More than 500,000 square feet of office space was leased in the first quarter of 2016 in metro Detroit, pushing the overall vacancy rate down to 18.7 percent, a rate not seen since 2002, according to Newmark Grubb Knight Frank, a commercial real estate advisory firm in Farmington Hills.
“The consistent level of demand we are seeing from the Detroit central business district to Southfield and Farmington Hills is indicative of the overall health of the office market,” says Frederick Liesveld, managing director of NGKF’s Detroit office.
Liesveld says both the suburban and the Detroit central business district office markets are showing positive gains. The suburban office vacancy rate dropped to 19 percent during the first quarter and is now at pre-recession levels.
He says in Detroit’s central business district, the office vacancy rate fell to 15 percent during the first quarter of the year, as more than 210,000 square feet of office space was leased. Since 2011, more than 2.4 million square feet of office space has been leased in the district, leaving its vacancy rate at levels not seen over the course of 20 years.
Liesveld says the drop in vacancy rates in the first quarter was led by Ally Financial’s move from the GM Renaissance Center to One Detroit Center. He says the 1 million-square-foot One Detroit Center is now fully leased. Five years ago, the building was 60 percent vacant.
He says two major office building renovations in Detroit by Bedrock Real Estate Services and a renovation of the Marquette Building on West Congress Street by Carlos Slim Helú will also drive office vacancy rates down.
Cities including Farmington Hills, Southfield, Troy, Novi, Birmingham, and Auburn Hills saw their office vacancy rates fall in the first quarter. Office vacancy rates increased in Ann Arbor and Livonia. However, he says Ann Arbor’s office market is set to be more active for the rest of the year with Google’s move to a larger campus in the city.