Surprisingly, I felt no bitterness as we winged our way toward Detroit. After all, I was headed home to my family, friends, and community.
I had never felt so blessed.
EIGHTEEN
Coming Home
When I returned to Detroit from Rochester, Judge Damon Keith and Max Fisher organized a welcome-home luncheon for me at the Detroit Athletic Club that I will never forget. Everyone was there, from Mayor Kwame Kilpatrick and University of Michigan president Mary Sue Coleman, to former Michigan governor Jim Blanchard, business leaders, friends, family, and colleagues. What a great feeling to know that so many people had stood by me through such horrific trials and tribulations.
Of course, my reentry into society was also accompanied by some not-so-pleasant encounters. In December 2003, I attended a holiday party in the Manhattan home of my friend Ben Lambert (who had assisted us with the Irvine Ranch). As I was sitting in the library of Ben’s beautiful apartment, David Simon approached me with his hand extended. I didn’t stand up or shake his hand. But I did offer this special holiday greeting:
“You’re a stupid little asshole.”
To his credit, David turned and without a word disappeared into another room.
At my age, I don’t buy green bananas. But I’m still taking the long view, looking at things and thinking how to make them both different and better. In my apartment building in New York, I recently rode the elevator with my neighbor, the Broadway director Harold Prince. He said, “I’m so retired.” And I responded: “That’s not the attitude. The attitude is that you’re alive and you’re better than you ever were. You’re smarter, and you’re better than you ever were. Don’t think of yourself as old. You’re experienced.”
You have to take the long view. And when I do, I still see great opportunity for my industry and for my hometown. People wonder if the country has too many shopping centers. Well, the demographers tell me that by 2025 we’ll have 70 million more people living in America than we have today. That’s pretty astounding when you think about it. They’ll all need a place to shop. And, no, I don’t think they’ll be buying everything online. On a macro level, sales of department store–type merchandise in 2006 totaled more than $1.0 trillion. By most estimates, total online sales for everything—not just DSTM—in 2006 barely passed the $100 billion mark. As for fashion items, the numbers over the Internet are even weaker. Sales in Taubman Centers properties (centers open at least one year) increased more than 7 percent in 2006. So, despite the popular perception, cyber sales are not getting an edge on brick-and-mortar business.
The technical limitations of computer screens make it impossible to effectively communicate such important product characteristics as fit, color, and feel. There are no fitting rooms or tailors in cyberspace. And the more expensive an article of clothing, the more critical it is that it fit well. There are an infinite number of colors and shades, and each works differently for each individual, depending on hair color, complexion, and eye color—even with high-quality print catalogues, the four-color process cannot match the exact color of a garment. There are no tactile experiences in cyberspace; at least not yet.
It is also ironic that one of the Web’s greatest strengths is also one of its most serious weaknesses when it comes to retailing. Internet surfers can “drill down,” as they say, to learn anything and everything about a product or service from the comfort of their homes. You would think that would build confidence. But without the guidance and persuasiveness of a salesperson, the hunt for information online tends to be endless. It’s pretty easy to talk yourself out of a purchase when you can sit for hours reading negative product reviews (some legitimate, some not) and chatting with other buyers who are just as confused and uncertain as you are. Never underestimate the value of a knowledgeable salesperson.
That’s not to say that the Internet is not a powerful force in retailing. Just like every other major business, retailing has harnessed the Web for manufacturing, supply-chain, fulfillment, and record-keeping functions. And successful retailers are pursuing multichannel distribution strategies, developing what some have called 360-degree marketing strategies. Customers can research a product online, come to a mall to purchase the item, and receive regular updates from the manufacturer via the Internet. Manufacturers like Sony and Apple—whose products do very well online—are enjoying great success with offline showcase stores in Taubman malls.
Clearly, of all offerings, commodity products do best on the Web. If you’ve jogged every morning in the same size Nike running shoes, there is no reason why you can’t reorder online (at least until Nike introduces a new model or your feet change). Purchases of books, CDs, and cell phones are strong (although the brick-and-mortar outlets of Borders and Barnes & Noble have never been stronger). With these products, the Web serves as a fulfillment vehicle, more than a promotional tool. And look who is doing best over the Internet: established brands. Consumers have confidence ordering from trusted merchants they have come to know in America’s shopping centers.
The Internet retail revolution will occur when television viewers are able to order goods right off the screen during prime-time programming. A blouse worn by one of the cast members of Desperate Housewives catches your eye. You click on the character and up comes a description of the item along with ordering information. Your computer knows your size and your credit card number. You click and the blouse is on its way. Technology experts call this “convergence.” I call it impulse buying!
The technology, which is very close to being perfected, will take a bigger bite out of on-premises retailing. No question. But for now, when it comes to women’s sportswear, shoes, men’s dress slacks, and fancy wastebaskets, the strongest fashion statements are still being made in the best department and specialty stores.
Malls aren’t dinosaurs. And neither is another great twentieth century economic force that people have been writing off: Detroit.
Wherever I go in the world, I’m proud to tell people I’m from Detroit. Even the halfway house I was assigned to in Detroit for the first weeks after leaving Rochester looked good to me.
Like me, Detroit has seen its share of success and failure, ups and downs. It gave mobility to the masses and has given the world an extraordinary number of talented people in a broad range of fields, from manufacturing to entertainment.
In many ways, Detroit’s patterns of industrialization, suburbanization, and social diversity reflect America’s journey from frontier to industrial powerhouse to nation in economic transition. Detroit faces challenges in part because geographic and economic forces have been at work for centuries to discourage density of development.
It starts with the water. The Great Lakes hold 18 percent of the planet’s fresh water. Detroit’s strategic location along the “straits” connecting these enormous bodies of water brought the fur traders in the eighteenth century and helped deliver the raw materials for the automobile industry in the twentieth century. The Detroit River has also created a boundary and barrier, defining the course of the city’s growth. Development from the earliest days of human habitation has pushed out from the river over a 180-degree, not 360-degree, radius.
The land that stretches out from the river is very flat, with little variance in elevation. That made it easy to build roads, extend infrastructure, and get around fast, which in turn encouraged what we today call sprawl. In the early 1900s, Detroit was the automotive industry’s equivalent to today’s Silicon Valley. Young Detroit inventors and entrepreneurs like Henry Ford and Ransom Olds needed smooth roadways to sell their early models. In 1909, the one-mile stretch of Detroit’s Woodward Avenue between Six Mile and Seven Mile Roads became the first road in the world to be paved with concrete. Concrete paving was cheaper and quicker to put down than cobblestone or brick, and much smoother. This breakthrough helped fuel the growth of the automobile industry and of the region. You could live in the suburbs and work in the city without having to depend on public transportation.
Then
came the people. Thanks to Henry Ford, hundreds of thousands of workers and their families arrived from all over the world, seeking the extraordinary salary of $5 per day. When the board of directors of the Ford Motor Company announced this wildly generous pay policy—more than twice the amount of the average worker’s compensation—on January 5, 1914, the Wall Street Journal accused Henry Ford of “economic blunders if not crimes.” It dubbed the $5 day “the most foolish thing ever attempted in the industrial world.”
Of course we know that the policy in many ways ushered in the age of the American middle class. Workers became customers. They were able to own their own cars, buy their own homes, and pay taxes to municipalities building public schools that could send generations on to college and success. Thousands of these Ford workers were African Americans who migrated from the South to start a new life with their families. Thanks to this migration and the competitive wages, Detroit—while not always a perfect place to live for African Americans—developed a strong African American middle class.
By 1925, Detroit boasted the highest per capita income and the highest percentage of home ownership in the world. But this wage-driven revolution had unintended consequences. Traditional business institutions like banks and insurance companies, which were dependent upon large workforces, could not compete for labor against Ford Motor Company’s wages. These essential white-collar institutions, along with the massive office buildings required to house their employees, did not flourish in Detroit. Cleveland, Chicago, Pittsburgh, and other midwestern cities, which were less dominated by the auto industry, developed more balanced economies and more dense downtown business districts with banks and insurance companies clustered within walking distance of one another.
The manufacturing plants of Detroit were not similarly clustered. The river and the rail lines brought iron ore from Lake Superior and the coal from Lake Erie to massive industrial campuses built along or within a short distance of the Detroit River. Workers had the income to afford their own homes near the plants, resulting in low-density housing patterns throughout the region. Ford’s 2,000-acre River Rouge plant, designed by Albert Kahn and located three miles inland from the Detroit River, helped establish the character of Detroit land development. Vanity Fair in 1928 called it “the most significant public monument in America.” This self-contained industrial complex included a foundry, glass plant, tire plant, assembly building, cement plant, power house, pressed steel building, miles of roadway, and one hundred miles of railway track. At its peak of production, the Rouge plant employed 100,000 people.
With the innovation of the production line, Kahn’s Rouge plant was the world’s first single-level, horizontal manufacturing building. It replaced the vertical factory model—like Ford’s Highland Park, Michigan, plant—that relied on gravity to ease and speed production.
Albert Kahn was commissioned to design the Fisher Building, which opened in 1928 across Grand Boulevard from General Motors headquarters. At that time, the GM structure was the largest office building in the world. But the Fisher and GM buildings were not built downtown. Detroit’s planners envisioned and encouraged a three-mile corridor of growth along Woodward Avenue from the river to what became known as the New Center area. The theory was that development would spread along this corridor. And to be fair, neighborhoods of cultural, medical, and academic institutions did spring up.
With few banks and insurance companies demanding office space, it was unrealistic to expect the pattern of commercial development in Detroit to extend three miles up Woodward, but the planners never gave up on the idea. They kept encouraging growth in the outlying New Center area. Detroit’s hoped-for extension of dense commercial development from the river to the New Center area never materialized. And it never will (at least not in my lifetime).
During the war years we were among the most prosperous and fastest-growing cities in the world. With peace, Detroit helped fuel the nation’s prosperity and answered America’s call for mobility. Along with the baby boom came an auto boom, and Detroit benefited economically as much as any city in the nation. Detroit and Detroiters were spreading out, and retail followed the flow of population. Remember those massive stores that Hudson’s built in Detroit’s suburbs? They destroyed the competitive opportunity within the region for the chain’s historic flagship store downtown. Every line of merchandise was available in depth in the more convenient suburban stores. Another reason to “go downtown” was gone. Hudson’s suburban strategy certainly hastened this landmark’s demise and forever changed the retail landscape in Detroit.
In the 1970s, I made deals with JCPenney and Lord & Taylor to come to the Detroit metro area and anchor five projects—four suburban centers (Fairlane Town Center, Twelve Oaks, Lakeside, and Briarwood) and the proposed Cadillac Square development downtown. The historic Hudson’s store was to be the centerpiece of Cadillac Square, but a misguided young architect from the firm of Smith, Hinchman & Grylls scuttled the project with the help of some equally misguided preservationists in Washington, D.C. To save two insignificant structures on Griswald Street (both of which are still boarded up), Hudson’s and the city’s downtown retail vitality were cheated out of a second lease on life. The store was closed in the mid-1980s and torn down in the late 1990s.
People moved out of Detroit for all the reasons of geography, economics, and personal taste that we’ve been discussing. And they moved out because of the growing racial tension that exploded in 1967. The tragic Detroit riots of 1967, and the festering social problems they reflected, influenced the course of Detroit’s development as much as any street patterns, business decisions, or geography. Detroit’s population peaked in 1953 at around 2 million. By 1970, it had declined by a half million people. The 2000 United States census found only 950,000 people living in Detroit—a decline in just fifty years of 1 million people.
I can think of only one comparable example in history of such rapid urban population decline. Vienna, Austria, at the beginning of the twentieth century had much in common with Detroit. This bustling European city—the capital of the Austro-Hungarian Empire—was a center of arts, education, government, and finance. And like Detroit at its peak, it was home to more than 2 million people.
But the twentieth century was not kind to Vienna. The Hapsburg empire fell with the outbreak of World War I, and the city’s diplomatic infrastructure disappeared overnight. By 1950, after World War II and the Allied occupation, the city’s population had fallen to just over 1 million, a decline of 50 percent.
What’s interesting is how Vienna is dealing today with such traumatic change. While large sections of the city, where beautiful homes once stood, are vacant and waiting for redevelopment, Vienna’s historic strengths—the opera, museums, and restaurants—are among the finest in the world. City leaders are investing in the aspects of the city that remain internationally attractive and competitive. Tourists continue to visit, trade is flourishing, and people are slowly but surely moving back to the city. Population has climbed back up to more than 1.5 million people.
We’re hoping there is a second act for Detroit as well. Following the disastrous 1967 riots, I was one of the members of the business community who formed Detroit Renaissance. Along with my friends Max Fisher and Henry Ford II, we committed time, influence, and resources to rebuild the economic strength of our great but wounded city. I headed the organization’s development committee and had the honor to work with Mayors Coleman Young and Dennis Archer in planning several of Detroit’s most important projects, including the Cobo Hall convention hall expansion and the beautiful new Comerica Park baseball stadium.
If Detroit is going to be able to attract residents downtown, it must look to the riverfront for regionally competitive housing. The Riverfront Apartments, which Max Fisher and I helped develop in the early 1980s, may not have been my best real estate investment. But it laid some of the groundwork for Detroit’s exciting Riverwalk initiative, spearheaded by General Motors, the Kresge Foundation, and the city. The subur
bs don’t have a comparable amenity, and it is absolutely essential that we reclaim the riverfront from its industrial past.
Other market-rate housing is being developed in Detroit, thanks to dedicated hometown developers like Cullen DuBose. My friend Cullen has created a wonderful community of affordable single-family homes directly adjacent to our world-class museum, the Detroit Institute of Arts. The units sold out quickly and are anchoring an attractive, prospering part of our city.
General Motors’ decision in 1996 to adopt Detroit’s Renaissance Center as its world headquarters has also been one of the most positive events in the history of Detroit. Their presence and commitment to downtown has already paid extraordinary dividends. Unfortunately, even General Motors can’t move the Renaissance Center off the river a few blocks, where it should have been built in the first place. My friend Henry Ford II was the driving force behind the development of the RenCen in the 1970s. I was one of the city’s lone voices in opposition to the project’s location and design. I remember driving by the construction site one day with Henry. He wanted my advice on some last-minute design issues. “Henry,” I said, “fill in the hole.” The massive towers, as impressive as they are, stand in isolation from the city’s central business district, blocking access to the river and diminishing the opportunity for residential development along the water. But General Motors has made important physical changes to the complex, revitalized the center’s retail offerings, and injected magnificent new life into our city.
Taubman Centers board member Peter Karmanos, founder of Compuware, also deserves accolades for bringing his energy and company headquarters downtown. The Ilitch family (owners of Little Caesars Pizza, the Detroit Tigers, and Red Wings) has reenergized our sports and entertainment offerings. And the Fords have brought the Lions back home in a beautiful new world-class sports facility (Ford Field), host to the 2006 NFL Super Bowl.
Threshold Resistance Page 20