Trends Remain Positive into Fall of 2016
Metro Detroit posted another quarter of positive trends through the third quarter. The overall market saw the vacancy rate decrease by sixty basis points, and reported 1,255,394 SF of positive net absorption. In almost a mirror image of the second quarter, while vacancy and absorption moved in a positive direction, rent growth was minimal on a market-wide basis.
Sales and leasing in Downtown Detroit continued to be the top story in Southeast Michigan. Local investment firm REDICO completed its purchase of 150 W. Jefferson for a rumored $93.75 million, which comes out to $190.11 per SF. The sticker price indicates confidence in the Downtown Detroit market—as not too long ago, office towers traded for less than half of that number. In other news, New York based co-working company WeWork completed a lease for 80,000 SF in a Bedrock-owned building on Campus Martius.
Into the home stretch of 2016, expect the current positive momentum in the market to continue. Both tenants and investors have confidence in the market, and are pulling the trigger on deals. Absorption and vacancy will continue to trend in the right direction, but do not expect rents to grow in a significant manner, with the exception of trophy offices in a select few markets.