Metro Detroit's Office Buzz
The overall vacancy rate for the Metro Detroit office market ended in the first quarter at 9.9%, down thirty basis points since the fourth quarter 2017. Net absorption for the overall office market was positive 292,832 square feet.
Much of the buzz around Metro Detroit’s office market has been focused around the Central Business District and downtown area, but it’s time to take a closer look at the suburban market which has been steadily improving for more than five years. The vacancy rate is 10.1% in the first quarter 2018, down by one hundred-fifty basis points from 11.6%, compared to one year ago. The vacancy rate in the CBD is even tighter at 8.6%. Lease rates are escalating at a higher rate in the CBD, with the average asking rental rate for Class A office space in the CBD at $24.41 per square foot, compared to $21.53 per square foot in the suburban market. These conditions are creating a healthy tenant demand in suburban municipalities offering “urban-type” amenities such as restaurants, shopping, entertainment, transportation and affordable housing. As the shift toward mixed-use redevelopment and mixed-use new construction continues, suburban areas are becoming more appealing and viewed as cooler places to live and work and Detroit’s neighboring suburbs are garnering the attention of companies looking to expand or relocate outside of downtown if the vibe feels right, the rent is fair, and the parking is free. This quarter, ConcentroHealth moved from Detroit’s New Center One building to Southfield to accommodate growth. They now occupy 15,493-square-feet at 18000 W Nine Mile, Southfield. DesignHaus choose downtown Auburn Hills to build their new $2.5 million, 25,000-square-foot mixed-use headquarters building, restaurant and loft space. The Southfield Town Center is nearing completion of renovations to its 2.2 million square foot campus. The new collaboration areas and green spaces as well as improved entry way, conference area, and expanded parking help to create an appealing alternative for offices users looking outside downtown.