Downtown Detroit office building vacancy rate drops 7.7 percent from 2012

[Spartan]

Seems like good news. Unfortunately, the title is a bit misleading, as they added 4 buildings to the report, all of which have very low vacancy. I'm trying to find a more actual comparison though of the buildings included both years.

http://www.crainsdetroit.com/article...7-percent-from

[SpartanDawg]

While adding the four buildings does help the vacancy rates slightly, overall it doesn't sway the data more than a couple percent, particularly given significant increases in occupancy at Ford Field [[from 29.5 percent in 2012 to 75.5 percent in 2013); One Detroit Center [[from 50.2 percent in 2012 to 64 percent in 2013); and Tower 200 of the RenCen [[from 81.4 percent in 2012 to 92.5 percent in 2013). In addition, all but two of the buildings in the first Skyline report increased their occupancy from 2012 to 2013 [[Tower 600 of the RenCen and the Madison Office Building).
Without the four new buildings factored into the equation, the vacancy rate in 2013 was 13.5 percent, just 2 percent higher than when the four new ones are taken into consideration.
Kirk Pinho
Crain's Detroit Business
kpinho@crain.com

[Gistok]

Good luck... getting a meaningful statistic is going to be problematic. The criteria of renovated since 1985 [[or new), and over 100,000 square ft. excludes such buildings such as the Penobscot, Buhl and many other downtown buildings. So any statistic will be less than ideal in a total occupancy sense...

[DetroitPlanner]

You don't need to worry about stats. There are more people in lunch joints and the prices are increasing. 2 coneys and a vernors is now $7. Not bad for something I can make myself for $2.

[MikeyinBrooklyn]

Here's the stat I like to use: there are a lot of people downtown now during the day. Also, the initial headline is misleading. First, as noted, the quantity of quality commercial office space has changed, and is in constant flux right now, making percentage comparisons at best just a suggestion of ongoing trends, not hard facts. Second, assuming the stats are stable and comparable, the amount of vacant space actually fell by about a third. Saying it fell by 7.7% makes it seem like 92.3% of the originally vacant office space was still vacant. Not that I care about the stats. Downtown has a pulse now. Might not be where we want it yet, but it's light years ahead of where we were.

[Spartan]

Here's the stat I like to use: there are a lot of people downtown now during the day. Also, the initial headline is misleading. First, as noted, the quantity of quality commercial office space has changed, and is in constant flux right now, making percentage comparisons at best just a suggestion of ongoing trends, not hard facts. Second, assuming the stats are stable and comparable, the amount of vacant space actually fell by about a third. Saying it fell by 7.7% makes it seem like 92.3% of the originally vacant office space was still vacant. Not that I care about the stats. Downtown has a pulse now. Might not be where we want it yet, but it's light years ahead of where we were.

That's a good point. You can't just subtract percentages from each other like they did. Vacancy rate dropped much faster than the headline suggests.

[Spartan]

Good luck... getting a meaningful statistic is going to be problematic. The criteria of renovated since 1985 [[or new), and over 100,000 square ft. excludes such buildings such as the Penobscot, Buhl and many other downtown buildings. So any statistic will be less than ideal in a total occupancy sense...

I definitely agree, but I don't think this is a case where people are moving out of the Buhl/Penobscot and into First National or the Ren Cen, for the most part. I would say it is a pretty good barometer of the overall status, though not too precise a measurement of the true vacancy. The sample is not representative of the overall population.

[Mind field]

Great news! It seems lately there has been a lull in companies deciding to move downtown from the burbs, or maybe it's just a return to normalcy after the torrent of relocations from the past few years. Hopefully we get some bigger moves to fill up the rest of the empty space downtown in the coming months.

[DetroitPlanner]

Another point. Were the Whitney and Broderick included as office space in the prior study? Those buildings are no longer considered offices.

[animatedmartian]

Another point. Were the Whitney and Broderick included as office space in the prior study? Those buildings are no longer considered offices.

Since they hadn't been renovated since 1985, no. They likely wouldn't have been included either way.

I thought it was interesting that this study doesn't include Blue Cross Blue Shield, DTE, and AT&T Michigan headquarters. Each tower is at least 300,000 square feet. But the thing is they were built in the 1970s and I guess haven't been renovated since. It's probably easy to assume they're 100% occupied. It'd seem odd if they weren't.

[MikeyinBrooklyn]

Great news! It seems lately there has been a lull in companies deciding to move downtown from the burbs, or maybe it's just a return to normalcy after the torrent of relocations from the past few years. Hopefully we get some bigger moves to fill up the rest of the empty space downtown in the coming months.

While big companies moving into Detroit would be nice, there is only a finite number of those that might potentially occur. It's better for the city as a whole for smaller businesses to come to the city. There are many more candidates for that, and they can fit realistically into many different kinds of buildings and neighborhoods. And they have more capacity for growth. GM and Compuware won't be doubling in size anytime soon. Little businesses can experience rapid growth.

Ultimately, Detroit will have proven to be a viable business home when people [[including Detroiters, not just people moving here) think of it is a place to start a business, rather than move an existing one.

[Gannon]

Another few months, and this will not be as good of news...with the changes at Compuware, and the inevitable contraction at GM over this silly-ass stuff they're getting boned with now. Nobody knows what Fiat is going to do with Chrysler leases, especially relatively unnecessary PR ones like downtown, building name-change or not.

A good portion of the RenCen occupancy is from GM's policy of having their main suppliers and service orgs rent space for a local Detroit presence...they even made BCBS move people, didn't they?! That had to be an net-zero difference for the city, shifting a few percent from their building to GM's...but not with this fictitious figuring. Who ignores MOST of the fucking FINANCIAL DISTRICT skyscrapers from this sort of calculation?! OR those corporate-owned buildings...makes the whole premise an exercise in futility. [["let's ignore the old and ugly to make the rest look better!")

Plus, many conservative bankers are already constricting their mortgage divisions, so I expect Danny's core business to be dented a bit within a year. The hokus-pokus that industry has done to falsely re-inflate housing prices, restricting the properties that go back on the market, will come back to haunt them...and us all...again.

Curious to see where this occupancy rate goes by then. There will be renovations coming on-line to increase the inventory...those Chinese investors will not wait to get their newly-acquired properties onto the market, among others.

How soon until Gilbert starts that high-rise on the Hudson's I-Beam Farmsite?! I'd bet he's using this article to convince Other People to donate their Money to his high-hopes.


Cheers,
John

[Gistok]

OK... I'll bite... Gannon... who crapped into your Wheeties this morning to get such a pessimistic and sour prediction??

It would certainly spell doom and gloom for the downtown market, were it not for the fact that you are only making predictions...

[Gannon]

OK... I'll bite... Gannon... who crapped into your Wheeties this morning to get such a pessimistic and sour prediction??

It would certainly spell doom and gloom for the downtown market, were it not for the fact that you are only making predictions...

Just because I go all Polly-anna on stuff doesn't mean I can't be annoyed when others do the same, LOL! I think the methodology is enough to make this whole study moot, it really doesn't show anything other than what the real estate agents and the Chamber of Commerce need to maintain their sales schticking...I just provided a bit of the larger picture. Do I WANT any of it to happen? No...but there are dynamics at play well beyond our hopes and desires.


It is a market in flux...I prefer MikeyinBrooklyn's take on it all.

But I AM watching how other bankers are fleeing the mortgage business, while Quicken continues to grow their aggressive army. There is a rumor downtown, yet unsubstantiated, that our Dan was one of the mathematical architects of the previous bond-packaging schemes which made the mortgage industry frail enough to fail...but he turned state's witness to help them figure the whole mess out, so he can show a squeaky-clean veneer to the public...something we all know he craves like oxygen and water.

IF any of that is true...while I see the real-estate industry resuming many of their old bad practices, plus manipulating the housing market available stock to raise pricing beyond reason AGAIN, creating the illusion of a seller's marketplace...I am very concerned about what happens to our fair city after the next crash they are creating.

That is the only DOOM I feel happening...the rest is merely adjustment. GM isn't going away, although the vultures are circling at their gates...eager for some carrion, justified or not. Although, if they make a whole NEW department to handle these sorts of claims, it could mean MORE jobs in the RenCen. One of our neighbors is in the middle of that mess, I've been wanting to talk with him about it...but he's been working 12-16 hour days sorting through the layers of crap. Not sure he'd be very vocal anyways. He basically does the job the Edward Norton character did in Fight Club.

I can see Fiat pulling out of downtown Detroit with that office which was ONLY opened due the guilt created by that ad series catchphrase...although that lease was likely for five years, the owners of the company may seek to break it. It is merely vanity money being spent, and while I'd love to imagine the Italians being sensitive to that...they are moving their headquarters out of Italy, for financial reasons. Not a good sign.

Cheers, anyways,
John