Jerry Paffendorf and Mary Lorene Carter, co-founders of the Imagination Station
Jerry Paffendorf and Mary Lorene Carter, co-founders of the Imagination Station, a nonprofit organisation renovating two blighted historic houses to help revive the city. Photograph: Brett Mountain/Eyevine

The raucous scene inside the M@ dison building is not one usually associated with inner-city Detroit.

It appears as though a wacky slice of California's Silicon Valley has landed smack in the middle of a city now just as famous for catastrophic urban blight as for being the spiritual home of America's car industry.

Two youthful tech engineers play table tennis in the middle of a busy open-plan office, while bubble chairs hang from the ceiling. Around a table three people are having an intense discussion and a snatch of their conversation drifts across the room. "Having an eye patch would be kind of cool," insists one, earnestly.

This is no mirage. Increasingly it is a common sight in the Motor City as over the last few years a flood of hi-tech firms have sprung up in downtown Detroit, sparking talk of an urban renaissance in an area laid waste by poverty and abandonment.

The M@ dison building has just been named one of the world's coolest offices by business monthly magazine Inc. The building is not alone. Around the M@ dison a cluster of tech firms, design boutiques and other web-savvy projects have emerged. In their wake have come bars, restaurants, spas and, that ultimate accolade of hip urban youth in America, an upmarket table tennis club. Most are centred on Woodward Avenue, leading to the once-proud street being dubbed "Webward Avenue" by local media.

But, unlike many previous attempts to rejuvenate downtown Detroit, the growth of a tech industry seems to have legs. Suddenly buildings empty for decades are being snapped up and turned into loft apartments. On "Webward", the sound of construction rings out as new buildings rise skywards. In Detroit, so down on its luck for so long, never underestimate the sheer joy the sound of jackhammers brings. "You are seeing construction. It is pretty exciting," said Jim Xiao, a financial analyst for Detroit Venture Partners, the driving force behind the M@ dison and an investor in new tech firms in the city.

Xiao, a 24-year-old who evaluates tech firms for DVP to finance, has trouble concealing his enthusiasm. He lives in one of the converted buildings nearby, socialises at the new downtown bars and has a keen sense of mission about tech's role in the city's future. "Where else in the country can you make an actual impact on a whole city when you are in your 20s?" he said.

As a former resident of Seattle and Microsoft employee, Xiao is typical of the breed of tech engineers and entrepreneurs popping up in Detroit. Already DVP has invested in 18 startups in under two years. The aim is to set up many of them in the M@ dison and then watch them grow, leave to find their own offices and have their spaces filled by an already long waiting list of new ones looking for a leg up. In a city known for the "big three" of General Motors, Chrysler and Ford, the corporate names around "Webward Avenue" now boldly proclaim their arrival with techie monikers such as Doodle Home, Tapjoy and Bizdom. Nor is it just in downtown that the tech industry is taking hold. In one of the furthest-flung parts of the city, Brightmoor, there are plans to set up a project called TechTown that will help locals start or improve their businesses.

One of the biggest success stories is Detroit Labs, which makes apps for mobile phones, iPads and other tablets. The firm has grown from nothing to being 30-strong in 18 months and is about to move out of the M@ dison for two floors of office space of its own. Detroit Labs co-founder Paul Glomski is another evangelist for the city. "There is the cool grit factor with Detroit. This is a genuine, hardworking place. It is not superficial. It is full of people getting things done," he said.

It is not just new firms giving birth to the hi-tech industry in Detroit. The giant car-makers are playing a role too. The industry, which is bouncing back after a government bailout during the recession, is producing cars increasingly focused on tech. As a result, the big three are hiring thousands of software engineers as vehicles become internet-connected and tech-oriented.

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