In 2007, downtown Detroit had a vacancy rate of 33 percent. Now it stands at 26.5 percent, says a commercial real estate advisory firm. (Daniel Mears / The Detroit News)
Metro Detroit’s office vacancy rate fell below 25 percent for the first time since 2009, with improvements in downtown Detroit and key suburbs, according to a report released Thursday by Newmark Grubb Knight Frank..
The decline in vacancies in both downtown Detroit and suburbs is a clear indication that the office market is reversing the slide that began in early 2007, said Fred Liesveld, executive vice president of NGKF, a commercial real estate advisory firm.
The rate dropped to 24.9 percent during the third quarter of 2013, a level not seen since the fourth quarter of 2009, according to the report. The rate was 25.4 percent in the previous quarter of this year.
“Although vacancy matches 2009 levels, the office market today looks significantly different than it did pre-recession due to robust activity over the past several quarters,” said Liesveld.
Slightly more than 354,000 square feet was absorbed during the quarter, pushing year-to-date total absorption to about 1.1 million square feet.
In 2007, downtown Detroit had a vacancy rate of 33 percent. Now it stands at 26.5 percent.
In the last three years, more than 1.2 million square feet of office space has become occupied with companies such as Blue Cross Blue Shield, DTE Energy, Quicken Loans, Title Source, Chrysler, PricewaterhouseCoopers, Metro-West Appraisal Co. and Agency 720 leasing space downtown.
“We are starting to see demand pick up in the suburban office market, which is great news for southeastern Michigan and underscores the overall improvement in the region,” Liesveld said.
Trends are reversing, particularly in Troy and Southfield. Southfield’s rate fell below 30 percent for the first time since the second quarter of 2011. Its vacancy rate now stands at 29.7 percent.
It is a similar story in Troy, where, year-to-date, the submarket has posted just over 225,000 square feet of positive absorption as companies such as Shore Mortgage, Magna, iDashboards, Flagstar Bank and Plex Systems Inc. have taken large blocks of space.
Its current vacancy rate is 28.3 percent.