The second quarter of this year brought some good news for the Detroit-area office sector: For the first time in five quarters, the region’s office market saw positive net absorption.
According to research from CBRE, the Detroit office market experienced 208,100 square feet of positive net absorption during the second quarter of this year. That’s the first time the Detroit office sector has seen positive net absorption since the third quarter of 2022.
Downtown Detroit was especially solid, with CBRE reporting that it saw more than 370,000 square feet of positive absorption in the second quarter. This number was boosted by Ford moving into the newly built Michigan Central Station and Rocket Mortgage’s 66,500-square-foot sublease at 1 Campus Martius.
Downtown Detroit’s asking office lease rates also rose by 79 cents during the second quarter, jumping to an average of $24.31 a square foot, according to CBRE. The overall Detroit-area office sector witnessed an increase of 17 cents in asking lease rates during the quarter, closing the quarter at an average of $19.61 a square foot.
in other big office news during the quarter, General Motors inked the first deal at the Hudson’s site, though specifics about the terms of this transaction remain uknown. General MOtors will officially make the move to this site from the Renaissance Center in 2025. The Renaissance Center served as General Motors’ world headquarters since 1996.
TD Auto Finance reduced its office footprint by more than 100,000 square feet with its move from 27777 Inkster Road in Farmington Hills to Two Towne Square in Southfield. CBRE says that this move caused the Farmington Hills/West Bloomfield Township office submarket to experience substantial negative absorption during the second quarter.
CBRE says that more than 2 million square feet of sublease space remains available in the Detroit-area office market. The Southfield market accounts for more than 800,000 square feet of that sublease space.
Two significant office projects were delivered in the Detroit-area market in the second quarter: Michigan Central Station and 118 N. Main St. in Royoal Oak. These combined to add more than 560,000 square feet of office space to the market.
A highlight of the current office pipeline? The Hudson’s site, which is on schedule to deliver in the second half of 2024. Another significant project is 479 S. Old Woodard in Birmingham, which is under construction with a delivery date scheduled for late 2025. This latter project is a build-to-suit facility that will be occupied by Dykema Gossett LP.
