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Developers pledge to keep Eastern Market’s identity even as prices rise

Here’s the dilemma facing Detroit’s Eastern Market.

With real estate values and rents rising rapidly in and around Eastern Market, long-time retailers find they can cash out and retire. And owners new and old have more money available now to upgrade their century-old buildings.

But that same rapid escalation of property values means long-time retail and residential tenants may be forced out. And fans of the market fear the gritty authenticity of Eastern Market may be lost in a rush to gentrification.

The man at the middle of this dilemma is Sanford Nelson, a 30-year-old developer who since 2017 has purchased 20 properties in the Market district. Nelson admits to a few mistakes when he bought his first building there two years ago, treating existing tenants with less sensitivity than he should have as he raised rents. But he said he’s committed to keeping the character and appeal Eastern Market intact.

“We love Eastern Market as it is,” Nelson said. “We didn’t want to come in there to change what Eastern Market is all about. We want to support the identity of Eastern Market and maintain its growth.”

Nelson, who is white, has partnered with African-American businessmen Larry Mongo and Marvin Beatty, among other partners. Most recently, Nelson’s group based in downtown Detroit purchased the market buildings occupied for many years by Farmers restaurant and Adams Meats. Both businesses have closed.

Those sales sparked worries that Nelson was evicting long-time tenants. But Dan Carmody, president of the nonprofit Eastern Market Corp., which runs the public market sheds and does the overall planning strategy for the market, said rising values allowed those owners to cash out and retire.

“It’s careful what you wish for,” Carmody said. “The issue at hand is rapid acceleration of real estate values which is both a blessing and a curse. Higher rents help fund desperately needed building renovations.” But it’s crucial, he added, “to stress the importance of maintaining a tranche of space below-market priced rents as those rents rapidly increase.”

Carmody said many of the long-time retailers used to pay $7 to $10 per square foot for space in century-old buildings they rented. Now landlords are asking more in the $15 to $20 per foot range, and new construction is likely to command even more.

Nelson’s plans

Nelson admitted that when he first started buying his properties in the market in 2017 he did not handle relations with long-time tenants well. Those tenants complained of being victims of gentrification.

“I will admit we made a mistake in how we communicated to tenants about what was going to be happening, and we acted too fast,” he said. “We learned  a lesson. I’m a human being. Human beings make mistakes. I learned a valuable lesson from that.”

But the work of renovating many of the older properties still requires raising rents and, for a time, displacing tenants, he said.

“The majority of the buildings I’ve bought have not been maintained and have several code violations and are not safe,” he said. “You simply cannot complete those renovations while they’re occupied. … The work just can’t be done while there are people living in it.

“It’s hard but it’s the reality. While it’s painful for some people and they don’t like it, those same people don’t want to see these buildings deteriorate.”

Nelson now commits to working with existing tenants to keep them in the market district, even at below-market rates, although some may be offered new space in a different location as he renovates their older buildings.

His three-fold goal for his properties includes developing new space for the food operations there, renovating existing buildings, and eventually building new construction.

“We are actively working with existing legacy food businesses that are in the market today and desperately need more space. It’s not just about having more space. It’s about having new space because a lot of these cool old buildings that they occupy don’t work logistically for the way the modern food business has evolved,” he said.

“Not only do they need more space, they need new space. We’re committed to that. We have plans to build a lot of buildings for that.”

One of Nelson’s tenants in the market is Signal Return, a printing operation. Lynne Avadenka, director of the operation, told the Free Press that the firm’s lease in its building runs until 2023. She added, “We have no complaints regarding our space.”

Other developers, too

Nelson is hardly alone in eyeing new development in the market district. Drawn by the market’s popularity, at least a half-dozen developers are mapping plans to renovate older buildings or build new ones, including residential projects.

Among them are some well-known names. George Jackson, the former president of the Detroit Economic Growth Corp., who now splits his time between metro Detroit and a second home in Arizona, is negotiating with the city to buy the former Detroit Water & Sewerage warehouse at 3500 Riopelle on the northern end of the district.

Vacant for many years, the 117,000-square-foot warehouse would be transformed in Jackson’s vision into a food emporium called Riopelle Market. It would include an accelerator space for food entrepreneurs to test their concepts, as well as dining options and commercial space. He estimates his investment at $15-$20 million.

“Our goal is for this to be a a seven-day-a-week location as opposed to just a Saturday location, and that will also be an anchor for the northern end of Eastern Market,” Jackson said. “I think it will be a very unique project, but still within the overall theme of the market itself historically.”

Should negotiations result in a deal, Jackson hopes to begin work on the project later this year.

To justify the hefty investment, though, at least some of the tenants would have to pay some of the higher rents market-area buildings now command.

Market basics

Eastern Market is really three distinct environments in a district bordered by Gratiot to the south, I-75 to the west, Mack to the north, and roughly St. Aubin to the east.

There are the publicly owned market sheds where local farmers sell their products every Saturday and where special events like fashion shows or new car model unveiling take place. Carmody’s Eastern Market Corp. has invested tens of millions of dollars into upgrade those sheds in recent years.

Then there are all the private restaurants and shops including Supino’s, Russell Street Deli, Bert’s barbecue restaurant, and dozens more. These often operate in buildings owned by landlords.

Finally, there are the meat packers, fruit and vegetable distributors, and other wholesale food businesses that operate in larger structures throughout the district. Often, these businesses are busiest in the early morning hours as truckers show up to carry bulk products to groceries throughout the Detroit area.

Many of the shops, restaurants, and wholesale producers and distributors operate in buildings close to a century old. In those buildings, rents remained low for years and code violations were common if often grandfathered in by city regulations.

Updating those older buildings, or replacing the most dilapidated ones with new structures, may be necessary. But it could prove disruptive to long-time tenants, who feel the pressure to move as rents inevitably rise.

Carmody is trying to get all the new developers to commit to the city’s vision for the market — a food-centered place that remains open and welcoming to people of all incomes, not just a gentrified enclave for the well-to-do.

So what’s ahead?

In many ways, Eastern Market is both resilient and fragile. It draws many thousands of visitors on public market days. Its shops and restaurants score high in popularity. Its many wholesale businesses play an essential role in metro Detroit’s food economy.

And with its walkable streets and its urban chic, where a dress shop may operate steps away from a hog butcher, Eastern Market offers a unique environment. It’s the sort of district that once existed in every big city but has disappeared from many.

Holding on to that authenticity is now the goal. But that means accepting that change is inevitable and that working with developers like Nelson and Jackson is necessary to achieve a common vision.

“In all the planning work we’ve done, everybody wants Eastern Market to stay exactly the same but get better,” Carmody said. “Right now, people love Eastern Market because it’s one of Detroit’s truly authentic places. Is it possible that it could be authentic after investment happens? I believe it is.”


Posted By: Detroit Free Press on March 23, 2019.  For more information, please click here to read the source article.

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