DETROIT—JLL recently released its Spring 2014 Detroit Skyline Review, a study of the top downtown office properties, and the firm's researchers say an influx of new tenants, many from the suburbs, has in the last three years cut in half the total vacancy rate within these buildings. Furthermore, office rents have recovered to pre-recession levels, making the downtown core a remarkable standout in a municipality undergoing hard times.

The firm now includes 43 cities and areas in its US Skyline Review, with a total of 979 buildings.

The 20 Detroit properties have nearly 10-million-square-feet and include the riverfront's giant Renaissance Center, nearly a dozen office towers clustered around Cadillac Square and three others near Ford Field and Comerica Park. All have more than 100,000-square-feet or were built or significantly renovated since 1985, have a high-profile location, a recognized tenant profile, or have architectural significance. JLL added four buildings to the Skyline report this year, including the Guardian Building, the First National Building, Chrysler House and 1001 Woodward.

In the past three years, the vacancy rate in these spaces declined from 26.0% to 11.5%, about 1.5-million-square-feet of space was absorbed and gross asking rents grew from around $22.00-per-square-foot to $22.59.

“We are seeing a significant influx of suburban companies and employers into the CBD,” as well as many other groups expanding their footprints, David A. MacDonald, executive vice president of JLL in its Detroit office, tells GlobeSt.com.

In addition, investors have poured money into the buildings, especially Dan Gilbert, the head of Quicken Loans and Rock Ventures. “Over the course of the last three years, Rock Ventures' real estate portfolio has grown from nothing to approximately 3.0-million-square-feet of commercial and residential space in Detroit's growing urban core,” JLL notes, including three of the buildings added to the Skyline portfolio.

“We were surprised that the economic recovery has effected this set of 20 buildings so quickly,” Robert Kramp, vice president and director of research for the Midwest and Great Lakes regions for JLL, tells GlobeSt.com.

JLL recently published an update on employment in the metro area and found that its employers added 14,500 net jobs over the past 12 months ending in December 2013. Meanwhile, the unemployment rate decreased 2.2% over the same time period to 8.0%, higher than the national average of 6.7%, but less than half the rate recorded in July of 2009 when it spiked at 16.9%.

“The big push we're seeing from the employers in the CBD is coming from those looking to attract a younger set of employees,” who typically prefer an urban environment, AJ Weiner, an executive vice president of JLL, tells GlobeSt.com.

In 2011, Blue Cross Blue Shield, DTE Energy and Quicken Loans took over a combined 750,000-square-feet of downtown space. In 2012, Title Source Inc., Chrysler, PricewaterhouseCoopers, Metro-West Appraisal Co. and Agency 720 leased almost 500,000-square-feet.

And this year will see even more corporate migration. Campbell-Ewald, a national marketing agency, for example, is moving about 600 employees out of suburban Warren and into roughly 120,000-square-feet of space in the Ford Field Office Complex, one of the Skyline buildings.

“These are seismic moves that have stirred other leasing,” says Weiner, especially from smaller firms that provide business services to larger corporations.

As a result, the neighborhood that encompasses the downtown has filled up with residences to serve the new workers. “It's virtually 100% occupied,” says MacDonald, giving multifamily developers a very strong incentive to continue building.

“The streets are clean, retail is returning and there is a general sense of excitement,” Weiner adds.

And although the trend of corporate right-sizing has been noted in many US cities, in Detroit, Kramp says the trend has more or less reached a plateau. In fact, the researchers found that along with other Midwest cities like Chicago and Columbus, Detroit's Skyline buildings saw the highest concentration of expansions in the US.

“We're even starting to see new office development,” says MacDonald, pointing to Meridian Health's plan to develop a new 16-story, 320,000-square-foot headquarters on Cadillac Square by 2017, the first major tower in the CBD since the 247,000-square-foot One Kennedy Square opened in 2006. Still, Meridian plans to occupy most of the space and other major new construction seems unlikely. “We're not quite there yet.”

And even though the CBD has finally shaken off the doldrums, Detroit as a whole still faces the challenges of emerging from bankruptcy proceedings and addressing the social problems that afflict much of the city. The part of Detroit that has shown economic vitality stretches from the Renaissance Center on the river and up Woodward Ave. nearly three miles to Midtown. “It's a very small area in what is a geographically large city,” says Weiner.

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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.