Office Ends On a Strong Note
Metro Detroit’s office market reported a strong first quarter, carrying over the previous quarter’s positive momentum. The market’s experienced a 10 basis point decline in vacancy, and reported 441,935 SF of vacancy. While the market posted a small decline in quoted rents, in tier 1 Submarkets like Downtown Detroit and Ann Arbor, rents continue to grow.
Overall, it was a quarter that continued most of the positive momentum of 2016. Absorption, occupancy, and rents all grew in 2016, and exciting projects are beginning to come on line. Most notably, build-to-suit headquarters projects for Little Caesars and Masco are expected to come online in 2017. As large automotive suppliers struggle to find modern office buildings, expect more build-to-suits in markets like Livonia, Auburn Hills, and Novi. Other large announcements include Microsoft moving to Downtown Detroit.
Into the warmer days of 2017, we do expect the market to move in a positive direction. However, it will continue to do so at a slow pace. While specialized requirements can be difficult to fulfill in markets like Birmingham and Ann Arbor, the overall market continues to suffer from a glut of excess office space, much of it 1980s era suburban office product.