Detroit Real Estate Market Reports

Detroit Office Market

The Metro Detroit office market vacancy rate climbed 10 basis points to 17.8% during the fourth quarter of 2021 as just over 126,000 square feet in net vacancies were added to the market. This marks the sixth consecutive quarter that the office market has posted negative absorption. For the year, just over 1 million square feet of net vacancies were added to the market. The market has not seen that level of net vacancies in one year since the Great Recession in 2009. The onslaught of vacancies was brought on by major consolidation efforts by companies such as GTB, Kelly Services, The Gale Group and Plant Moran. Adding to the office market lull is the hesitancy among office users to commit to new leases. Work-from-home and work-from-office arrangements brought on by the pandemic have significantly reduced leasing activity. Despite rising vacancies, asking rates have not fallen as many landlords are reluctant to reduce rates in a market with little to no market participation. Average asking rates are statistically on the rise as more Class A space is added to the market. This is particularly evident in the Detroit Central Business District as newly constructed and newly renovated space hits the market.

Detroit Industrial Market

The Metro Detroit industrial market vacancy rate fell 20 basis points to 4.0% during the fourth quarter of 2021 as just over 2.8 million square feet was absorbed. In 2021, net absorption totaled 7.5 million square feet, a level not seen since 2017. While all industrial product types are seeing positive demand, warehouse/distribution facility is by far seeing the greatest attention. Just over 73% of the 7.4 million square feet absorbed in 2021 were in bulk warehouse facilities. This trend in the bulk warehouse market began in 2015 with the Cardinal Health Distribution Center in Detroit and surged following the success of Ashley Capital’s Tri-County Commerce Center in 2016. Since 2015, users have absorbed over 20 million square feet of bulk warehouse and developers have added 15.0 million square feet of construction to meet demand. Just this year, 5.0 million square feet of both build-to-suit and speculative bulk warehouse developments have been built and 100% leased. Looking ahead to 2022, another 5.6 million square feet of bulk warehouse space under construction will add additional inventory in Wixom, Shelby Township, Livonia and Detroit.