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Detroit Office Market

Average Asking Rent (Price/SF) $19.23
Vacancy Rate (%) 17.2%
Net Absorption (SF) -143,348

The Metro Detroit office market's vacancy rate climbed 20 basis points during the second quarter of 2017 to 17.2%, as just over a net 143,000 square feet became vacant. This is the market's first increase in vacancy since 2012. The cities of Southfield and Troy, the two core suburban submarkets, both saw a rise in vacancies during the second quarter, as tenants leased space elsewhere. Corporate relocations will continue to affect these two core submarkets, as companies seek opportunities in other submarkets. The biggest beneficiary of corporate relocations to date has been the Detroit Central Business District (CBD), which over the past four years has seen its vacancy rate fall from 35.0% to 11.4%. The city of Pontiac, which has seen vacancies linger near 40%, is the next to benefit from this trend, which could push the submarket's vacancy rate into the single digits.

Detroit Industrial Market

Average Asking Rent (Price/SF) $4.89
Vacancy Rate (%) 5.3%
Net Absorption (SF) 1,296,441

Metro Detroit's industrial market vacancy rate held steady at 5.3% during the second quarter of 2017. The limited supply has dramatically slowed the level of absorption in existing vacant space. In fact, roughly 90% of absorption during the quarter came from companies moving into newly constructed space. In total, nine industrial construction projects came to completion during the quarter for a total of 1.1 million square feet. The vast majority of existing vacant spaces currently on the market are second- or third-generation facilities that in most cases are not functionally suitable for modern space requirements. This is leading to even more new construction in the form of both build-to-suits and speculative developments. A major indicator of the strength of the industrial market is the performance of speculative developments, as these potentially risky developments begin with no lease commitments. Across Metro Detroit, these developments are drawing tenants and are seeing very little dark time once complete. Two major test cases, the Tri-County Commerce Center in Oakland County and the Cherry Creek Corporate Park in Macomb County, have occupancies of 60.0% to 100% upon completion. Now developers across the metro area are bringing more projects to the market. While virtually nonexistent a few years ago, there are now 13 active speculative developments currently under construction, which represents 40.0% of the overall number of projects currently under construction.

Detroit Office Market Report
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Detroit Industrial Market Report
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