Vacancies continue to rise in the Detroit office market, with few signs that a rebound is coming for this struggling sector.
That’s the gloomy news from CBRE, which recently released its second quarter 2023 office figures for the Detroit market.
Detroit is hardly alone in facing a down office market. Cities across the Midwest and the country are seeing vacancies rise throughout their office markets. They’re also seeing half-empty buildings, a flight away from Class-B and Class-C office space and tenants that are still struggling to bring their workers back to the office.
The second quarter of this year, though, was an especially grim time for the Detroit office sector. CBRE reported that the market saw a negative net absorption of more than 1.070 million square feet. That’s a significant jump from the negative net absorption of 697,559 square feet that the Detroit office sector experienced in the first quarter of the year.
The largest jump in negative absorption came in the Detroit-area city of Southfield, Michigan, which experienced 619,016 square feet of negative absorption.
There was a glimmer of hope, though. CBRE reported that Class-A office buildings within the downtown Detroit market saw positive net absorption of 142,750 square feet. That tracks with the rest of the country, where tenants are leaving lower-class buildings and renting a smaller amount of square feet at Class-A properties with a greater number of amenities.
The Book Depository building in Detroit was a particular bright spot during the second quarter. According to CBRE, this office property accounted for 270,000 square feet of positive absorption during the last three months, filling its space with several start-up and mobility companies. Key new tenants include Airspace Link, Cavnue and Canopy.
On the negative side, Credit Acceptance is downsizing its Southfield office footprint and has put 282,450 square feet of office space at 25300-25330 Telegraph road on the market for lease. The company’s goal is to sell or lease the entire building and downsize its Southfield office footprint.
The submarkets of Southfield, Troy, Dearborn and Detroit each saw negative office absorption of more than 100,000 square feet.
