As the commercial real estate market continues to recover, property vacancy rates are dropping. This is good news for landlords of commercial and industrial spaces. According to an analysis of 20 buildings in the Detroit area, the city’s vacancy rate for high-profile office buildings is down to 11.5 percent, a significant drop from the 26 percent shown three years ago.
The report, conducted by real estate managing firm Jones Lang LaSalle, looked at buildings that were either newer than 1985 or had underwent significant renovations since 1985, were over 100,000 square feet in size, were architecturally significant or located in a high-profile location. The analysis showed that almost 1.5 million square feet of office space has been absorbed in the past years.
One reason for this is the relocation of three major commercial tenants, including Title Source, QuickenLoans and Lowe Campbell Ewald, from the outlying suburbs into the main city. Title Source is now occupying 330,000 square feet of space in the First National Building. Lowe Campbell Ewald moved into the Ford Field complex and is taking up 122,000 square feet.
The drop in the city’s vacancy rate is largely good news for industrial and commercial real estate landlords. Despite Detroit’s recent financial woes, the city is becoming a hot spot for developers and companies who want to get prime real estate at a low rate. As more businesses move into the city, property values are likely to increase, meaning landlords may start to see a rise in average rent in certain high-profile areas. Managing a commercial property isn’t just maintenance and proper upkeep. It also includes keeping an eye on the overall market trends to ensure that investments are properly valued.
Source: Detroit Free Press, “Vacancy rate drops in major Detroit office buildings” Frank Witsil, Mar. 26, 2014