The Metro Detroit office market saw slight improvements in the fourth quarter of 2010. Net absorption was positive 924,996 square feet and vacancy rates decreased to 19%. Rental rates increased slightly to $18.77 per square foot. Construction remains low as the real estate market continues to recover from the economic downturn. Challenges remain for commercial property owners as high vacancies persist through 2011.
1. Q4 2010 | OFFICE
METRO DETROIT & WASHTENAW MARKET
RESEARCH REPORT
Detroit Office Market
DETROIT OFFICE MARKET REPORTS A SLIGHT INCREASE IN RENTAL RATES AND
DECREASE IN VACANCY RATES
At the end of 2010, the fourth quarter Metro Detroit office market area has finally shown
positive results after a long steady decline due to the current recession that the entire
Nation is experiencing. Net absorption totaled a positive 924,996 square feet at the end of
MARKET INDICATORS Q4 the fourth quarter 2010. Vacancy rates decreased to 19 percent this quarter. Rental rates
2009 2010 slightly increased to $18.77 per square foot.
VACANCY
The Detroit Michigan real estate market has taken a hard hit over the last few years due to
NET ABSORPTION increasing unemployment and continuing downsizing of organizations. New development
and construction are practically nonexistent. Through 2011, challenges remain for
CONSTRUCTION commercial property owners as mortgages become due, vacancies remain high and new
projects are scarce.
RENTAL RATE
1500000 0.2
UNDER CONSTRUCTION BY SUBMARKET
1000000 0.195
0%
I-696 Corridor
500000
M illion Square Feet
0.19
V acancy (^)
23% Northern Oakland
0
County
0.185
-500000 Macomb County
Area
0.18
-1000000 I-96 Corridor
77%
-1500000 0.175
Washtenaw County
-2000000 0.17
Q4 Q1 Q2 Q3 Q4
2009 2010 2010 2010 2010
Completions Absorption Vacancy Rate (%)
www.colliers.com/detroit
2. RESEARCH REPORT | Q4 2010 | OFFICE | DETROIT
RENTAL RATES Local landlords must continue to offer
Total office inventory in the Detroit market A building’s vacancy is the major factor in aggressive incentives on both new leases
area amounted to 164,292,884 Square feet in its rental rate rather than the overall and renewals.
2,940 properties. performance of a market sector. Rates
range from $12.04 to $25.58. CONSTRUCTION
Total year to date net absorption at the end of
2010 totaled a positive 223,249 square feet. Fourth quarter delivered any additional
The Metro Detroit’s average rental rate 44,500 square feet of office product to the
increased since third quarter 2010 and market. All Class B type and located in the
stands at $18.77 per square foot. This Oakland County Central Submarket.
represented a $0.33 decrease from 12
months ago. Construction activity decreased this quarter
compared to third quarter. With 8,885
Currently, the average rental rate in fourth square feet of office space reported under
quarter for Class A was $22.49, Class B construction, mainly concentrated in the
was $18.17 and Class C was at $14.38. Suburban market and majority Class B type
Detroit’s Downtown average asking rental property.
rate decreased $0.06 to $18.45 while a
$0.04 increase to $18.70 reported in the continued on page 4
suburban markets.
SALES ACTIVITY
PROPERTY ADDRESS CITY SALE DATE SALE PRICE SIZE PRICE PER SF
333 E Jefferson Ave (3 Properties) Detroit 12/2/2010 37,800,000 550,094
401-411 S Old Woodward Ave Birmingham 11/12/2010 15,300,000 250,000 61.2
38525 Woodward Ave Bloomfield Hills 12/17/2010 7,000,000 63,186 110.78
43630 Hayes Rd (5 Properties) 12/29/2010 6,525,000 98,830 66.02
17199 N Laurel Park Dr Livonia 12/23/2010 6,000,000 124,000 48.39
1349 S Rochester Rd Rochester Hills 12/22/2010 2,825,000 64,000 44.14
500 Avis Dr Ann Arbor 10/29/2010 2,000,000 27,160 73.64
6001 N Adams Rd Bloomfield Hills 12/28/2010 2,000,000 67,484 29.64
29621 Northwestern Hwy Southfield 11/5/2010 1,875,000 26,500 70.75
800-900 W University Blvd Rochester 12/3/2010 1,500,000 40,400 37.13
6050 Greenfield Rd Dearborn 11/5/2010 1,434,532 15,100 95
17000 Executive Plaza Dr Dearborn 11/30/2010 1,250,000 60,000 20.83
LEASE ACTIVITY
BUILDING NAME SUBMARKET TENANT SIZE SF
28333 Telegraph Rd. Southfield Int. AutomotiveComponentsGroup 113,894
401 - 407 E. Liberty St. Washtenaw Google 81,292
100 Galleria Southfield NA 41,865
2800 Livernois Rd. Troy Carlson Marketing 36,720
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