In rebound mode. That’s how Avison Young describes the performance of the Detroit office sector during the first quarter of this year.
In its first quarter office market report for Detroit, Avison Young said that more companies in the Detroit market are making decisions about their plans for a return to the office.
“The office sector has definitely felt effects of the pandemic, but companies are getting creative with their return-to-work strategies,” said Jim Becker, managing director of Avison Young’s Detroit office.
Becker said that he expects a rise in traffice in Detroit’s CBD as employers begin bringing their workers back to the office during the next two quarters of the year. This includes such major employers as Ford, the City of Detroit, Ally Financial, Flagstar Bank and the State of Michigan.
Other employers in the Detroit area are getting creative with their workspaces. This includes GM, which is instituting a “work appropriately” plan, giving workers more freedom in choosing where they will work each day; Stellantis (Chrysler), which is touting its “New Era of Agility” hybrid work model; and AAA, which is focusing on flex work, also giving its employees the opportunity to choose from which locations to work throughout the week.
At the same time, companies are considering moving to higher-quality space that they might not have been able to afford before the pandemic. As Avison Young reports, market rents in the Detroit region are about $3-a-square-foot lower than what they were before COVID-19 hit the United States.
The hope is that these plans will provide a boost to the Detroit-area office sector. This is needed, as Avison Young’s numbers for the first quarter reflect a sector still facing challenges.
Total net absorption for the office market in the first quarter of 2022 came in at negative-210,056 square feet, while direct asking rents fell to $21.42 a square foot. The office market vacancy rate stood at 16.6% at the end of the first quarter, according to Avison Young.