Office vacancies in Detroit’s CBD rose in the fourth quarter of 2018, the first time these rates increased in nearly seven years, according to the latest research from Newmark Knight Frank.
Newmark reported that the office vacancy rate in Detroit’s CBD rose 180 basis points in the fourth quarter last year to hit 12.3 percent. Molina Healthcare accounted for the largest vacancy, moving out of its 41,000-square-foot space at 615 W. Lafayette in the CBD. The company made the move while consolidating its employees into its suburban Troy, Michigan, location.
Molina’s move marked the second bit of negative office news for Detroit’s CBD in 2018. In the second quarter of the year, Adient, a supplier of automotive seating, canceled its plans to relocate from suburban Plymouth and spend $100 million to renovate the Marquette Building in Detroit’s CBD.
The increase in vacancy, though, doesn’t mean that Detroit’s CBD office market faces a gloomy 2019. Newmark Knight Frank reported that Chemical Bank plans to build a 20-story, 250,000-square-foot high-rise at Woodward Avenue and Elizabeth Street in the CBD. The company is expected to begin construction in the middle of 2019 and move 500 employees to the new property during the next two years.
In further good news, Universal McCann announced its plan to relocate 40 employees to 1001 Woodward Ave. and eventually expand by 150 workers. LinkedIn, which now has 40 employees in Detroit, plans to expand in the CBD’s Sanders Building on Woodward Avenue, while RSM US LLP plans to expand by 120 employees during the next three years in the Chrysler House building on Griswold Street.
And in big new-construction news? Little Caesars is expected to complete its $150 million, nine-story, 234,000-square-foot world headquarters at the corner of Woodward Avenue and Columbia Street in early 2019. Construction has also started on Detroit’s tallest skyscraper, which will rise from the former site of a Hudson’s department store. The nearly $1 billion construction project being developed by Bedrock, will include resiential units, retail space and an estimated 263,000 square feet of office space.