With just over 474,000 square feet absorbed, metro Detroit’s office market vacancy rate fell 60 points to nearly 18 percent during the second quarter of 2016, says a report from Newmark Grubb Knight Frank, a global real estate service firm.
For 2016, midyear absorption levels of 919,000 square feet were down compared with 2015 midyear absorption levels of just over 1 million square feet.
“The metro Detroit office market is now in its fourth year of expansion mode,” says Fred Liesveld, managing director of the firm’s Detroit office. “We expect the expansion to continue given the level of demand we are consistently seeing in the market.”
He says Detroit’s central business district, Troy, and Farmington Hills accounted for the bulk of the overall absorption for the second quarter in a row.
The Detroit central business district’s vacancy rate fell 80 points to nearly 15 percent during the second quarter of the year, as roughly 110,000 square feet was absorbed. The district’s 2016 midyear absorption levels of 263,000 square feet are up compared with 2015 midyear levels of 183,000 square feet.
Rock Connections, a marketing firm that is part of the Quicken Loans family of companies, moved into 67,500 square feet at the Madison Office Building on St. Antoine Street. The move accounted for the bulk of overall absorption. The company’s relocation made room for Ally Financial Inc.’s 321,000-squre-foot lease at One Detroit Center.
Liesveld says other notable moves in the district are LoVasco’s 8,000-square-foot lease at One Woodward and International Bancard Corp.’s upcoming move into 30,000 square feet at 1505 Woodard Ave. during the third quarter.
With roughly 111,000 square feet of space absorbed during the second quarter, the Farmington Hills vacancy rate fell 170 points to nearly 14 percent.
According to the report, the bulk of leasing activity in Farmington Hills has been in the Class B market, as companies such as ZF TRW, AGC Flat Glass North America, and Trinity Health’s leased space resulted in over 220,000 square feet of absorption.
Troy’s office market vacancy rate fell 120 basis points to 22.5 percent during the second quarter, as just over 149,000 square feet was absorbed. The largest deal was Midland Credit Management Inc.’s move into a 62,000-square-foot lease in Troy Officentre.
Additionally, during the second quarter, Southfield’s vacancy rate fell 10 points to nearly 22 percent; Novi’s fell 60 points to 10.5 percent, the Livonia office market vacancy increased 20 points to nearly 16 percent, and Ann Arbor’s vacancy fell 120 points to nearly 9 percent.