I read a very interesting article in the WSJ a few days ago about real estate in Detroit.

In 2005, a real estate company called The Northern Group purchased an iconic Art Deco office building in Detroit, the Penobscot Building, for $14 million. The purchase price equated to about $14 per square foot, a seemingly absurdly low price for a functioning office building. By contrast, the national average is around $200 per square foot...and in some markets, the best properties trade in the range of $700 per square foot.

If you had even a smidge of hope for downtown Detroit in 2005, $14 per foot for an iconic tower was a no-brainer.

But "no-brainer" it was not. The building was just sold again last week, for $5 per square foot, or $5 million. Let's see...what can $5 million get you in real estate these days? A starter house in the nicest section of Beverly Hills, or a 1-million square foot office building in downtown Detroit.

The buyer, a Canadian investment firm, is the same company who bought the Pontiac Silverdome about three years ago for $583K.

As you can see in this Wikipedia entry, the Penobscot Building was the eighth tallest building in the world when it was completed in 1928.

The point of all this? First, it sadly shows how far Detroit has fallen. But overall, it's a cautionary tale about diversification of your economic base. Just because you're riding high now (as Detroit was in the 1950's) does not mean that it will always be so.