"While there is little evidence that Metro Detroit's economy is set for a major expansion in the coming quarters, companies are becoming stable enough to retain office space," Grubb & Ellis said in its third quarter report on commercial office trends in the Detroit market.
The overall vacancy rate edged up again in the third quarter and sublease space on the market declined for the third straight quarter.
According to the reports, about 67.5 million sf of office space is available in the market, with about 20%, or 13.4 million sf, vacant. About a quarter million sf were under construction in the third quarter. Asking rents for Class A space averaged $26.07 across the market, with Class B space asking an average $23.70. In the downtown Detroit CBD, 28.4% of the 12.1 million sf was vacant, with average asking rents of $26.80 for Class A space and $23.81 for Class B space.
"With just over 2.2 million sf of sublease space still on the market, sublessors will find it challenging to recover 70% of their lease cost for unneeded office space," G&E reported. "With much of the current sublease space poised to become vacant in the coming quarters, the overall vacancy rate will likely exceed 20% during the fourth quarter of 2003."
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