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Multifamily Market Predicted to Remain Tight, Profitable in Detroit

DETROIT-An upcoming Marcus and Millichap report for the fourth quarter 2000 will say the booming

By Robert Carr | Updated on January 07, 2001

DETROIT-With the cost of home ownership continuing to outpace average rental rates, apartment buildings in the Detroit market will remain a strong investment vehicle, according to a rough draft of Marcus and Millichap’s apartment research report. However, while the current vacancy rate of about 3% in Detroit tells a tale of increased demand, apartment construction starts remain sluggish, says Sean Hamilton, research manager for the company.

With the wave of condominium conversions, not only in the Downtown area but in the suburbs as well, it appears that owners and developers are going for the big payoff of condos to help alleviate the stress of increased building costs, he said. “My guess is that at some point the condominium sales will start slumping, and some projects built as condos will be leased out as apartments until the market picks up again,” he said.

Affordable housing, although in demand, has seen starts averaging below 1,500 units each year for the past three years, a trend that doesn’t figure to change through 2001, Hamilton saiys. He said the arduous approval process is no doubt a factor in the slow pace of construction as well.

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