Detroit-Ann Arbor office market
A third-quarter 2018 report from Colliers International said Detroit’s central business district and suburban office markets posted year-over-year
asking-rent and net-absorption increases. The metro area had 55 office
transactions totaling nearly 2 million square feet of space during the
past third quarter, and the office-vacancy rate for the area declined from
9. 8 percent to 9.1 percent between the first and third quarters of 2018.
Colliers also reported that Michigan’s largest bank, Chemical Bank, will
start construction on a new headquarters in downtown Detroit by mid-
2019. Ford Motor Co., Little Caesar Enterprises Inc., and LinkedIn are
among the companies driving construction and leasing trends in the first
half of 2019. Detroit is attractive to tenants because Class A office space,
which averages $22.77 per square foot, is much less expensive than in
markets like Chicago or New York City.
What the locals say
“There are many players, development companies, that are active
in Detroit now, especially in the greater downtown area, and
they’re starting to look for opportunities out in the neighborhoods as well. The bread and butter has really been rental housing.
However, now we have a lot more for-sale housing coming back
into the area in terms of some single-family housing, but primarily
townhomes, lofts and condos. … There are mortgages available
and appraisals have been certainly allowing a lot of these
[types of] lenders to come back into the market, because
the [property] values have really risen here over the last
five years or so.”
By Neil Pierson
The Great Lakes State continues its recovery efforts.
Michigan’s geography is unique. It is the only one of the lower 48 states to
be split into two large land masses, with the sparsely populated upper
peninsula and the urban-based lower peninsula connected since 1957 by the
5-mile-long Mackinac Bridge. The state’s nickname, the Great Lakes State,
is the result of Michigan bordering four of the five Great Lakes — Erie, Huron,
Michigan and Superior.
Several Native American tribes originally inhabited the area, and a wave of
European immigration — known as the “Michigan Fever” — arrived in the
1830s. Michigan achieved statehood in 1837, shortly after a tenfold population
increase from 1820 to 1834.
Michigan’s economy has been on a rollercoaster ride for the past two decades.
In the early 2000s, the bursting “dot-com” bubble and the faltering auto
industry triggered massive job losses. The Great Recession deepened the
state’s troubles as some 850,000 jobs disappeared, many of them related to
The state’s post-recession recovery has been strong, however. As of March
2018, Michigan led the nation in the number of engineers per capita, was third
in durable-goods manufacturing and was seventh in total manufacturing
output. Still, the Great Lakes State has work to do as 2017 rankings from
U.S. News & World Report placed Michigan among the bottom of half of states
for health care, education, infrastructure and quality of life.
A report this past November from the University of Michigan said the state
experienced nine straight years of uninterrupted job growth from third-quarter 2009 to third-quarter 2018. The same report predicted Michigan
would add about 75,000 jobs in 2019 and 2020, although that equated to a
lower employment-growth rate than the state recorded from 2011 to 2016.
International migration is expected to comprise 55 percent of the state’s
population growth through 2025.
According to the U.S. Department of Labor, the six-county Detroit metro area
recorded an average weekly wage of $1, 107 as of second-quarter 2018, higher
than the national average of $1,055. The metro area added 12,800 jobs from
November 2017 to November 2018, and the mining, logging and construction
sector led the way with 4,600 jobs added, or 6.1 percent growth, during
Among the nation’s 100 largest rental markets, Detroit had the sharpest
decline from 2008 to 2018 in the size of an average apartment, RENTCafe
and Yardi Matrix reported. The average apartment in the Motor City is now
791 square feet, a 27 percent reduction over the past decade, placing Detroit
12th among U.S. cities for smallest average apartment size. n
Executive director, Midtown Detroit Inc.
Detroit-Ann Arbor Office Market
Source: Colliers International
Average asking rent
per square foot
Total vacancy rate