In general, companies remain cautious about committing to office space, Fenster notes.
"Tenants looking in the Detroit area needed the space regardless of the economic conditions, or those seeking to take advantage of the down market," he says, adding the only real activity was in sublease space, which increased 40% during the second quarter. A total of 1.25 million sf of sublease space was available through metropolitan Detroit at midyear 2001.
In addition, property owners tended to be more aggressive by the end of the second quarter, recognizing qualified tenants are few and far between. They have responded by offering more amenities and shorter lease terms, Fenster says. Developers were completing speculative office developments started before the market softened but the stream of new project announcements dwindled in the first half.
"This restraint should help metro Detroit avoid a repeat of the overbuilding experienced in the 1990s, and bodes well for the office market's recovery," Fenster says. More than one million sf of new office space was under construction at mid-year, with just 10% pre-leased.
"Well-financed local developers continued to move forward with new projects in select markets," Fenster says, including 464,000 sf of new development in the second quarter.
New developments include Kojaian's 275,000-sf Maple Corporate Center in Troy and REDICO's 180,000-sf Oakland Towne Square Phase II on the Lodge service drive north of the Southfield Civic Center.
Sales were also sluggish as real estate investors waited for good prices for available buildings. "There were still a number of investors eager to acquire solid metro Detroit office buildings in the first half of 2001, but they were thwarted by the ongoing lack of available properties," the executive says.
Significant sales during the first half of 2001 included Farbman Group's acquisition of the Fisher and Albert Kahn Buildings in Detroit's New Center area for $32 million. A private local investor purchased the 90,000-sf, nine-story Comerica Bank Building at 30500 Van Dyke in Warren for an undisclosed price.
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