Kupiec says with the continued construction of new office product over the past several years, Detroit's resilience will be tested, and absorption of new space will be of prime importance in keeping vacancy low and rent's showing healthy gains.
Kupiec says the state government has worked diligently to attract new companies and improve the retention of residents, and the hard work has been paying off.
"The newest programs, such as designated SmartZones and high-tech Single Business Tax credits, and mainstays like the Renaissance Zones, continue to be utilized to strengthen the local economy," he adds.
Oakland County has the most office construction, with 2.2 million sf of product scheduled to come online this year, Kupiec says.
In Detroit, the Campus Martius district will consist of more than one million sf of office space. The project is being built in two phases, with an estimated completion date for Phase I of 2002. The GM Technical Campus in Macomb County is currently underway as well. The new mid-rise will comprise approximately one million sf and has an estimated completion date of 2003.
This added product will move office vacancy rates higher during the next year, but will still remain below 10%, Kupiec says.
"An increase of just over 0.5% is forecast, which will lead to a slower rate of growth in terms of rents than has been seen over the previous several years," Kupiec says.
This trend will soften the office market, and will put expansion plans on hold until times become steadier, he says. Average rents will soften over the next 12 months but will continue to show solid gains of around 4%, Kupiec says.
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