Creative Destruction

How to save a city by knocking down thousands of its buildings

May 31, 2013
May 31, 2013

The best hope for the troubled American city of Detroit may be a plan to destroy thousands of its buildings.

The problem with Detroit, which could soon host the largest municipal bankruptcy in the country’s history, is its shrinking population. With its industrial base decimated by automation and outsourcing, a city of 1 million people in 1990 dropped to 700,000 this year, with 200,000 people leaving the city since 2008. That reduced the taxe base to fund public services. Fewer public services coupled with lower population density weighed on crime, public health and the economy.

The upshot? The city now has a covetable asset compared to municipalities like New York and San Francisco: empty land for development. The city needs to right-size and refocus city services and herd its population into a smaller area. But redevelopment isn’t easy in a city where home prices are still in the dumps:

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Low prices make existing homeowners unlikely to sell, keep others underwater (owing more money on their mortgages than their homes are worth), and scare away new investment.

One thing holding back price increases: some 65,000 vacant homes, many of which have been stripped of their copper plumbing by thieves or simply left unmaintained; others have burned down. Derelicts don’t have much resale value, but they cost a lot to tear down and take up valuable land that could be repurposed. Enter organizations like the Detroit Blight Authority, which has started razing these abandoned buildings, and fundraising to raze more. One advocate of the program, William Pulte, an executive at PulteGroup, a leading homebuilder, hopes the city can knock down 13,000 homes a year.

Studies suggest the efforts will drive up prices, perhaps as much as 30% (pdf). Of course, the city also needs a coherent strategy for developing, cutting crime, boosting the economy and reducing debt.

But it’s not impossible. Just look at New York’s urban renaissance in the 1990s. Other cities in the US rust belt, including Cleveland, Ohio, are trying it too. Opening up that space could welcome new industries, for instance, huge, futuristic urban farms.

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