Vacancy rates in single digits in downtown's prime office buildings

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June-25-16, 11:31 PM
Lowell

Vacancy rates in single digits in downtown's prime office buildings

Who'da thunk it? Of course there is still plenty of room in non-prime spaces like the Michigan Building where DetroitYES "World Headquarters" holds out and places like the Book and Stott where renovations are in the works. But, wow, this is more good news for Detroit.

Quote:

According to the new Skyline report from Jones Lang LaSalle, a Chicago-based international real estate company with its local office in Royal Oak, vacancy rates in those 20 properties [[see box) was 9.4 percent at the end of the first quarter.

It was 26 percent in 2010, according to the report.

FYI, Here are the stats on each of the 20 buildings Jones Lang LaSalle surveyed for its 2016 Skyline report.

211 West Fort St.
Square feet: 450,000.
Occupancy: 78 percent.
Rent: $20 per square foot.

150 W. Jefferson
Square feet: 493,000.
Occupancy: 92.4 percent.
Rent: $22.50 per square foot.

Fifth Third Bank at One Woodward
Square feet: 360,000.
Occupancy: 100 percent.
Rent: $23.25 per square foot.

Ally Detroit Center
Square feet: 957,000.
Occupancy: 100 percent.
Rent: $23.25 per square foot.

Guardian Building
Square feet: 643,000.
Occupancy: 88.6 percent.
Rent: $19.25 per square foot.

Chase Tower
Square feet: 505,000.
Occupancy: 100 percent.
Rent: N/A.

First National Building
Square feet: 800,000.
Occupancy: 97.9 percent.
Rent: $23.75 per square foot.

Chrysler House
Square feet: 416,000.
Occupancy: 99.4 percent.
Rent: $23.75 per square foot.

One Kennedy Square
Square feet: 247,000.
Occupancy: 100 percent.
Rent: N/A.

1001 Woodward
Square feet: 283,000.
Occupancy: 97.5 percent.
Rent: $23.75 per square foot.

One Campus Martius
Square feet: 1 million.
Occupancy: 100 percent.
Rent: N/A.

Renaissance Center, Tower 100
Square feet: 577,000.
Occupancy: 84.4 percent.
Rent: $23.25 per square foot.

Renaissance Center, Tower 200
Square feet: 582,000.
Occupancy: 87.3 percent.
Rent: $23.25 per square foot.

Renaissance Center, Tower 300
Square feet: 585,000.
Occupancy: 100 percent.
Rent: N/A.

Renaissance Center, Tower 400
Square feet: 576,000.
Occupancy: 89.9 percent.
Rent: $23.25 per square foot.

Renaissance Center, Tower 500
Square feet: 307,000.
Occupancy: 100 percent.
Rent: N/A.

Renaissance Center, Tower 600
Square feet: 307,000.
Occupancy: 76 percent.
Rent: $23.25 per square foot.

Ford Field
Square feet: 331,000.
Occupancy: 50.5 percent.
Rent: $23.25 per square foot.

1900 Saint Antoine
Square feet: 99,000.
Occupancy: 100 percent*
Rent: $21.75 per square foot.

Brewery Park
Square feet: 371,000.
Occupancy: 94.8 percent.
Rent: $21.25 per square foot.

* Dan Gilbert purchased the building, currently almost entirely vacant, earlier this year and plans to move 400-plus of his Rock Connections employees there this summer.

Full Crain's Article here: http://www.crainsdetroit.com/article...s-prime-office
June-26-16, 11:45 AM
Armin

....waiting for daveinwindsor to chime in and say that these numbers are all lies concocted by Dan Gilbert to artificially increase office space rent.
June-26-16, 12:28 PM
SammyS

I had no idea commercial RE was that lucrative. So a 2000 sf office costs over $500k to rent/year?
June-26-16, 12:55 PM
Király

The Guardian Building has the cheapest rent on the above list. I never would have guessed!
June-26-16, 01:05 PM
401don

1001 Woodward may be the most impressive on the list. They tried to convert it to condos about a dozen yrs. ago when there was zero interest in commercial space downtown and now it's 98% occupied at 23.75/sq.ft.
June-26-16, 03:35 PM
Packman41

Quote:

Originally Posted by SammyS

I had no idea commercial RE was that lucrative. So a 2000 sf office costs over $500k to rent/year?

Ummmm....no - you are off by a factor of 10.

2,000 SF X $23.50 PSF = $47,000
June-26-16, 05:42 PM
SpartanDawg

interesting the Penobscot was kept off that list

that owner is a loser... won't even fix the globe at the top properly ... did a patchwork job from that guy that said he would do it for FREE.... the man who fixed it strongly urged the owner to just make it LED, since neon tubing would break down again quickly... and he refused to pay for that.. instead we had the globe on for like a month in the past year.
June-26-16, 05:48 PM
SammyS

Quote:

Originally Posted by Packman41

Ummmm....no - you are off by a factor of 10.

2,000 SF X $23.50 PSF = $47,000

$47,000 x 12 months = >$500k/year....unless that's $23.50 PSF/year which is a very unusual way to quote. Yes, I have no idea how commercial RE is marketed.
June-26-16, 06:00 PM
southen

If the market is in the single digits Uncle Dan is going to have to start building new in order to keep luring people downtown. I wouldn't be surprised to see some legitimate proposals for new commercial construction downtown in the next year or two.
June-26-16, 06:10 PM
ABetterDetroit

Quote:

Originally Posted by SpartanDawg

interesting the Penobscot was kept off that list

that owner is a loser... won't even fix the globe at the top properly ... did a patchwork job from that guy that said he would do it for FREE.... the man who fixed it strongly urged the owner to just make it LED, since neon tubing would break down again quickly... and he refused to pay for that.. instead we had the globe on for like a month in the past year.

I wouldn't hold my breath on the globe unless she gets a new owner who actually cares. She looks like she hasn't been washed in decades :[[
June-27-16, 06:46 AM
ekleezy

Quote:

Originally Posted by SpartanDawg

interesting the Penobscot was kept off that list

that owner is a loser... won't even fix the globe at the top properly ... did a patchwork job from that guy that said he would do it for FREE.... the man who fixed it strongly urged the owner to just make it LED, since neon tubing would break down again quickly... and he refused to pay for that.. instead we had the globe on for like a month in the past year.

more importantly, half the elevators in the building don't work and there's no sign of trying to fix them.
June-27-16, 07:32 AM
mikeg19

Quote:

Originally Posted by ABetterDetroit

I wouldn't hold my breath on the globe unless she gets a new owner who actually cares. She looks like she hasn't been washed in decades :[[

DG to the rescue....
June-27-16, 10:17 AM
eliboyer

Quote:

Originally Posted by SammyS

$47,000 x 12 months = >$500k/year....unless that's $23.50 PSF/year which is a very unusual way to quote. Yes, I have no idea how commercial RE is marketed.

It's not unusual, commercial rents are always quoted annually.
June-27-16, 10:41 AM
SammyS

Got it. Thank you, makes sense now. Also tells me that commercial and residential RE rental rates are more or less on par.
June-27-16, 11:36 AM
Onthe405

Quote:

Originally Posted by SpartanDawg

interesting the Penobscot was kept off that list

. . .and the 26-story Buhl Building
June-27-16, 12:19 PM
Bham1982

Quote:

Originally Posted by Onthe405

. . .and the 26-story Buhl Building

They always just leave off the buildings with high vacancy. These are commercial real estate sales firms. They aren't producing data, they're trolling for business.

The top buildings almost always have low vacancy, BTW. You could have written this same article at almost any point in recent decades.
June-27-16, 12:39 PM
DetroiterOnTheWestCoast

Quote:

Originally Posted by Bham1982

They always just leave off the buildings with high vacancy. These are commercial real estate sales firms. They aren't producing data, they're trolling for business.

The top buildings almost always have low vacancy, BTW. You could have written this same article at almost any point in recent decades.

I think we were all waiting for the obligatory "nothing good is happening in Detroit" input from the utopia that is Birmingham.

But if the study is comparing the same 20 buildings between 2010 and now, as it appears to be, your point is.....off.

Quote:

The vacancy rates in downtown's 20 most prominent office properties has fallen to single-digits in the last six years.
According to the new Skyline report from Jones Lang LaSalle, a Chicago-based international real estate company with its local office in Royal Oak, vacancy rates in those 20 properties [[see box) was 9.4 percent at the end of the first quarter.
It was 26 percent in 2010, according to the report.
July-16-16, 02:00 PM
David L

Anyone know the vacancy rate at the Buhl, Ford and Penobscot? Why didn't Gilbert snatch up the latter when it was available. It sold for only 6M.
July-17-16, 07:26 AM
emu steve

Quote:

Originally Posted by Lowell

Who'da thunk it? Of course there is still plenty of room in non-prime spaces like the Michigan Building where DetroitYES "World Headquarters" holds out and places like the Book and Stott where renovations are in the works. But, wow, this is more good news for Detroit.

FYI, Here are the stats on each of the 20 buildings Jones Lang LaSalle surveyed for its 2016 Skyline report.

[[I didn't copy the individual building data here).

* Dan Gilbert purchased the building, currently almost entirely vacant, earlier this year and plans to move 400-plus of his Rock Connections employees there this summer.

Full Crain's Article here: http://www.crainsdetroit.com/article...s-prime-office

**************
What these figures [[26% vacancy rate in 2010 vs. less than 10% now) show is why there is such rush to do commercial buildings today and not 10 or 20 years ago.

It isn't all about 'gee that building has great bones, let's redevelop' but rather there is a strong market which needs to be met.