01 Jun 2016
Rethinking Housing in the Motor CityRe: Peter Cummings (OPM 13)by April WhiteTopics:
Detroit needs more housing, says developer John Rhea (MBA 1992). That’s a counterintuitive idea for most people who have driven the streets of that shrinking city, passing thousands of vacant homes and nearly abandoned neighborhoods.
“Generally speaking, Detroit is a series of neighborhoods with single-family houses—the largest strictly single-family housing market in the country,” Rhea explains. Lafayette Park, the Detroit neighborhood where he grew up in the 1970s, is one of the few exceptions. Populated with high rises and townhouses designed by modern architect Mies van der Rohe, the neighborhood was a product of Detroit’s controversial 1960s urban renewal efforts.
“But the way people live today, they want to be close to the action. They want to be close to their jobs. They want to ride their bikes; they want to take public transportation,” he says. That’s the Detroit that Rhea hopes to help build—a city designed for this millennium, not the last.
It’s been a long road back to Detroit for Rhea, who left for college in the early 1980s. “I would have loved to have been able to go back to Detroit [after school]. But the reality was I knew that—as someone being just prudent, and thinking ‘where is the best opportunity going to be for me professionally?—I couldn’t move back to Detroit,” Rhea says. Instead, he went into finance in New York. After the financial collapse he left banking for a position as chairman and CEO of the New York Housing Authority.
In that role he saw the power that housing policy can have on a community and the importance developers could play in the revitalization of America’s cities, especially his hometown. “Detroit has the opportunity to be the biggest revitalization success story that America’s ever known,” he says.
Rhea is now the managing partner of Rheal Capital Management, a New York-based investment management firm. Among its first investments was a codevelopment deal for a mixed-use project in Detroit’s Brush Park neighborhood north of downtown. Scheduled to break ground this year, the development will include 150 to 200 apartments, retail, and open space.
Rhea is also a partner in the redevelopment of Detroit’s iconic Fisher Building, along with Peter Cummings (OPM 13, 1988). He hadn’t planned to get into the office-space business, but the Fisher represents for Rhea the key to the New Center neighborhood revitalization; the adjacent Kahn building, part of the redevelopment project, will be transformed into apartments. With planned public transit, the neighborhood has the potential to become the Detroit Rhea envisions, a thriving, walkable mix of residential, office, and retail properties.
“If I were graduating from undergrad or business school today, or I was young in my career,” Rhea says. “I would think Detroit is an incredible place to be.”
Class of MBA 1992, Section A