More of the same struggles. That’s what the Detroit market is facing in its office sector.
According to the third quarter office report released by Newmark, the Detroit metropolitan area office vacancy rate climbed 50 basis points during the quarter to 22%. A total of 446,816 square feet in net vacancies were added to the local office market.
And the news isn’t better when it comes to 2023 as a whole. According to Newmark, more than 2.05 million square feet in net vacancies have been added to the Detroit-area office market so far in 2023.
It’s not surprising, then, that available office sublease space in the market increased by 4% during the third quarter, rising to a 20-year total of just more than 2.2 million square feet. Direct available office space reached a 10-year high of 19 million square feet during the third quarter, according to Newmark.
These weak numbers don’t mean that the Detroit office market didn’t see some activity during the quarter. Newmark pointed to CURE Auto Insurance leasing 15,000 square feet in the Icon Building at 200 Walker St. in Detroit and Majorel leasing 35,000 square feet at 211 W. Fort St., also in Detroit.
And Samsung Semiconductor leased 10,000 square feet at 1000 Town Center in Souhfield, Michigan.
The outlook for the local office sector? Newmark is predicting more challenges. According to Newmark, office vacancies are expected to increase in the coming quarters as users occupying large blocks of space seek to shed excess square footage.
Newmark is also predicting that landlords will begin offering more competitive rental rates to attract tenants.
And for those looking to rent office space? Newmark predicts that the office market will become even more favorable for tenants looking for new space as sales price will fall.
