Tuesday, March 22, 2011

Rust Belt Reset: Windsor

Other Rust Belt cities should pay attention to the Pittsburgh-like renaissance going on in Windsor, Ontario. By now, the story is familiar. Region diversifies economy and begins to reap rewards. The surprising part is Windsor's ability to attract retirees:

The area has also recognized the up-side of low real estate values, and has pitched itself as an active retirement community to boomers in the Greater Toronto Area who are looking for a more affordable lifestyle in an area with one of Canada’s most moderate climates. ...

... Real estate investment in the area from that cohort alone is estimated to already be $110 million. Since the initiative was launched in September 2008, 278 Ontario families have moved to the area – two-thirds from the Toronto area. Perhaps more surprising is the power to draw from the West. Krista Del Gatto, Executive Officer of The Windsor-Essex County Real Estate Board, notes that fully 28 per cent of the arrivals – 103 families – are from Alberta and B.C. Even 200 retirees have been courted away from the pricier West Coast.

Boomers are in an excellent position to employ geographic arbitrage and many Rust Belt cities deliver excellent real estate value at a fraction of the cost. In fact, all adult demographic cohorts are beginning to cash in on the cheap digs.

Via Twitter, Aaron Renn posted links to two articles that get to the heart of this talent migration trend. One concerns the turnaround for a town in Western New York:

The $100 rents he offers, he insists, are not charity. He makes money, too, as much as $500 a month, from the apartments upstairs. In remaking Mount Morris, O’Connell is revisiting his own playbook, the one he used to rehabilitate Brooklyn’s once-deserted waterfront Red Hook area. It was a project that lasted decades, one that put O’Connell on the map and made him a millionaire many times over. Starting in 1982, the year after he retired from the N.Y.P.D., he began buying run-down buildings in Red Hook, then an area known for its drug addicts and prostitutes. He renovated one building at a time, before moving on to the next. He saw the area’s potential before anyone else did and bought his properties — many from the city, which no longer wanted them — at nominal prices. “You’ve got to buy things right,” he says. “You’ve got to be 15 to 20 years ahead of the trends.”

The Rust Belt is the new gentrification frontier for urban success stories. Real estate refugees from New York City are pouring into Northeastern Pennsylvania, an area that has experienced a surprising increase in population over the last decade. Close proximity to a global city has been a boon for many struggling regions.

When I moved here last summer, all I could see were the changes in my neighborhood. I’d attended Howard University from 2002 to 2006, and while I knew that the city was where I wanted to stay, I got a job in New Jersey and worked there for a few years.

It was pure luck that when I made it back, I found a house for rent in LeDroit Park, right around the corner from my old dorm. The change that had occurred in four short years was stark.

To put it bluntly: There were white people, everywhere. Now, they trek between Bloomingdale and U Street NW by way of the busy intersection of Georgia and Florida avenues, where just nine years prior, it was a place where black college students butted up against unemployed brothers lingering on corners.

That story is full of interesting themes to explore. I'm highlighting the connection with the champion of Mount Morris. Going to college provided the knowledge of the geographic arbitrage opportunity. People won't fall out of the sky and repopulate Cleveland. There has to be a prior experience with the landscape. That's why so many people from Ohio end up in South Carolina:

Our charming neighbor to the north, Myrtle Beach, the Redneck Riviera (a.k.a. the gateway drug for Ohioans to Charleston), is particularly good at enticing beach-goers from the heartland. The Myrtle Beach Chamber of Commerce runs a 60-second TV spot in the Toledo and Youngstown markets in Ohio. They also have a significant online and TV presence on the CNN-style Ohio News Network channel. Myrtle Beach Chamber Public Relations Manager Kimberly Miles reports, "We just dropped a small property insert into Canton and Cleveland newspapers, which went to a combined 143,000 insertions, and on March 5 we dropped the eight-page vacation planner insert in Columbus."

Much of the Rust Belt-to-Sun Belt migration is made up of those seeking a year-round spring break experience. They get to a know a place while on vacation or perhaps a friend recently moved there. They aren't in the market for lower taxes or a right-to-work state.

Your Rust Belt city will need more than rock-bottom real estate prices. The missing ingredient is intimacy with the landscape. That's true at any scale and why some neighborhoods offer incredible bargains. Perception is reality. Those are the mesofacts that drive migration.

1 comment:

Andy said...

'Much of the Rust Belt-to-Sun Belt migration is made up of those seeking a year-round spring break experience... They aren't in the market for lower taxes or a right-to-work state.'
Spot on, as usual.

Unfortunately, the nice Homeland Security folks on the US side of the border are not helping some of that Windsor mojo spill across the Detroit to us in Michigan.