WJBK) - Detroit's economic climate is changing for the better, and one area we're keeping our eyes on to hopefully see more growth, too, is the neighborhoods.
What if everyday people could own equity in their neighborhood's resurgence? With this new business model, a development company is trying to share the wealth.
David Alade and his cofounder Andrew Colom both used to live in New York City, where they saw neighborhoods gentrify, leaving some residents behind. Detroit, they realized, could be different. During the housing crisis, when it was possible to buy a house for $1,000, many people saved neighboring homes or old family houses at foreclosure sales. Now, as real estate slowly picks up in the area again, some developers offer cash for those houses. Century Partners realized they could also offer equity.
In Detroit, many of the brick mansions built in the boom days of the auto industry have fallen into neglect and disrepair. Even just a few blocks from the construction site for the new Red Wings stadium, houses are gutted and crumbling. But in those rundown historic homes, Andrew Colom and David Alade, two college friends with an interest in urban planning and social justice, saw an opportunity.
Alade who was working on Wall Street had seen renters priced out of the neighborhood where he grew up in Jamaica, Queens. Colom, who has worked in real estate in Mississippi, thought that more equitable urban development could be a way to revitalize communities. Two years ago, the two Columbia University graduates decided that they would renovate houses, turn them into affordable housing and shake up the traditional housing model in the process.
When developers fixed up a vacant house on Detroit's historic Atkinson Street—refinishing the hardwood floors, adding stainless steel appliances, and bringing back the beauty of the classic brick home so it could be rented—some of the neighbors made a cut of those profits, too.
In a new business model, the development company behind the renovation is trying to share the wealth with long-term community members as home values rise around them.
"We have a unique environment where we can bring resources to a community, we can enhance it, we can enrich it, and the people who benefit naturally are those who stood by the city in the worst of times," says David Alade, co-founder of the startup development company Century Partners.
Andrew Colom and David Alade believe that longtime Detroiters should profit from the revitalization of their city. And they don’t mean that as a metaphor.
These two men are old friends who moved to Detroit in 2015 to launch Century Partners, an unusually holistic housing development company. Colom came from Mississippi, where he pursued writing and film while running a real estate company in his hometown. Alade came from New York City, where he worked as an investment banker at Barclays Capital and Credit Suisse. They met when they were students at Columbia University, and while it took years of “what if” conversations, they finally found themselves in Detroit, going all-in with a new model of getting things done.
David Alade and Andrew Colom moved to Detroit from their respective homes of New York and Mississippi this year to take a risk on the city’s uncertain future. They buy, renovate and rent out houses in a historic neighbourhood close to the site of the 1967 race riots, and where both Henry Ford and Motown Records label founder Berry Gordy Jr owned mansions.
Sellers have the option of buying a stake in the property fund set up by Mr Alade and Mr Colom. This way, they argue, the local community can be a part of the neighbourhood’s revival.
“Everyone is watching Detroit and there is an opportunity to do something really special in a different way,” says Mr Alade, a former Wall Street banker.
Mr Alade, Mr Colom and architect Steve Harris, who grew up in the neighbourhood, are the kind of investors the city needs to bring money and jobs in to the community
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