The Pink Zone: Why Detroit is the New Brooklyn

January 30, 2014: 10:09 AM ET

Detroit may not the richest U.S. city, but it's a place where millennials can build wealth

By Andres Duany

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FORTUNE -- Detroit is going to be the next "Brooklyn." Perhaps not all of Detroit. But certainly a portion of the city has the potential to become as rich and thriving as New York's trendiest borough.

Hope for Detroit would seem far-fetched if you had been on the "pornography of ruins" tour I have been going on for years, led by various residents over the years. But, it turns out that those tours were provided by folk who had lost their beloved city. I recently began to hang around with a younger crowd: Mark Nickita, for example, an architect and a maniacal optimist, and a serial small-scale entrepreneur who runs Archive DS, an architecture and urban design firm in downtown Detroit, and also co-owns eight retail establishments -- including two coffee shops, a café, and a "Culture Shop" -- in and around the core of the city. What he showed me during some recent visits was astonishing. There are in fact two Detroits: There is the oceanic disaster, and then there is an archipelago of vitality and potential, and even excellence. You can experience one or the other. You can be buried under the cold hard numbers of the fiscal situation -- or you can believe the evidence in front of your eyes.

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How is this revival happening? The old way it seems; in that sequence that has always pioneered the revitalization of cities: the artists with a good eye, the penniless young people with a sense of adventure, and the fearless entrepreneurs. These were the pioneers of the Left Bank of Paris in the 1870s, Greenwich Village of the 1920s, SoHo in the '60s, Miami Beach in the '80s, and Brooklyn today. They are the first wave in a succession that thrives below the horizon of bureaucratic control. They can be classified as the risk oblivious cohort. Later, as a result of their success, when their neighborhoods have become cool, a risk aware cohort appears. These are the developers, who secure permits and mortgages. Later yet, when it is perfectly obvious that the place is safe for investment, arrive the risk-averse -- the boring gentrifiers called "the dentists from New Jersey." By then, that generation of pioneers has been chased away, only to reappear at the next Brooklyn.

That Detroit is now attracting that first generation is an unintended consequence of its impoverishment. Detroit is now the city where the risk-oblivious millennials can get things done. Elsewhere, over the last three decades, there has arisen a regulatory regime so comprehensive that it is impossible even to make a cookie for sale without a certified kitchen, an accessible bathroom, and constant inspections. Almost everywhere else, the slack that once allowed revitalization to evolve organically has been exterminated by bureaucracies. If this is not obvious, it is because most of us elders have grown up within the rising tide of regulation. We are inured -- and we even know how to operate within it -- but the young folk do not. They are flummoxed and repelled. As evidence, observe the extraordinary numbers of millennials who are currently in the arts. Could it be that art and video are among the few things that can be made and sold without regulation -- without the stranglehold of bureaucracy?

So, why is this happening in Detroit? Because its bankruptcy cannot support it, the glacier of American bureaucracy has receded. Detroit can no longer supervise crime, let alone gainful economic activity. There is a liberating adoption of the Nike mentality going on: Just do it! There is no red tape. So the young are immigrating in droves to start their businesses, to fix the buildings, to live affordably, to make their own security arrangements, to invent their amusements -- unimpeded. It is the agile deal flow of the Internet made physical.

There is already evidence of a related phenomenon: In other cities, because regulation has exterminated the first organic phase of revitalization, developers must be enticed before the cool is present, and so their expensively compliant projects must be subsidized -- hence the proliferation of the public-private partnership of the past 20 years. Development today is habitually subsidized. Why? Real estate is easily translated to wealth -- as was the expansion of the 19th and most of the 20th century.

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Detroit has now inadvertently restored the organic sequence. Because the young people are in-migrating, the developers are following. Developers like Dan Gilbert are already renovating the big buildings and recruiting potential tenants by showing them that the workers they require are already there. This, which is today so unusual, is really just a reversion to the status quo before we became so rich that we could afford to be stupid.

Detroit is a model where wealth is absent, allowing millennials to grow wealth -- merely by withdrawing its bureaucratic impediments. Inspector: "Go ahead, just don't hurt yourselves" is not dissimilar to the situation encountered by my boomer generation when we were 30. Detroit is a Free Economic Zone, which should be institutionalized as the first Pink-Zone: a place where the red tape is light. This is a lesson for other cities, which can no longer afford to subsidize development (the need for which is ludicrous).

This trajectory, incidentally, is the future also of other to-be-bankrupt-cities so it is important. And the starting point is not zero: Detroit is so large that it has more good to revitalize than other big cities could ever hope to have.

Andres Duany is an architect and town planner and the recipient of a Knight Foundation Grant for the study of Lean Urbanism.

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