The office vacancy rate in the Detroit metropolitan area keeps falling, with Newmark Knight Frank reporting that this figure dropped 30 basis points in the third quarter to hit 15 percent.
According to Newmark Knight Frank’s third-quarter office report, the Detroit market absorbed nearly 92,000 square feet of office space during the quarter.
The Farmington Hills submarket was the busiest during the quarter. That’s largely thanks to Trinity Health consolidating from 18 locations across the state of Michigan into 180,000 square feet at 34375 Twelve Mile Road in Farmington Hills.
Other big deals in Farmington Hills during the quarter include Symphony Performance Health’s 9,500-square-foot lease in the Orchards Corporate Center and Sumika Polymers North America’s 6,500-square-foot lease at Farmington Hills Officenter 1.
In other big news for Farmington Hills, Olympia Development will soon start construction of a 200,000-square-foot Class-A headquarters for Mercedes-Benz Financial Services USA. The facility, located on the corner of Twelve Mile Road and Drake Road, is expected to be complete by 2021.
Vacancy actually rose, though, in Detroit’s CBD, jumping 30 basis points to 12.7 percent in the third quarter. That’s largely because the 85,000-square-foot Campau on Jefferon in the Rivertown-Warehouse District hit the market.
Newmark reported that the core CBD office market, though, remained healthy during the quarter. Neighborhood Defender Services closed a 17,000-square-foot lease in the Guardian Building, while Burns & McDonnell expanded to 17,000 square feet in the Francis Palms Building.
Newmark says that office expansions are becoming a trend in the Detroit CBD, as more companies have expanded their footprints in the city. IBM, Microsoft, LinkedIn, Universal McCann, WeWork and Waymo have all expanded in the CBD, while Google plans to add onto its already existing space in the next several quarters.
Renovations are also nearly complete at The Assembly, a former warehouse that is being turned into a five-story, multi-use development. Located in Detroit’s Corktown District, the Bedrock-owned building will feature just more than 79,000 square feet of office space. Its first office tenant, Coyote Logistics, will occupy 50,000 square feet at the beginning of the fourth quarter of this year.
Meanwhile, Little Ceasars has nearly finished construction of its $15 million, nine-story, 234,000-square-foot world headquarters at Woodward Avenue and Columbia Street. Chemical Bank is building a 20-story, 250,000-square-foot high-rise at Woodward Avenue and Elizabeth Street. And law firm Warner, Norcross & Judd pre-leased 30,000 square feet in an Olympia Development Co. development at 2715 Woodward Ave. in the District Detroit.
“Despite downsizing in certain segments of the service sector, Metro Detroit’s office market on the whole is holding steady,” said Fred Liesveld, managing director of NKF’s Detroit office, in a statement. “The suburban markets offer a lot of options for both large and smaller office users. In the CBD, we are seeing more building owners renovating buildings to try to capitalize on the growth in demand in the city.”