Motor City Attracts New Automotive Startups – Investors, Pay Attention!
Detroit is undergoing a transformation right now.
With Ford’s reopening of Michigan Central Station as a hub for automated vehicle research, the city is once again emerging as a hub for technology and innovation.
Recent developments have underscored this evolution, with significant investments and relocations reshaping the city’s landscape. Two news stories highlight this shift:
- A2Mac1, a French automotive software company, has moved its North American headquarters to Newlab at Michigan Central Station.
- Grounded, a manufacturer of smart-electric RVs, also recently announced the company’s move to the Motor City.
Let’s break down what this means for rental investors in Detroit.
Ford’s Innovation Hub: A Magnet for Tech Businesses
Ford’s ambitious innovation hub is quickly becoming a focal point for technological advancement and business growth in Detroit.
Located within the iconic Michigan Central Station, this hub is attracting a plethora of tech businesses eager to leverage the economies of scale offered by proximity to an industry giant like Ford.
If you know anything about how startup ecosystems work, then you’ll see this is a classic case: an influx of autonomous vehicle suppliers and tech startups moving to one centralized area to essentially share knowledge, resources, and talent.
The Historic Book Depository: Breeding Ground for Startups
Ford is actively encouraging the creation of a tech startup community here, centered around research for automated vehicles.
The transformation of the historic Book Depository into Newlab is a testament to this. This renovated space now serves as a breeding ground for startups, providing an environment rich with resources and opportunities for growth.
Already Newlab is home to over 50 startups.
Companies like A2Mac1, who produce computer software for vehicles, and Grounded, a manufacturer of smart-electric RVs, are just the latest to relocate here.
2 New Startups Move to Motor City
Frank Bunte, CEO of A2Mac1, recently explained the move to Crain’s Detroit:
“Newlab at Michigan Central has quickly become a leading hub for mobility and new energy technologies. By joining this thriving community, A2Mac1 is positioning itself at the forefront of the industry’s most exciting developments.”
This statement shows how Newlab is already acting as a catalyst in the market, bringing new tech companies – along with new tech employees and their families – to the city.
Sam Shapiro, founder of Grounded, echoes this reasoning. “We ended up in Corktown primarily because of the Michigan Central project. Here, we get to be surrounded every day by other startups and innovators. An osmosis happens and you’re sharing and learning. It’s a nice environment to be in.”
Investment Opportunities: Detroit’s Rising Appeal
As Detroit evolves into a tech hub, the implications for rental investors are profound.
The city’s burgeoning status is catalyzing a trend towards Class A areas , attracting high-quality tenants and increasing demand for premium commercial and residential spaces. This surge in development is not only transforming the city’s skyline but also boosting its economic prospects.
Peter Kageyama, an urbanist and expert on community development, said: “The renovation of Michigan Central Station is symbolic of Detroit’s rise. It’s the cherry on top of the sundae.”
He couldn’t be more right. Over the past few years, Ford’s $1B project has spurred a spike in property values , the regeneration of commercial districts, and an influx of new businesses and tenants.
Our advice to landlords who want to position their portfolio wisely is:
- Invest in up-and-coming areas close to development projects, like the North End, Oak Park, and Dearborn.
- Target single-family homes and townhouses, which are the first and second most in-demand types of properties with Class A tenants.
- Renovate units to a high standard to attract tenants from tech industries.
This way, you can buy affordable rentals, renovate, and maximize returns with high-quality tenants in fast-appreciating neighborhoods.
Conclusion
Detroit’s future shines bright as it transforms into a thriving tech hub.
With strategic investments and a welcoming environment for innovation, the city is poised to become a center of growth and opportunity.
As more startups and tech companies establish roots in Detroit, property values and demand for rental units will continue to rise, so you should invest now, before the bubble grows even larger.
Ready to start investing? Explore our exclusive list of off-market turnkey rental investment properties in Detroit today.