Office, Industrial Numbers Worsen, Report Says

DETROIT-Vacancies have climbed, absorption has dipped and rental rates have been reduced since the second quarter, according to the Detroit area office of Colliers International. However, company officials report continued moderate increases in inquiries and space showings throughout the office and industrial markets.

Although user and investment sale closings remained sporadic and modest in volume in the third quarter, velocity is increasing and those buyers once seeking deep discounts have begun to realign pricing to meet sellers’ expectations, the company says.

Research development/high-tech vacancy has increased three points, standing at 19.7%. To date, this sector has experienced negative absorption of 815,000 sf.

Warehouse/manufacturing vacancy has increased only slightly to 12.3% and absorption is at a negative 3.5 million sf.

Class-B office space continues to bleed, experiencing negative absorption of more than 500,000 sf during the third quarter alone; bringing the vacancy rate to 17.3%.

The class-A vacancy rate continues to climb and stands at 14.77%. Southfield’s class-A space has experienced nearly 670,000 sf of negative absorption, while Birmingham/Bloomfield has realized positive class-A absorption of 236,210 sf.

Overall warehouse/manufacturing asking rates are approximately 5% lower, ranging in decreases of $0.10 per sf to $0.50 per sf. In the office market, class A asking rates in north suburban cities and the Detroit Central Business District have been reduced by as much as $1 per sf.