Detroit plot sells for $1 per square inch

Web designer buys foreclosed land for virtual rehab project

Louis Aguilar / The Detroit News

Detroit -- An empty east side lot that a designer of virtual reality Web sites bought for $500 in foreclosure has become a hot patch of real estate in this depressed city.

Attracting more than 400 investors that include IBM research scientists, policy wonks from East Coast think tanks and a writer from Wired magazine, the property is being sold online for $1 per square inch at makeloveland.com. Many "inch-vestors" intend to use it as an online forum to highlight Detroit's real estate crisis.

Some will create Web sites and other online links highlighting the actual empty plot. Others will devise virtual neighborhoods. Some plan online art installations, said Jerry Paffendorf, 28, who bought the lot and is behind the project he calls Loveland.

What happens to the property in real life remains as sketchy as the neighborhood in which it is located.

The empty property, 8887 E. Vernor Highway, is a parcel of unruly vegetation with a broken stone pathway leading to what once was a house. The street, between Detroit's Indian Village neighborhood and neighboring Grosse Pointe, looks like many embattled Detroit streets, with nearby abandoned homes and pot-holed streets.

Price is right

The median sales price of a Detroit home is cheaper than a Chevrolet Aveo: $8,000. In four months, "Loveland" investors have bought more than 7,000 square inches at $1 a piece. The entire property is 1 million square inches.

"To me, Detroit -- its challenges -- reminds me of a surreal, virtual world," said Paffendorf, who once designed Web sites for the virtual reality site Second Life.

Selling the property for a buck an inch was intended to get many people involved and use it as online launch pad of ideas for abandoned urban properties.

In the spring, there may be markers on the property indicating there is an online link to the space.

"There is so much space; why not try to do what you want and build a new community?" said Paffendorf, who moved to Detroit this year to create the project.

Previously, he divided his time between the San Francisco area and New York City.

"I had never been to Detroit before I moved here, but I thought if I was going to try and make a statement about what can be done with foreclosed property, Detroit has to be the place to make that statement."

Detroit has 62,000 uninhabited buildings and vacant lots, according to the U.S. Postal Service. Entire blocks of commercial and residential property are deserted. It's the harsh, physical evidence of a city that has lost 1 million people from its peak population of 1.8 million in the 1950s.

The most prime commercial real estate downtown is fetching $23.37 a square foot in monthly rent, according to Grubb & Ellis, a commercial real estate service firm. Loveland is selling for $144 a square foot.

After 10,000 square inches are sold, Paffendorf will likely begin to sell the property by the square foot, he said. It will remain cheap, but he hasn't decided if it will remain at $1, he said.

The largest investor

Loveland's largest investor is Rita King, a New York-based writer, entrepreneur and consultant to such companies as IBM Corp. and Manpower Inc. A fellow at the Carnegie Council for Ethics in International Affairs in New York and the Center for the Study of the Presidency and Congress in Washington, King bought 1,100 square inches of Loveland.

"I'm very excited and proud to be an 'avatar' of Detroit property. It's a brilliant idea," King said. She has encouraged others, such as IBM research scientists, and think tank colleagues to invest. And many have, she said. She's also given a few inches away, including to the writer for Wired.

"Will it increase property values in Detroit? I don't know. But I don't see how it can hurt," King said. "You now have a lot of people discussing Detroit real estate who wouldn't likely have given too much attention to it."

She was recently in London on business with the influential nonprofit the British Council and she mentioned the project. "Suddenly, every meeting I go to and everyone is asking me 'Can you get me a piece of that Detroit land?' "

laguilar@detnews.com (313) 222-2760