DETROIT—The growing popularity of CBDs among office users has revived many downtowns. But few have witnessed a more profound change than Detroit. Buildings that were empty or underutilized for years now crackle with energy and activity on weekday mornings. In addition, thousands of new residents, including many office workers, have occupied new and renovated units in the CBD and its surrounding neighborhoods.
And the CBD's momentum is still strong, according to a recent report from Newmark Knight Frank. It just marked its 21st straight quarter of positive absorption, the data show. The vacancy rate decreased 20 bps to 11.2% during the third quarter, as just over 32,000 square feet was absorbed. Year-to-date, the CBD has posted 237,272 square feet of absorption. And since 2012, it has absorbed more than 2.4 million square feet.
“Since 2012, we've seen a transformation of the Detroit CBD,” says Fred Liesveld, managing director of NKF's Detroit office. “It is great to see that investments and energy continue to pour into the downtown area going into 2018.”
In fact, the level of demand has created a near scarcity of functional modern office space, NKF concludes. The vacancy rate for class A space alone is just 7.7%.
And both new sporting venues and retail have made the CBD a center of activity that lasts long after its offices empty out. Olympia Entertainment completed construction of the $862 million Little Caesars Arena and district that will house the Detroit Red Wings and bring the Detroit Pistons back to the city from suburban Auburn Hills. Little Caesars will also soon finish its new, $150 million, nine-story, 234,000-square-foot world headquarters at the corner of Woodward Ave. and Columbia St.
The Downtown Detroit Partnership expects the downtown area to see a demand for 10,000 new residential units during the next five years. With the anticipation of demand for office, retail and residential, developers and investors are pouring in millions of dollars to not only renovate existing iconic buildings but also to build new skyscrapers.
In the New Center area, the 290,000-square-foot Albert Kahn Building and 634,000-square-foot Max M. Fisher Building, built in the 1930s, are getting a $100 million renovation. The 300,000-square-foot former Detroit Free Press building is undergoing renovations that will turn the building into a mixture of office, retail and residential uses. Meanwhile, Bedrock, the real estate arm of Dan Gilbert, will continue to play a leading role in the downtown revival by investing nearly $1 billion to redevelop the former Hudson Site into a mixture of office and residential that will become the city's tallest skyscraper at 800 feet.
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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.
