Office V Michigan

Busy times in Detroit's office market? You bet

Busy times in Detroit's office market? You bet,ph01

How vibrant has downtown Detroit become? For clues, just look at how busy the office sector is in both downtown Detroit and its surrounding areas.

The overall office vacancy rate in the Detroit area fell 30 basis points to 15 percent during the second quarter of the year, according to the latest research from Newmark Knight Frank. More than 216,000 square feet of space was absorbed.

The office vacancy rate in the city of Detroit itself was even lower, with Newmark Knight Frank reporting that this figure fell 60 basis points to 12.5 percent during the second quarter. The city saw more than 85,000 square feet of office space absorbed during this quarter.

Several of the biggest names in Detroit commercial real estate will be speaking about the city’s office sector – and looking at Detroit’s other commercial sectors – during the fifth annual Detroit Commercial Real Estate Summit being held by REjournals.com and Midwest Real Estate News at the Westin Southfield Detroit on Sept. 6.

These experts will spend plenty of time discussing the future of downtown Detroit and the impressive growth that’s happened there. And you can bet that some of this talk will focus on the continuing strength of the office market in the CBD.

The central business district has been fortunate enough to see several big office transactions so far this year. Notable office deals in the second quarter included Quicken Loan’s 41,000-square-foot lease of space recently vacated by Molina Healthcare. United Way for Southeastern Michigan moved into 36,000 square feet in the Fisher Building in the city’s New Center corridor.

Bigger moves are expected. Google, for instance, plans to expand its presence in downtown Detroit. The search giant occupies 30,000 square feet on Henry Street adjacent to the Lttle Caesars Arena and plans to lease another floor in the building by 2020.

Another tech player, IBM, is joining a growing group of companies moving from the suburbs or expanding into the downtown market. IBM is moving from its 1800 W. Nine Mile Road location in surburban Southfield to 10,000 square feet in the Ally Detroit Center at 500 Woodward Ave.

Other big companies that recently expanded or moved to Detroit’s CBD include Microsoft, LinkedIn, Universal McCann, WeWork and Waymo.

Meanwhile, there is new office construction, too, bringing added life to downtown Detroit. Little Ceasars has nearly wrapped construction of its $150 million, nine-story, 250,000-square-foot high-rise at Woodward Avenue and Elizabeth Street. The law firm Warner, Norcross & Judd pre-leased 30,000 square feet at a new development at 2715 Woodward Ave. in The District Detroit.

Overall, then, it looks like a solid first half of the year for Detroit’s office market. Newmark Knight Frank reported that the average asking rent for office space in the market hit $19.72 a square foot. That’s up slightly from $19.59 a square foot in the first quarter of the year and $19.46 a year ago.

Cushman & Wakefield, in its second quarter office report, had plenty of positive news for the Detroit offic market, too. According to Cushman & Wakefield, the metropolitan Detroit area continues to see major investments by several companies. German battery maker Askasol, for instance, plans to open a $40 million plant in Hazel Park, a move that will add 224 new jobs.

Cushman & Wakefield also pointed to semiconductor maker KLA, which is building a 230,000-square-foot office and research-and-development facility in nearby Ann Arbor, about 43 miles from Detroit.

Then there’s the Palace of Auburn Hills, the former home of the NBA’s Detroit Pistons, in Auburn Hills, Michigan. This facility was sold to Schostak Brothers & Company, which plans to demolish the arena and build office, tech and R&D spaces on the 80-plus-acre site.

Interested in learning more about Detroit’s CRE market, in downtown, its surrounding neighborhoods and across the suburbs? Then be sure to register for the Detroit CRE Summit here.