DETROIT—Yesterday, GlobeSt.com reported that Friedman Integrated Real Estate Solutions had helped negotiate the sale of 5750 New King Dr., a three-story, approximately 91,000-square-foot class A office building in suburban Troy to Macomb Development, LLC. It was just the latest sign that investors and occupiers have gotten interested again in an area that had suffered more than most from the recent economic crisis.
According to a report just published by Friedman, for example, the Metro Detroit office submarket has in some ways returned to a pre-recessionary level of health. “Total investment office sales were up an astonishing $300 million at the close of 2013,” it notes, “significantly higher than anything seen since 2007.”
Most markets just had to deal with the recession, but Detroit got hit with the double whammy of a recession and the decline of the auto industry. Vacancy rates in the office submarkets eventually hit 20.3%, Friedman says.
Troy, the third largest suburban office submarket with 170 buildings totaling over 16-million-square-feet, suffered along with other suburbs like Southfield and Livonia. Macomb Development's new home, part of the eight-building North Troy Corporate Park, once provided a central location for EDS to serve its top client General Motors. But the company vacated 500,000-square-feet in 2007, dropping the occupancy by almost 50%. The properties were returned to the lender in 2011.
Today, however, “buyers are taking advantage of the availability of high-end office buildings in prime locations with modern, updated space along with below-market replacement costs,” says David Friedman, the firm's president and chief executive officer. “We have seen an increase in building sales in the suburbs, especially in Troy.”
Other local buildings purchased recently include: a 306,720-square-foot office building known as The Centennial, located at 100 E. Big Beaver, purchased by HTC Global Services; and an 186,562-square-foot building located at 880 W. Long Lake Road, purchased by Molina Healthcare. And just last week, a 248,427-square-foot office building at 750 Tower Dr., also located within North Troy Corporate Park, was purchased by Magna America RE Holdings, LLC, a subsidiary of Magna International Inc.
In a recent report, Glenn Lapin, Troy's economic development specialist, referred to a CBRE analysis that said Troy's office vacancy rate in the fourth quarter was 23.8% and that the industrial vacancy rate was 6.2%.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
