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Detroit Office Market Looks Good to Lenders

DETROIT—The class A vacancy rate has slipped below 10%, and the activity shows no sign of slowing down.

By Brian J. Rogal | brianjrogal | | Updated on August 05, 2016

 

det-150west jefferson 2 (2) 150 W. Jefferson has been remarkably stable over the past ten years.
DETROIT—As reported this week in GlobeSt.com, REDICO just acquired 150 W. Jefferson Ave., a 500,000-square-foot, 25 ‐ story office tower located in downtown Detroit. And yesterday, officials from PCCP, LLC , said the lender had provided REDICO an acquisition loan for the class A property. “The downtown Detroit office market has gone through quite significant changes in the last three to four years,” Dorian Farhang with PCCP tells GlobeSt.com. What had been a 25% vacancy rate, for example, has now sunk below 10% for class A spaces. He attributes many of these changes to “an interest and desire by many people to live and work downtown. It’s a healthy market to lend into.”    And 150 W. Jefferson, one of 15 class A buildings in downtown Detroit, is considered one of the top properties in the CBD. Built in 1989, the office tower is 89% occupied and includes some of Detroit’s most notable companies including Miller Canfield Paddock & Stone , Starcom MediaVest Group/Digitas , Lochbridge , Butzel Long , KPMG , and Jones Day . It also has convenient transportation options, and the nearly completed QLine will have a stop only one block away. For a lender, one of the property’s most attractive aspects is its stability. “It hasn’t lost a tenant in the last ten years,” says Farhang. That’s quite remarkable considering that the CBD here has gone through some really tough times. “It speaks to the durability of this asset.” REDICO, a nearly 50-year-old Southfield, MI-based real estate developer and operator, will also act as property manager for 150 West Jefferson. The firm’s nationwide portfolio now exceeds $2 billion in value and encompasses about 16 million square feet of space, including One Kennedy Square, a class A downtown Detroit office building REDICO developed in 2006.

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