Modest Gains Seen in Office, Industrial Market

BINGHAM FARMS, MI-Commercial real estate brokers at Colliers International report a marked increase in leasing activity throughout the Metropolitan Detroit’s office, industrial and investment markets. Detroit’s industrial market seems to be recovering at a faster pace than the office market, the company says.

According to the company’s data, overall absorption through mid-year 2002 stands at a positive 1.9 million sf for warehouse/manufacturing space; causing a one-point decrease to 10.81%; while vacancy in the high-tech sector has decreased nearly four points to 16.62%.

While the north and south suburban warehouse/manufacturing sectors continue to a negative absorption trend, the city of Detroit captured over 2.4 million sf of positive absorption, the company says.

The office market is continuing to lose occupancy, although at a seemingly slower rate than in 2001, Colliers brokers say.

More than 500,000 sf of negative absorption has occurred, they say, mostly in the suburban markets.

Although the overall north suburban class A vacancy has increased only slightly since year-end to 13.64%, a significant amount of tenancy has shifted within this sector.

Southfield’s class A vacancy rate has risen eight points; while Birmingham/Bloomfield captured most of the positive absorption; decreasing its vacancy rate nearly 14 points.

Troy seems to be holding steady; experiencing minimal negative absorption, while Auburn Hills/Rochester Hills’ vacancy rate has decreased slightly.

The slow recovery was expected and has not deterred investors, Colliers officials report. Both institutional and private investors are repositioning current portfolios and seeking additional investment opportunities in order to capitalize on the next market upswing, the company says.

Those seeking office projects in the suburban markets are snapping up the few available offerings, the company says. Sales listings for flex and industrial projects have increased and large portfolios of retail projects are more available as liquidation plans are announced.

Colliers said with a few exceptions, investors can afford to take a “wait and see” approach with their holdings. Those looking to purchase property at a bargain price have little to take advantage of; owners are not willing to sell at discounted values.