Can we talk about the overpriced lofts in Corktown?

I keep hearing everyone say these new lofts near Michigan Ave are the future of Detroit living. But I did the math last month and a 700 square foot unit runs $1,800 a month. For that price a few years ago you could buy a whole house on the west side. What tipped me off was talking to a buddy who manages one of those buildings. He told me a third of the units are empty because businesses cant afford to put their workers there. Meanwhile down the street, the old warehouse spaces are renting for half that with more square footage. Am I missing something or is this bubble just waiting to pop? Has anyone else looked at the vacancy numbers for these places?

2 comments

2 Comments

lee.drew12d ago

Man, $1,800 for 700 square feet. That’s like paying for a fancy shoebox with a view of the trash alley. I looked at one of those lofts last year and the kitchen had exactly two feet of counter space. I felt like I was supposed to cook a gourmet meal in an elevator.

keith_rivera1912d ago

The 1031 exchange rule is what really screws people on these tiny units. I talked to a guy who bought a 600-footer downtown for $220k five years back and now he's stuck because selling it means paying $40k in capital gains unless he buys another property of equal value. So these tiny lofts just sit there, barely getting maintained, because nobody wants to take the tax hit. Meanwhile the landlords keep raising rent because they know you have nowhere else to go in the neighborhood.