Can Motor City restart its engines?

Long regarded as a synonym for urban decay, the battered city of Detroit has begun to flex its economic muscles again. But the process of regeneration is only just beginning, reports David Usborne

Anyone who thinks Detroit will never again be anything but a synonym for urban decay need only read the minutes of a recent City Council meeting, where members authorised the repair of 5,000 street lights at a cost of $750,000 (£475,000). There are thousands more such lights in need of repair, yes. But something is underway. The headline practically writes itself: the lights are coming back on in Motor City.

It is crime, often conducted under cover of darkness, that more than anything else has hollowed out Detroit, home of the Model-T and Motown. Between 2000 and 2010 its population fell 25 per cent, according to census numbers. Entire blocks became derelict and strewn with weeds. Add corruption, joblessness and poverty and it seemed there were no depths Detroit could not plumb.

Detroiters are leery of come-back boosterism. Ten years after the 1967 riots that more than any other event set this city on the path to purgatory, they said the building of the shiny Renaissance Centre by the Ford Company on the river front would provide a boost. Hopes rose again when the Super Bowl came here in 2006, but then the Big Three car companies hit a wall only to be saved by a controversial bailout from Washington and new rounds of plant closures and lay-offs.

There are still plenty of frightening statistics. Of the 702,000 now living here – from 2 million in 1950 – a third exist below the poverty line and unemployment runs above 14 per cent. But there are better numbers too, in the economy, changing demographics, even in sports. The car makers are profitable again and in baseball, football and ice hockey, Detroit has had a thrilling few weeks of winning – a big deal because all the major teams play downtown. All of this leads to a spurt in something much harder to measure: spirit.

"Are you kidding? We are in a huge upwards surge and it's because the people really want to support the city exactly because it has been through such hard times," insists Renee Adams Schulte, 57, who recently had dinner with her friend at Roast, a high-end eatery with décor and prices that would not be out of place in Manhattan. A native of the mostly upscale suburb of Grosse Pointe, she has long made a point of coming into Detroit's downtown to support it.

"When I was a kid I used to get on the bus with my friends to go shopping in Detroit," Ms Adams Schulte, who runs a women's rowing club, recalls. "Would I have put my (now grown-up) kids on the bus to downtown? I don't think so! But now new businesses are coming back. There are all the galleries and the stores and the restaurants and it's great."

Some of the new pride was captured in a Chrysler commercial in this year's Super Bowl broadcast. Featuring local rap king Eminem, it was a celebration of the city's grit. "What does a town that has been to Hell and back know about the finer things in life?" the narrator asks. "Well, I will tell ya... it's the hottest fires that make the hardest steel." The tagline read: "Imported from Detroit." A huge banner draped down the side of a downtown building today declares: "Outsource to Detroit". It's a not too subtle message that Detroit won't take it from Japan and Korea any more.

Chrysler is not the only one of the autmobile companies to be feeling better about things. Ford has grown for 10 consecutive quarters, beating expectations to the extent that a profit of $1.6bn in the third quarter of this year was deemed disappointing. And last week General Motors' chief executive, Dan Akerson, declared that, with a profit this year of $7.1bn so far, it was finally beginning to escape the spectre of the government bailout that did its image so much harm – but set it on the road to recovery.

If the resurgence of the "Big Three'' has boosted the city's economic muscles, the success of the big three sports franchises have warmed its heart. The Detroit Tigers bested the New York Yankees in the recent baseball season and just missed out on the World Series. Each big game draws people from the suburbs to the city where, with luck, they will spend dollars. "The more you win, the more fans come. Bringing people to downtown Detroit helps the economy tremendously," Tigers pitcher Justin Verlander said.

But it is the accelerating influx of fresh and mostly young blood, from elsewhere in Michigan but also from across the US – artists, musicians, film-makers and entrepreneurs – that may end up giving Detroit its loudest buzz. In the same 10 years that the city's overall population fell so sharply, there was a 59 per cent increase in the numbers of college-educated under-35-year-olds living downtown. Among them was Jerry Paffendorf, a native of New Jersey who abandoned a $100,000-a-year job in Silicon Valley to move to Detroit because it set his "spider senses tingling" and he wanted to know more.

"It occurred to me that I didn't know much about the city beyond its ambient bad reputation," he said.

His new venture, Loveland Technologies, is an experiment in using cyber-technology to tackle Detroit's huge housing and delinquent property problems. It pays him $20,000 a year if he is lucky. He recently launched an interactive web site mapping and profiling for potential buyers each of the roughly 13,000 houses in foreclosure that the city put up for sale in an eBay-style auction last month. Prices started at about $500.

Another Loveland web site invites you to buy a square inch of land in Detroit for $1. He calls it "inchvesting" in the city. Buyers can visit their square-inch plots, together forming what Mr Paffendorf calls "microhoods". He has raised $40,000 this way, most of which he passes on to charities engaged in rescuing derelict blocks.

Like many others, Mr Paffendorf says Detroit's plight attracted him because he can make an impact, but he stresses that it is not a "blank canvas".

"That can come across as offensive. What is true is that this city is affectable on a whole different scale. Even if I look out of my window here everything I see is affectable in some way."

Once here, he says, there was no leaving. "I definitely took the red pill." Never mind if friends are baffled. "If I wasn't getting juiced by the unique urban feeling that this city has, I wouldn't be here."

That urban feel is not entirely unique. In fact, parts of the city are beginning to feel like New York's Williamsburg, an area popular with artists priced out of Manhattan. Detroit's Midtown, with hotspots like the Raw Café and Avalon Bakery, where the bakers toil before you as you eat your sandwich, could be picked up and dropped in New York. That new sophistication is also partly because of the affordability of space.

Margarita Barry, 26, recently opened 71 Pop, a gallery space on the ground floor of what used to be an abandoned hotel in Midtown, where she rotates the work of local artists every month and helps them sell their work with advertising and video profiles. Her website, IAmYoungDetroit.com, showcases young artists. "Detroit is where you can come and be an artist in part because it is relatively affordable," she says. She used Jerry Paffendorf's web site to buy a house in the foreclosure auction. Her home cost $6,000 and is in the neighbourhood where she grew up.

A few blocks from 71 Pop stands the soon-to-open Green Garage, an incubator for new small businesses with eco-friendly credentials. It is situated in what was once the first ever Model-T showroom, a building dating from the 1920s but which in recent decades was either a warehouse or was abandoned and bricked up. "This building to me represents everything that has happened in the city and what's changing about it," says Peggy Brennan who, with backing from the city, is a co-founder of the Garage and has rebuilt it to such strict specifications that while it offers 12,500 sq ft in space it should cost only $300 to heat for a whole winter.

Among future tenants is Jason Peet, 34, who, like Jerry Paffendorf, wants to conjure something good from the implosion of Detroit's housing stock. As the city prepares to demolish up to 60,000 empty homes Mr Peet's firm, Mend, has permission to harvest wood from each of them. He will make furniture pieces using timber from single houses and sell them with the address of the house branded on it and a certificate detailing the story of its construction and owners. One house, at 1416 Van Dyke, was owned by the chief engineer of White Star Line cruise ship that at the turn of the last century plied the Great Lakes.

"I came here because I saw the uniqueness of this city," says Mr Peet, adding he hopes to "give new life to houses that will otherwise vanish ".

His business model would hardly work anywhere else. It succeeds here, not just because of all the houses being torn down but because there are people who care enough about Detroit, battered as it is, to buy what he will be selling.

Detroit in numbers

25% The drop in Detroit's population between 2000 and 2010

3.6% The increase in manufacturing jobs in September from last year, more than twice the US rate

10 The number of consecutive quarters of growth posted by Ford, one of Detroit's biggest employers

18th Where Detroit now lies in the ranking of America's biggest cities, down from seventh in 1990

3,000 The number of derelict houses demolished by city authorities every year