While other major U.S. cities experienced a resurgence in the 1980s and 1990s, Detroit got left behind for several years. But now, the ongoing resurgence of Detroit may be creating a compelling investment opportunity for Opportunity Zone investors.

Jed Howbert, partner at Greatwater Opportunity Capital, joins the show to discuss Detroit’s bankruptcy and ensuing economic transformation, and the opportunity for real estate investors to capitalize.

Watch On YouTube

Episode Highlights

• How Detroit’s 2013 bankruptcy filing catalyzed a financial restructuring and government departmental refresh improved interest from investors.
• Why Detroit’s existing real estate stock and infrastructure can help solve a shortage of walkable urban neighborhoods.
• The importance of capital investment in Detroit from Dan Gilbert, both pre- and post-bankruptcy.
• How Detroit’s Opportunity Zones differ so drastically from those in most other major American cities.
• The demand drivers that are leading to the economic revitalization in downtown Detroit.
• How Opportunity Zone multifamily redevelopment (meeting substantial improvement), as opposed to new construction, is far more likely in Detroit, versus most other locations around the nation.

Featured On This Episode

• Detroit bankruptcy (Wikipedia)
• Gilbert announces $500M to revitalize Detroit neighborhoods (The Detroit News)
• Dan Gilbert adds Cadillac Tower to his massive Detroit real estate portfolio (Detroit Free Press)
• Opportunity Zones in Detroit (OpportunityDb)

Today’s Guest: Jed Howbert, Greatwater Opportunity Fund

• Jed Howbert on LinkedIn
• Greatwater Opportunity Fund

About The Opportunity Zones Podcast

Hosted by OpportunityDb.com founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

• Subscribe on Apple Podcasts
• Subscribe on Google Podcasts
• Subscribe on Spotify
• Watch on YouTube

Listen Now

Show Transcript

Jimmy Atkinson: Welcome to the Opportunity Zones Podcast. I’m your host Jimmy Atkinson. Is the ongoing transformation of Detroit creating an investment opportunity for Opportunity Zone investors?

Here to discuss Detroit and OZs with me today is Jed Howbert, partner at Greatwater Opportunity Capital. And he joins me today from Detroit, Michigan.

Jed, great to meet you. Great to have you on the show. Welcome. How you doing?

Jed Howbert: Great I’m doing very well, Jimmy. Thanks for having me.

Jimmy Atkinson: Oh thanks for being here with us today Jed. So we’re going to be talking a lot about Detroit Michigan today, but first maybe we can talk about the transformation that the city has been through and continues to go through over the course of the last decade.

Really, following in the footsteps of other cities that came back from Lowes in the 80s and 90s Detroit’s been left behind a little bit, but it seems to be researching now so, can you characterize that transformation, or that resurgence for our listeners.

Jed Howbert: Yeah, I think you hit the nail on the head when you talk about other cities coming back from the 80s and 90s that, you know, if you had gone to Philadelphia or DC or large parts in New York, a couple of decades ago you never could have imagined what they look like now.

And that exact same process that has happened everywhere else, Detroit is just the last major city for that to occur.

And so, for people who haven’t been to Detroit and five or 10 years, who only know the terms bankruptcy when they think about Detroit or think about the old auto industry.

I really believe if they came to visit today, they would be shocked by the quality of life in Detroit at a level of energy feeling Detroit, walking around downtown there’s people on the streets there’s bars and restaurants open it feels great.

It’s not just downtown there’s beautiful historic neighborhoods around downtown rebel architecture that are getting renovated and filled in.

By young professionals and young families, so the transformation has been occurring several years prior to the bankruptcy and then because of what the bankruptcy did, and we can talk about this in more detail, it really took off since then.

And so, if you haven’t been to Detroit a while and you’ve seen what has happened to every other city, we really characterize this circle last chance to get in early in the transformation in a major American metro.

Jimmy Atkinson: This will tell us a little bit about that bankruptcy how that unfolded, and what have been some of the results, coming from Pepsi.

Jed Howbert: Sure, so I you know started just personally I the pleasure i’m from Detroit originally and I moved back in 2014 better career on the east coast to work for the mayor in bankruptcy.

And my you know, through a different several different roles, I was ultimately what’s called a group executive for planning, housing and development.

really responsible for Detroit economic development and population growth strategy.

So the bankruptcy afforded us an opportunity to make sure the city departments were capable of doing what they need to be able to do.

So I was responsible for the planning and housing departments, they had deteriorated significantly they had a number of skilled staff.

They have staff that really should have been doing another job that didn’t have sufficient resources and they weren’t being led in the right way.

The tools of the backups he gave us allowed us to reshape those departments to make sure that they can do what a functional city needs to do.

And my experience in the planning the housing department was replicated by my colleagues overseeing the police department emergency services road maintenance parks, etc, so every city department got a refresh.

And then the financial restructuring the of the city, the financial room to breathe in order to make investments, and you know the way I think about it is.

The changes you’ve seen in places like Philly or Cleveland or Cincinnati we’re walking the last 20 years.

Those didn’t happen because those cities turn them to Singapore right, they are not the American cities are complicated.

There is no such city where permitting is incredibly easy for the politics are complicated when you’re in a big city that’s just part of the game.

But the issue is a big city needs to be good enough, and what we see it, a lot of other big cities, including New York if.

They are good enough that the economy can respond, the demand for companies and people to live, work in plant city.

And the bankruptcy allow the tray to be good enough just in the way that other cities are good enough that really allowed that inflow of interest to finally express itself in the city, you know 510 or 20 years after he began, seeing that same trend and most other major American cities.

Jimmy Atkinson: yeah that’s really interesting so not not even really that high of a bar to clear there did you just want to go from bad to good enough right.

Jed Howbert: that’s exactly right, I said that, with all due respect to people who work at cities, I spent a good chunk of my career working in mayor’s office as both for the Mayor of Detroit and also for years with Mayor of New York Michael number.

there’s a lot of talented people but cities are complicated, you would never have a private conglomerate that does as many things as a city does.

what’s all the politics, on top of it, but you figure out how to run it in a way that gets gets what needs to get done done.

And there’s such a revealed preference for people to live in walkable diverse urban neighborhood.

And the pricing changes you’ve seen in those neighborhoods and cities across the country shows.

Economically, when those prices are skyrocketing it’s because there is a national shortage of walkable diverse urban neighborhoods.

And to train is like the strategic reserved for the nation of walkable urban neighborhoods because of all these great areas that were built really before the automobile took over i’d still have a walkable that’s infrastructure and are now being filled back in.

Jimmy Atkinson: yeah a lot of those areas in downtown Detroit curriculum wrong, I would.

Just kind of speculate now I would imagine they were they were created at the turn of the.

previous century the early 1900s as the automobile industry was just first starting to take off, but they’ve kind of been left left behind for.

Jed Howbert: For quite a while I right.

Jimmy Atkinson: yeah okay.

Jed Howbert: exactly right and i’ve seen a wave of reinvestment I mean to try was fortunate that the tribals for a while the richest people on earth in 1900 1910 1920 when the taste and architecture was really good.

So cities that got Richard different areas Devon demolish the whole bunch of stuff and put up stuff that I think most people regardless ugly.

The architecture that was built in Detroit whether it’s the skyscrapers the apartment buildings and single family homes is really world class.

And a lot of it was lost and the decline, but a lot of it was preserved and there was late be reading those buildings that that is what great water does.

And we are far from alone and whether it’s single family Homeowners moving in old neighborhoods or Dan Gilbert mind skyscrapers downtown it’s taking advantage of that store setup really incredible world class buildings that can be great again that are being invested in.

Jimmy Atkinson: Now, and i’ll talk more about what great water is doing in Detroit and and what you’re doing specifically within the opportunities own structure, but with it still wanted to kind of play out this this Detroit transformation story.

A little bit more for a couple more minutes, so you just mentioned, Dan Gilbert and jed you and I, before we hit the record button we’re talking about Dan Gilbert of rocket mortgage.

Know coming into.

The City of Detroit what has he done can characterize his involvement.

Sure downtown and and how much that has had an impact in the city.

Jed Howbert: Dan has been an incredible force for change city and as a very successful entrepreneur businessman, he is, of course, ahead of the game so even even prior to the bankruptcy.

Dan Gilbert looked at what’s happening in every other major American cities we’ve discussed and saw the changes that had happened.

and asked why it wouldn’t happen to Detroit was there anything structurally different about them Detroit metropolitan area.

That would somehow prevent this change from occurring and his answer was now, this is a big city with more than 5 million people in the surrounding area.

A lot of a lot of smaller cities have seen major revivals in will happen in Detroit and you started to see these green shoots of the early coffee shops and restaurants popping up even before the bankruptcy.

And he is made it public, even for his own hiring when trying to quicken loans.

He was having a hard time convincing people to come work in a suburban campus because the quintessential 25 year old out of college wanted to go work in one city neighbor.

So before the bankruptcy he observed what he’s turned a skyscraper sale and he went to downtown Detroit and a bunch of hope bought a whole bunch of these old beautiful buildings.

And he moved a lot of TEAM members down and he grew the company like crazy so from moving 5000 people down, perhaps to having a firm 40,000 people downtown.

It made a huge difference, he was definitely not alone, he was a walks out a lot of grief public foundations or private foundations, I should say, like Kresge and Ralph Wilson for and other major corporate actors like.

Blue cross and Blue Shield to General Motors headquarters downtown etc, but the sort of extra energy he brought the quantity of TEAM members and then the amount of real estate investment based personally not here was not real estate firm downtown.

As really sort of shocked and system in a good way raw a lot of energy on top of all the other trends that were already occurring.

Jimmy Atkinson: And i’m sure he was able to do that at a fraction of the cost a fraction of a fraction of the cost that that it would have been his head he tried to do so in Chicago or New York or or any one of those other large downtown cities that are.

Absolutely, a little bit more actually requesting it was like.

i’m sorry say that again.

Jed Howbert: As you can see, also a practice of the replacement costs to.

I mean yeah the new buildings he’s in a lot of beautiful going for a great great price point.

Jimmy Atkinson: yep and I know that’s a large part of your strategy as well, shifting gears to opportunities and now actually I want to just kind of pull up on on my computer screen over here, I wanted to find out on.

On opportunity db.com what kind of amount of.

Opportunities zones, there are in Detroit and we’ll have a link to this in the show notes page for today, but it looks like the city of Detroit has 70.

designated opportunities owns a lot of them.

clustered right in that central downtown area right across the river from from Windsor Ontario kind of in the heart of downtown Detroit.

So there’s a lot of opportunity there clearly what so I want to touch on that in a minute, but but maybe maybe maybe first gen what lured you back to Detroit.

After time on the east coast, you mentioned, you were working in mayor Bloomberg office in New York City, I think you spent a little extra time on on the east coast as well, what what caused you to come back what was the attraction.

Jed Howbert: So I you know I love I graduate from high school in the 90s, and like the average person in Detroit at that point i’d love to try it and didn’t expect to return, because at that time, the city was not a vibrant place to live.

and economic situations not great, and so a lot of us moved elsewhere to the east coast and the West Coast lot to Chicago and really built a career, so I built a career in real estate.

Public and private sector like you said in mayor Bloomberg office and then in the Goldman Sachs or investment group as a principal investor and Goldman.

At tishman construction is the head of strategy and also started a principal investing firm.

And every morning living up and down the east coast, whether it was bill your Boston or DC or New York I would start the morning by reading the Detroit free press and the Detroit news.

I was obsessed with Detroit and I lived in these neighborhoods in the cities in the late 90s, and from 2000 2014.

where you can see the transformation happening in Williamsburg or in Center city Philadelphia, or on the 14 three quarter or DC and I will see what was happening in the cities where I live, and I would read the paper and think.

Why would this not happen to Detroit is just like what we talked about in Gilbert there’s nothing different.

there’s 5 million people in the metro area there’s 10s of thousands of college grads every year from all the schools, this will happen.

And when, and so I began to see these green shoots of the new restaurants and bars this classic early signs of people moving in.

And then, when the city declared bankruptcy, I thought this is the moment this is the inflection point where, if the city can clean up its balance sheet and create financial freedom.

And the city can refresh operations to be good enough like we talked about that will take this in Sydney and change and supercharge it.

And to try will be on the same path as other cities are for several decades of investment of rebuilding the urban core, so I thought.

I love the city, I see incredible opportunity I need to be a part of so I reached out through contacts make contact with them there and then came home and 2014 the middle of the bankruptcy.

To help and restructure the city which pretty quickly if anyone is feeling bored in their career and municipal bankruptcy, is a great way to address that is a masochistic undertaking.

Given how much needs to get done but it worked, it was a great experience and so when I after.

Four years in the mayor’s office decided to leave that’s when I found a great water with my partners because we saw that there was so much real estate opportunity.

It still wasn’t being tapped that we needed to create one of the entities that was going to figure out how to make it happen.

Jimmy Atkinson: let’s talk about that opportunity, as I mentioned there’s you know, according to my my map here at opportunity db there’s 70 opportunities zones.

In the city of Detroit large amount of them concentrated right in that downtown area right across the river from Canada, what are some of the so i’ve clearly there’s an opportunity there, I think.

Yes, it’s been economically distressed for for a long time, which is what led to you know they’re being so many eligible areas in downtown Detroit unlike you know a lot of other.

Cities around the country, if you look, if you look at Chicago there really aren’t a lot of opportunities, I don’t think there’s any opportunity zones in the loop in Chicago they’re all on the South side on the West side.

In New York City, for instance they’re all you know you got to go pretty far north or the.

South bronx and above there’s there’s I think there’s a couple on the on the on the east side of of lower Manhattan but the vast majority of them are you know up.

Past central park north of central park and then in Los Angeles there’s a handful and particularly in East la but but Detroit.

Looking to trade, I mean it’s the dude there’s all right in the heart of downtown there, what are some of the demand drivers now in Detroit that are kind of leading to some of this this this economic revitalization that’s occurring in in downtown.

Jed Howbert: Yes, absolutely.

So before the demand driver at your point on on the nosy.

districts and how they got placed on my team part of my role as the group executive for planning housing developments city was thinking about how to use all of our tools, including opportunities.

So we really pertinent with the state, and thanks for teacher ugly where will be sounds to be placed in Detroit where can they be placed in Detroit to maximize.

And to your point, unlike a lot of other American cities, because of the downturn.

Almost every census tract in Detroit net the income requirements for rosie destination, and so we were able to say.

We have our pick of where they go, the question is wearable investors, want to be where the oC the addition of the oC is enough to flip the switch to make it a real investable proposition.

And that is all downtown essentially all the greater downtown.

was a number of strategic neighborhoods outside downtown that lined up the city’s on investment priorities, so the city had applied and call the strategic neighborhood fun.

To do capital improvements to support retail to invest in parks and streetscapes and do the other public sector actions that can really fire up the energy and the neighbor.

So we layered the city’s strategic nature of the current investments and the opportunities on districts, to create environments where investors could really make a difference.

And what we’re seeing in those neighborhoods that it’s working the demand drivers for a classic it’s a cliched term but it’s appreciated for a good reason.

But when the workplace approach in Detroit is just what you’ve seen in other cities.

that the young kids come down out of college, because they want to live in a fund neighborhood bars and restaurants, the employers.

follow them because they want to be able to attract the kids who work there, and then the hospitality industry gets built around them because that’s where they socialize and you start this virtuous cycle.

And the virtuous cycle has been running it up in Detroit that you can see the generations of, so to speak, so that the 25 year old couple that met in downtown or midtown Detroit living in a little apartment.

Five years later they’re married they’re having kid they’re buying a house and one of the historic neighborhoods renovating that.

And the whole chain of revitalization coming out of that really you know, in its core live work play dynamic that started in the heart of downtown is what we think is going to help us for a long time.

Jimmy Atkinson: It makes perfect sense and get some good insight there it’s interesting to point out that differentiator for Detroit.

Is the fact that so many of their opportunities are clustered right in the heart of downtown unlike a lot of other American cities where their opportunities zones, maybe a little bit more scattered or not quite as concentrated.

Rom another huge differentiator differentiator for Detroit and for your group it’s a great water in particular jed is how you guys are doing your opportunities own.

deals, you are not, for the most part you’re not doing ground up construction of multifamily.

But because of some characteristics of Detroit you guys are primarily doing substantial improvement of multifamily which can be very difficult in most other places in the country, you spoke about this already a little bit, but I was hoping, you can.

drill down a little bit deeper here what is unique about Detroit in this regard, what is it that.

allows you to be able to do substantial improvement of multifamily properties, where it would be darn near impossible in in some other places in the country and actually kind of before I let you answer that question.

Jed Howbert: If sure.

Jimmy Atkinson: I know with me for a moment here.

For any listeners and viewers, who are a little bit new to Opportunity zones, just a quick explainer here.

In order to qualify or be compliant with opportunities own investing.

Regulations, you cannot simply just buy and hold and already stabilized asset you either have to put a new building into service for the first time, which constitutes.

original use or you have to substantially improve a property and that’s defined as doubling the basis in the property excluding the land value.

Doubling the bases in the value of the building essentially.

So In most places it’s very difficult to meet substantial improvement, but in Detroit so that’s why so many opportunities on projects, you see around the country are typically going to be.

ground up construction and there’s a lot of risks that are associated with new ground up but Detroit offers this opportunity to do substantial improvements so i’ll get off my soapbox and general let you get on yours what what’s unique about Detroit in this regard in particular.

Jed Howbert: So exactly given you know, given the nature of the substantial improvement tests and again, leaving aside the sort of detail about the land reduction and other details regulation, just to speak and round terms.

If you buy a unit for 100,000, we need to invest another hundred thousand you by unit 450 need to invest another hundred 50.

You see how pretty quickly if you’re buying units for six figures you’re getting post improvement it totally cost that is a quarter million 300,000 or more.

The difference in Detroit is you still have an amazing stackable buildings, again, you know some of the best buildings on the planet, that were built 100 years ago, but they have not many cases and care for for a long time, many of them are vacant are all almost.

And so we have bought this point, I think we purchased 37 buildings at this point for pregnant acquisition costs that could be $40,000 $50,000 $60,000.

We invest another 4050 $60,000 depending on the asset, you have an all an acquisition cost per unit of hundred grand 125 grand and obviously depends on the deal.

But it works for substantial improvement because you clearly need to test and then you’ve got a great economical what we would describe this workforce housing style.

You know, we are not in a renovated buildings producing luxury house, these are old buildings, they don’t have central air we’re not putting in central air they don’t have a washer dryer and every unit and we’re not putting one in.

But they are well located have incredible bones, they have beautiful architecture and for the classic 25 year old woman downtown.

it’s an easy sell a lot of our one bench rent for 1200 bucks.

that’s an incredible deal to be living downtown you’re walking distance to all the bars and restaurants you’re walking distance to four major sports teams.

you’re walking distance to your job for those still go into the office or the other attractions like museum and library.

And you know at that price point it’s very, very compelling and so it’s a great income strategy for us in terms of the target demographic were able to.

meet this potential improvement test and supply housing for a young workforce level renter which are incredibly plentiful city it’s why all of our buildings are full and it’s very, very strong.

Jimmy Atkinson: yeah it’s a competitive pricing for sure, and especially if it’s if you’re comparing it to.

A few other urban areas that have a lot of those same amenities, the the for sports teams within walking distance in the restaurant in the bar is i’m i’m thinking of Chicago or i’m thinking of New York City, maybe.

Two to prime competitors and yeah you’re paying a heck of a lot more than than that per month as a as a tenant we were talking a little bit.

Earlier jed you and me, before we hit the record button about a resident survey that you guys did which which gave me some really good information on on on your tenants, can you talk a little bit about that resident survey and what you.

Jed Howbert: sure.

Jimmy Atkinson: From that and what.

Jed Howbert: We absolutely so the principles of rainwater this point have bought almost 1500 units are in various stages of development, but maybe 700 of them are occupied, so we recently went out to serve it attendance try to understand more about the customer base per serving.

And it confirmed a lot of the sort of quintessential elements of the early phase urban revitalization that they are on average 27 years old.

They make on average $50,000 a year, these are young up and coming professionals moving into these neighborhoods and starting their lives in the city.

I think it’s a great reflection on the diversity of the demand for Detroit that the vast majority of these people do not working on loading 13% of the tenants we serve it working on mode.

There is a very good mixture of people who work in media tech healthcare, education hospitality food and beverage it’s a very diverse economic base that we see in our tenants.

And a very diverse origin, you know less than 30% of them moved from somewhere else in the city of Detroit more than 70% come from outside the city.

And that also is pretty mixed a lot of them from the suburbs, a lot from Michigan outside of the Detroit metro area and a lot from other states outside of Michigan so to us, it really show.

The diversity of the demand and the economic support for the tenant base that we were talking about it’s.

it’s typical the tenants, you see, in you know similar phases development Chicago or other cities it’s the young folks with a whole bunch of different jobs.

Who are united by their desire to live in an urban neighbor.

And it’s not even necessarily driven by where they work that two thirds of our tenants coming out to the suburbs, but want to live in the city.

Because that’s that’s where they that’s the narrative they tell about themselves, their city people they want to be around the other city people in these walkable neighborhoods.

And they can do so at a price that would be you know almost perceived as a Internet trap and other cities, because it’s so affordable stolen many apartments.

Jimmy Atkinson: Sure sure so we’ve we’ve covered a lot of ground already on this episode today jed we’ve we’ve talked about Detroit its transformation we’ve talked about the the housing stock that you’re able to get.

we’ve talked about your tenants, what about your investors i’m curious to know who is it that’s.

Investing with you.

Who is your capital base essentially and also where their gains coming from how much was the equity, have you raised, to date, her.

talk, talk a little bit about the investor side of things.

Jed Howbert: So we in total we’ve raised over 150 million dollars back with more than two thirds of that as opposed the equity so about 105 million posey equity doesn’t raise today.

we’ve done this in a series of OCD funds over the last three and a half years, the green water has been in existence and the principles also did some funds prior to great waters formation.

Though those funds are both single asset multi asset depends on, and when we started off years ago it was a classic sort of working the network of.

Wealthy professionals virgin and the real high net worth individuals who are interested in investing in Detroit we’re very proud to say there’s many investors who are in fun number one.

For now, with us and fun number nine because they really value the relationship we filled with them on the returns that we’ve delivered for them from the early assets.

we’ve also diversified the investor base so it’s not just professionals high net worth individuals run family offices and also some real institutional corporate partners, placing institutional money in Detroit.

That is personally reflection of Detroit to increase invest ability and partially reflection of the track record and systems we’ve built accurate water become an institutional investor quality partner.

To the firms that are interested in exposure to Detroit done don’t have a lot of ways to get that exposure.

to your What about the Games also diverse i’d say the two biggest tools.

Are tech related games, whether it’s selling companies or stock investing and also other real estate investors who had asked if they dispose of other cities.

And are seeing what’s going on in Detroit and we’ve we’ve had this conversation with investors, particularly real estate guys who were early to invest in downtown brooklyn or other neighborhoods that are up and coming.

And they see the same cycle happening in Detroit they’re not going to be the ones to get on the ground they’ve hit apply their career where they’re not fired up to like roll up their sleeves and go to.

a bunch of assets in Detroit we will do that for them, they can still benefit from the trajectory that they’re seeing.

In this investment proposition by partnering with us to get exposure to this market.

Jimmy Atkinson: and

Like me, and like a lot of our listeners and viewers and a lot of the other project sponsors that i’ve interacted with in this opportunities own space over the last three or four years, you are heavily invested in multifamily or at least you have been to date it’s it’s.

By far the most popular.

Real Estate segment to be in for opportunities and investors but.

i’m just curious, given the current economic climate that we find ourselves in the stock market and the bond markets are way down interest rates are on the rise, the the Fed last week just.

Increased the interest rate by 75 pips looks like we’re heading into a recession we’re in this inflationary environment where we’ve seen inflation that you know above 8%.

year over year for the past couple of months, you know highest levels we’ve seen in in for decades, given that what are some real estate segments that you like going forward Do you still like multi family are you looking at and other segments, what are your thoughts there Jen.

Jed Howbert: We still like multi family a lot and we’re beginning to look at other segments to and i’ll talk about that, but first on the multifamily.

We still see great demand in our properties or leasing a quickly, I can see a strong rent growth is strong and when we think about the fundamental drivers.

there’s always some fatality and every industry had to deal with recessions etc, we see the structural the secular change in Detroit over the long run, is really trumping that up and down cyclicality meaning.

If you look at the Detroit metropolitan area more than 5 million people.

And you look at the fact that 50,000 college graduates come out of Detroit area colleges every year from Wayne State University Troy University of Michigan Eastern Michigan Michigan state oakland etc.

there’s this fire hose of young graduates and a huge metro area and today, despite you know a lot of growth, since the bankruptcy a miniscule fraction of them.

live in the city compared to what you would see in other cities, there is a enormous amount of demand, yet to be satisfied to bring Detroit of the level of a.

Even a Cincinnati or milwaukee in terms of its share of young college educated professionals, so we think that is an incredible structural driver growth for multifamily because.

As another city is this let’s switch and all the sudden every 25 recognize, I want to live in the fun place where all the other ones live, and that is in the city.

Now, in addition to multifamily we’re beginning to experiment with certain types of retail.

Because we think it’s the important part about neighborhood development we want to play a role in bringing the retail amenities, but a lot of our attendance wants.

Releasing up a retail project now I should say mixed use project with you know apartments upstairs and retail on the ground floor.

And we have a product which we have really suited for up and coming retail entrepreneurs it’s small footprint 500 square feet or 1000 square feet.

All rented on a gross rent basis with relatively short lease terms, so for young entrepreneurs.

Without a lot of resources don’t want to get into the complexity of a triple net deal and all that accounting they don’t want percentage rent.

They don’t want to die, they just want to move in ready space that’s affordable we’ve seen great demand for that product and so that type of retail playing a role.

We think is very important now we’re also thinking about ways to address similar types of office products, and you know sentence pandemic obviously there’s.

A lot of questions everywhere around the future of urban office and we’ve seen some signs in Detroit.

similar to what you’ve seen other places where there are companies saying we may not need as much office space, but we still want to be in a great neighborhood.

We want people to come to the office, sometimes, so we want some space in a great place and maybe a smaller footprint wanted to be a cool neighborhood in a really nice environment.

there’s been some of those deals and we’re exploring how to get into there as well.

we’re also actually partners in the building where i’m currently sitting, which is a we work in Detroit detroit’s tech town neighborhood.

And just as tenants, frankly, it was we weren’t here we’ve seen a lot of increased office demand, as people have been filling up the space that has the pandemic has abated sunlight.

So we’re exploring targeted plays and retail and commercial that really fit what’s happening in the city now, while also continuing to place having investments in the multifamily that we see as a long way to run, despite the whenever cyclicality may come.

Jimmy Atkinson: yeah a lot of keep an eye on going forward in the future, I think I tend to agree with you that Office does seem to be coming back, I know, that was a.

Tough spot for that sector for a couple years there Oh well, clearly You paint a very compelling picture of Detroit and the opportunity.

That exists there throughout the course of our conversation today Jeff what have been some of the challenges in terms of, specifically in terms of.

convincing investors to make the leap of faith and invest more in Detroit what pushback has been most common with regards to raising capital for your projects in Detroit.

Jed Howbert: it’s really interesting speaking to our investors, we have not had much of a challenge finding great Investment Partners there’s certainly a group of people who, when you say to them how about investing in Detroit.

Their reaction is essentially you have to be kidding me like didn’t I read all these stories about the bankruptcy population.

Now there’s some portion of those people.

Who who, when they come to visit Detroit say Okay, I get this is very different than what I thought I was going to be, and they they invest with us.

That we find most of our investors and people right from the start, you say.

yeah i’ve seen, I was in philly 20 years ago and I remember how rough it wasn’t Center city, I was living near 14th street in DC 20 years ago I remember how rough networks i’ve seen it change.

i’ve read a couple of promising articles in Detroit that’s incredible free media support in the New York Times always writes, you know coolest restaurant scene and all these other great support of articles.

So there’s a group of investors who are cognizant of what happened in whatever city where they’re based who get some of these.

Little pricks of interest or what could be happening in Detroit and when they see what we’re doing and the assets we’ve produced returns we’ve had generally we build a long standing relationship with them and we’ve had them through 95 months.

Jimmy Atkinson: Well that’s great that’s always a great place to be in a good success story that you’re painting they’re.

Both for.

The City of Detroit and for your group at great water jet it’s been a pleasure speaking with you today if we have any listeners or viewers out there who are interested in learning more about.

Detroit or investing in Detroit or more about your group, where can they go to learn more about you and great water opportunity capital.

Jed Howbert: Absolutely that please come to our website great water.us great water just one word.us.

We have built relationships with people we met through just cold introductions on the website who’ve been with us through several.

rounds, or even multiple assets, so if you if you’re intrigued by the story of Detroit and want exposure to this market or interested enough to come, make an investor tour please reach out to us we’d love to meet you.

Jimmy Atkinson: terrific and for our listeners and viewers out there, as always, of course, they will have show notes available for today’s episode at opportunity db.com slash podcast.

And there will have links to all of the resources that Jen and I discussed on today’s show, and also, please be sure to subscribe to us on YouTube.

or your favorite podcast listening platform always get the latest episodes jed again it’s been a pleasure speaking with you today thanks so much.

Jed Howbert: Jimmy Thank you very much.