant, 472,000-square-foot station in 2018 for the automaker's new Corktown campus.

Now officials are preparing to update the city's long-range plan of action, and commercial real estate investors, developers and other groups are pushing for Detroit to prioritize the revitalization of areas beyond the central business district and into neighborhoods like Grand River Northwest, Campau-Banglatown and Gratiot-7 Mile.

Downtown Detroit came back from the dead, and it's time for the rest of Detroit to get some love, said Joe Stack, a broker at Signature Associates who specializes in industrial properties in neighborhoods outside the central business district, like 6501 Mack Ave.

“When Bedrock settled downtown, you really noticed a shift” in Detroit's fortunes, Stack told CoStar News, referring to commercial development projects led by Bedrock.

“Everything radiates out from downtown, but there is still a long way to go for the remainder of the city,” he said.

Certain Downtown blocks that once smelled like urine and were lined with derelict buildings, according to longtime city residents and real estate professionals, are now occupied by the likes of Gucci, the luxury Shinola hotel and a Spanish tapas bar and rooftop lounge atop the once-vacant Book Tower. Most new developments benefited from a combination of federal, state and city tax incentives.

The revitalization has even brought residents back Downtown. Multifamily developments like the 81%-leased City Club Apartments CBD helped boost the recovery of the Washington Boulevard historic district, one of Detroit's landmark city blocks.

The waterfront along the Detroit River, once a Uniroyal tire manufacturing site and inaccessible to pedestrians, has been converted to a walking path with a custom-designed carousel and lush native plantings.

Huntington Bank in 2022 opened its Michigan regional headquarters at 2025 Woodward Ave., a 20-story tower designed by Neumann/Smith Architecture. The building features a parking deck on the first 10 floors clad with perforated metal panels to obscure the parking area from view.

Detroit’s revitalization was on display in late April when it hosted the annual NFL draft and broke the attendance record for the event that changes cities every year with an estimated 775,000 fans descending on Campus Martius Park.

New construction and the restoration of vacant properties have boosted downtown Detroit’s office market. The vacancy rate improved from 14.1% in the first quarter of 2014 to 5.7% in the first quarter of 2020, according to CoStar data. For the entire Detroit market, office vacancies fell from 15.2% to 9.1% in the same period.

Asking rents per square foot in Detroit’s downtown office market increased 36% from $18.27 in the first quarter of 2014 to $24.78 in the first quarter of 2020.

The office market in Detroit’s “no-man’s zone” — an unofficial designation that refers to everything outside the central business district — pales in comparison to Downtown, with few office properties over 20,000 square feet, said Brian Fineran, CoStar’s director of market analytics for Detroit. The industrial, multifamily and retail sectors also trail the central business district by a wide margin.

“There are still entire blocks that are lacking basic grocery and look ravaged and war-torn,” Fineran told CoStar News.

Vacant buildings are still present in the central business district, too, including the former American Hotel and the former Alhambra apartments.

But drive in any direction away from Downtown on Grand River Avenue, Gratiot Avenue or other corridors and, in just a few minutes, the streets of Detroit turn barren, lined with vacant buildings and acres upon acres of vacant lots.

Crumbling industrial buildings are all over the city, offering a bleak reminder that Detroit, in 1950, was the fifth-largest city in the country. Detroit ranked No. 27 for the country's largest cities based on the 2020 census.

“We have a massive amount of square footage that essentially sits unused which, with minor investments, could be brought up to modern standards,” said Stack with Signature Associates.

Vacant land is abundant, too, with the University of Michigan estimating a total of 19 square miles, the equivalent of about 9,200 football fields, of vacant property within the city limits.

The vacant land is the result of a demolition program that began in 2014 by Mayor Mike Duggan to eliminate dangerous, blighted properties. The demolitions were deemed necessary because Detroit was built for 1.8 million people, its peak population in the 1950s, but now has only about 639,000.

Many of the eliminated properties may not have been in great shape, but the vast scale of demolition created another problem, O’Connor’s Mazzola said.

“Now in all these places, we’ll never have those same historic buildings,” Mazzola said. “What we gained by tearing them down is more of what we don’t need — vacant land.”

Some vacant land in Detroit is suitable for conversion to parks or to locate small-scale manufacturing enterprises or other businesses to help spur job creation, Jackson said.

Detroit’s vacant land can play a role in stormwater management where the open space "can significantly reduce the impact of major rain events and potential combined sewer overflows," said Dan Kinkead, director of urban design at SmithGroup and a Detroit native.

Detroit's topographic setting at the center of the Great Lakes positions the city's vacant land to be used as a water-management tool for the entire region, Kinkead said. The Great Lakes include about 22% of Earth’s fresh surface water supply.

“People historically have looked at vacant, open space as a detriment,” Kinkead said during a recent guided tour of the city provided to CoStar News.

“But it’s also a remarkable asset” because the vacant land can help lower temperatures in urban areas where heat is exacerbated by streets, parking lots and buildings, and it can reduce stormwater runoff into the Great Lakes, he said.

Vacant land can be a way for “public entities to look beyond costly large underground concrete storage systems,” Kinkead wrote in a recent report.

But speculators are holding back the development of much of the vacant land, said Jeff Horner, an urban planning professor at Wayne State University.

"I can't overstate the problem of speculation," Horner told CoStar News. "These vacant lots are gold mines because they're taxed at very low rates, so speculators buy them for nothing and sit on them for years."

Mayor Duggan recently proposed a change in Detroit's property tax laws to tax undeveloped land at a higher rate than the buildings that sit on land. The Michigan Legislature didn't approve the measure this year, but Duggan is likely to keep pushing the proposal, Horner said.

If approved, it would help homeowners with a slight property tax cut. But, more importantly, it would raise taxes on vacant land as a way to discourage speculation, Horner said.

Detroit benefits from the wealth accumulated by local families during the auto industry’s heyday and from other businesses that thrived in the early-to-mid 20th century, Kinkead said. Planners should continue to work with the charitable foundations created by these families "for maximum long-term impact for Detroit," he said.

The Kresge Foundation, one of the most active philanthropic groups in Detroit’s revitalization, was established by S.S. Kresge, the founder of a predecessor company to Kmart. The Ralph C. Wilson Jr. Foundation, established by the Detroit native and owner of the Buffalo Bills, has supported revitalization efforts in Detroit.

The $172 million Strategic Neighborhood Fund was created through donations from banks, automotive companies, nonprofit groups, the city of Detroit and the state of Michigan. Administered by Invest Detroit, the fund has led a broad effort to assist recovery outside downtown Detroit, focusing on commercial real estate development and job creation.

In one neighborhood, the Livernois Avenue corridor, the Strategic Neighborhood Fund has helped finance development for new retail, multifamily and improvements to streetscapes and bike lanes. The Kresge Foundation and the nearby University of Detroit-Mercy partnered with the fund on some of these projects.

Kresge also invested $50 million into the re-use of the former Marygrove College campus into a new public school running from kindergarten through high school. The University of Michigan also plans to launch a program for education majors at the Marygrove site.

Per capita income in metro Detroit rose 8% to $61,322 in 2022 compared to $56,901 in 2020, according to the most recent data available from the Bureau of Economic Analysis. That’s slightly below the national average for metro areas of $67,767.

Other Rust Belt cities haven’t fared as well. In Buffalo, New York, per capita income rose only 4% to $56,414 in the same period. For Scranton/Wilkes-Barre, Pennsylvania, per capita income climbed 5% to $52,304.

But Detroit is losing ground to other Rust Belt rivals. Per capita income in Milwaukee rose 13% to $68,155 in the same period. Cincinnati’s per capita income climbed 11% to $65,253.

Detroit’s struggle to extend the revitalization outside Downtown is partly due to problems many cities are experiencing, such as supply chain snags, a labor shortage and cost increases in building materials, said Keona Cowan, executive vice president of lending at Invest Detroit.

Other issues are specific to Detroit, Cowan told CoStar News. One is that Detroit only has three companies that service elevators.

“There is a lot to still be done here that exceeds the capacity of the development community,” Cowan said. “We’ve only got a finite number of people who can do certain work.”

Detroit also needs more private capital, said Chase Cantrell, executive director of Building Community Value, who arranges financing for development projects. Property values in neighborhoods outside the central business district remain low, making it harder to find capital sources to fill the void.

"We aren't seeing at scale the kind of investments needed," Cantrell told CoStar News. "It doesn't matter what property type they are looking at."

Many successful redevelopment projects Downtown received assistance from the city and state, Cantrell said. If large developers require subsidies, it's even harder for small developers working in the neighborhoods to get needed capital.

Detroit's neighborhoods are desperate for multifamily housing development that provides units for families, Cantrell said. Most new developments only offer studio and one-bedroom apartments. Those aren't large enough for families to live in, he said.

One example of a new multifamily development that can serve families is Parker Durand, a 76-unit property developed by Roxbury Group, located in the Islandview neighborhood, Kinkead said. Parker Durand's floor plans include two-bedroom units.

The Milwaukee Junction neighborhood, named for the railroad lines that converged there, is an example of a once-destitute Detroit neighborhood that has the potential for a comeback, said Mazzola of O’Connor Real Estate.

Situated west of General Motors’ Poletown assembly plant, Milwaukee Junction was once the home of Ford’s Piquette Avenue plant where the company produced the Ford Model T between 1904 and 1911.

Another early automotive company, Fisher Body, opened the Fisher Body Plant #21 on Piquette Avenue in 1919. But that building later became one of the city’s most visible industrial ruins with its prominent location at the intersection of interstates 75 and 94.

The neighborhood has lately caught the eye of commercial developers.

Its location helps. The TechTown small business incubator, founded by General Motors and Wayne State University, is nearby. So is Detroit’s Amtrak station, with three daily trains to Chicago, and the Hotel St. Regis Detroit that opened in 2020.

The district’s supply of sturdy historic buildings, even in various states of disrepair, is a magnet. Jackson Asset Management, Lewand Development and Hosey Development plan to convert Fisher Body Plant #21 into loft apartments. The group began construction this month, according to Crain’s Detroit Business.

Australian company Fortescue plans to renovate an industrial property at 601 Piquette Ave. into an electric vehicle battery manufacturing plant. Detroit Public TV is slated to move its offices and broadcast studio to 234 Piquette Ave.

Peter Cummings, the former head of Ram Realty Advisors, developed the Platform at 2937 E. Grand Blvd., home of the Chroma coworking and event space.

Method is also working on the second phase of its Detroit Design District project, a restoration of the circa-1929 Boyer Campbell Building at 6540 St. Antoine St.

In the coming decade, more and more developments like those in Milwaukee Junction are bound to happen throughout Detroit, not just Downtown, according to experts interviewed by CoStar News. Too many people and too much money are going toward that goal that it’s bound to happen.

Detroit's secret weapon might be the concentration of progressive philanthropies like the Skillman Foundation, Erb Family Foundation and Kresge Foundation, Kinkead said. All these organizations have made it a priority to spread the development to all parts of Detroit.

“Not only are there a number of key philanthropies here, they are all remarkably committed to supporting the city’s future,” Kinkead said.

Oombra Architects was design architect for the Detroit Design District. SHoP Architects and Hamilton Anderson Associates are architects for Hudson’s Detroit. Quinn Evans and AvroKO are architects for Michigan Central Station. Brinker Group and Christman Co. are general contractors on Michigan Central Station. SmithGroup is the lead consultant for the update to the city of Detroit’s master plan.