Metro Detroit's Office Market is Hot
Metro Detroit’s office market is HOT after recovering from double digit vacancy rates a decade ago to an overall vacancy rate of 9.5% in the second quarter 2018. Investors and occupiers are showing signs of confidence in the Detroit market and are buying and renovating existing office buildings and developing new product in the region. The revival was kick-started with Dan Gilbert’s decision in 2010 to move Quicken Loans headquarters downtown. Since then many other companies, outside of Gilbert’s umbrella of companies, have eagerly joined the comeback and are opening new offices in Detroit. These are exciting times in our region as we successfully work together to banish Detroit’s dated reputation following bankruptcy in 2013. The business environment in Detroit right now is one that fosters growth and promotes success through strategic collaboration efforts to revitalize and position the city as a go to destination. Residential population downtown continues to rise and strong tenant demand is driving Detroit’s revival. Detroit has become a magnet for technology companies. The diverse region offers access to global automotive, consulting, mobility and technology firms.
This quarter, LinkedIn, an online career and networking website, chose Detroit over nine other cities to open their first new office in the U.S. in over ten years. They are moving into the historic 74,500 square-foot Sanders building, located off Woodward Avenue, in the heart of downtown Detroit. Renovations are underway and they will move into the new space within the next year.
The biggest announcement this quarter is Ford Motor Co. purchasing the iconic Michigan Central Station in Detroit. The train station has been sitting vacant in the Corktown neighborhood for three decades and embodied the dated reputation of Detroit’s decline. Ford plans to develop the former train station into a 1.2 million-square-foot autonomous self-driving car division and a mobility and technology driven mixed-use campus. Though Ford will move 2,500 employees to the site, the space won’t be exclusive to Ford. Their vision is to develop cool space which is integrated into the community, open for people, entrepreneurs, and tech people, unlike their current campus in Dearborn. Ford also plans to raze The Alchemy building, once a brass factory, and redevelop the site into a large mixed-use development rivaling the development at the Michigan Central Station. Ford also purchased the former Detroit Public Schools book depository building east of the depot, plus land north of Bobcat Bonnie’s restaurant.
This quarter Tata Technologies, Accenture and RSM US LLP announced plans to open offices in Detroit, joining companies like Microsoft Corporation, Google, Quicken Loans, Campbell Ewald, Fifth Third Bank, and Ally Bank.
The influx of new tenants and development in the region is refreshing and almost hard to believe. Detroit’s story will be one tied to the greatest economic recovery since we can remember and optimism is high as we move into the second half of 2018.