Demand for office space in the metropolitan Detroit area is reaching heights never before seen, according to the latest research from Newmark Knight Frank.
According to Newmark Knight Frank’s third-quarter report, office vacancies in metropolitan Detroit fell 20 basis points to 17 percent during the third quarter. A bit more than 180,000 square feet was absorbed to get to this level.
For the year, 386,000 square feet of office space has been absorbed in the Detroit market. The Central Business District is especially strong, marking its 21st straight quarter of positive absorption.
Newmark Knight Frank says that demand for office space in the CBD is actually at its peak. At the same time, investments in Detroit’s CBD, including new sporting venues, retail districts and residential developments, have grown into the billions of dollars.
“Since 2012, we’ve seen a transformation of the Detroit CBD,” said Fred Liesveld, managing director of Newmark Knight Frank’s Detroit office. “It is great to see that investments and energy continue to pour into the downtown area going into 2018.”
Office vacancies in the Detroit CBD dropped 20 basis points to 11.2 percent during the third quarter, according to Newmark’s research. Just more than 32,000 square feet of office space was absorbed during this time. And since 2012, the Detroit CBD has absorbed more than 2.4 million square feet.
Vacancies for Class-A office space in the CBD are even lower, coming in a 7.7 percent for the quarter.
Officials with Newmark Knight Frank expect more good things for this sector in the coming quarters, too, thanks in part to level of development activity now hitting the CBD. Olympia Entertainment recently completed construction of the $862 million Little Caesars arena and district that will house the Detroit Red Wings and bring the Detroit Pistons back to the city from Auburn Hills.
Little Ceasars is also finishing its new $150 million nine-story 234,000-square-foot world headquarters at the corner of Woodward Avenue and Columbia Street.
And that’s just the start of the new activity in this part of the city. According to the Downtown Detroit Partnership, the downtown Detroit area is expected to see a demand for 10,000 new residential units during the next five years. With the anticipation of demand for office, retail and residential, developers and investors are pouring millions of dollars into the heart of Detroit. These dollars aren’t being targeted only for renovating existing iconic buildings, but also to build new skyscrapers.
In the New Center area, the 290,000-square-foot Albert Kahn Building and 634,000-square-foot Max M. Fisher Building, built in the 1930s, are getting a $100 million renovation. The 300,000-square-foot former Detroit Free Press building is undergoing renovations that will turn the building into a mixture of office, retail and residential uses. Meanwhile, Bedrock is investing nearly $1 billion to redevelop the former Hudson Site into a mixture of office and residential that will become the city’s tallest skyscraper at 800 feet.
