Office V Michigan

Newmark Knight Frank: Detroit office market surging

Newmark Knight Frank: Detroit office market surging,ph01
The Little Ceasars world headquarters building will provide a boost to Detroit’s office market.

Demand for office space in Detroit continues to rise. The proof? The office vacancy rate in the metropolitan Detroit area fell 30 basis points to 15.2 percent during the first quarter of the year, according to the latest research from Newmark Knight Frank.

Newmark’s first quarter 2019 office trends report showed that just more than 261,000 square feet of office space was absorbed in the Detroit market during the quarter.

“The level of new construction activity in Detroit is testament to the confidence in the downtown market,” said Fred Liesveld, managing director of Newmark Knight Frank’s Detroit office. “We are now seeing demand spread from the city’s CBD into the New Center area.”

According to Newmark Knight Frank’s research, the city of Detroit’s office vacancy rate fell 80 basis points to 13.1 percent during the first quarter of 2019. In more good news, tenants aren’t just focusing on the CBD. Newmark reported that the office vacancy rate in Detroit’s New Center corridor fell to 15.3 percent in the quarter, down from 25.6 percent in the last quarter of 2018. Just more than 101,000 square feet of office space was absorbed in this corridor during the first quarter.

Notable office deals in the first quarter include PricewaterhouseCooper’s 30,000-square-foot lease and Davenport University’s 12,000-square-foot lease in the New Center One building. United Way for Southeastern Michigan leased 36,000 square feet in the Fisher Building.

The office vacancy rate in Detroit’s CBD dropped 10 basis points in the first quarter fo 12.8 percent with just more than 123,000 square feet being absorbed. Universal McCann was the latest company to make a move downtown, expanding into 20,000 square feet in the First National Building at 660 Woodward Ave. LinkedIn also made a big move, relocating into 76,000 square feet at 1523 Woodward Ave.

As demand for office space increases, developers aren’t being shy about adding new office towers to Detroit’s skyline. Newmark Knight Frank pointed to the nearly $1 billion skyscraper being developed by Bedrock at the site of the former Hudson’s Department Store in downtown Detroit. The tower will feature residential units, retail space and about 263,000 square feet of office space. Bedrock is also adding a 310,000-square-foot expansion to the One Campus Martius buiding.

By the second quarter of this year, Little Caesars should complete its $150 million, nine-story, 234,000-square-foot world headquarters at the corner of Woodward Avenue and Columbia Street. And Chemical Bank during the same quarter is expected to start building its 20-story, 250,000-square-foot high-rise at Woodward Avenue and Elizabeth Street.