With nearly 17 million square feet, the Downtown Detroit office submarket is the largest submarket in Metro Detroit by total existing inventory. In Q4 2018, Downtown Detroit comprised over 21% of the total Metro Detroit office market. In Q4 2018, Downtown Detroit’s vacancy rate was 12.2%, while the suburban market had an overall vacancy rate of 15.7%. Detroit has historically maintained higher vacancy rates than the suburban office market. However, since 2010, yearly absorption has remained positive, and vacancy rates have declined dramatically, reaching lower levels than the suburban market.
Private and opportunistic investors continued to show interest in Detroit throughout 2018. Increased occupancy, rising lease rates, and general market demand has stabilized many properties, resulting in fewer value-add opportunities entering the market. Despite this trend, value-add sales dominated the Downtown Detroit market in 2018. The majority of this activity took place during the fourth quarter and was highlighted by three large office sales.