Southeast Michigan reports one of the highest vacancy rates for commercial office space in the nation but one of the lower vacancy rates for residential apartment buildings, the National Association of Realtors said in its latest national survey.
Metro Detroit’s overall office vacancy rate for the final three months of this year stood at 25.1%, a vacancy rate exceeded only by handful of other cities among the nation’s 72 largest office markets.
But the regional vacancy rate for apartment buildings stood at only 3%, the Realtors reported, a rate well below that reported by most other markets.
The higher office vacancy rate stems from Michigan’s long slow recovery from the Great Recession and its relatively high unemployment rate of 7.1% in October. High joblessness translates into vacant office space.
Among the many possible reasons: the low vacancy rate in metro Detroit’s multi-family residential market could reflect the impact of the foreclosure crisis of recent years, which saw thousands of homeowners lose their houses and many moving into apartments.
Lawrence Yun, NAR chief economist, said an improving economy will continue to bolster the nation’s real estate markets.
“Solid economic growth in the third quarter proved that the second quarter wasn’t an anomaly, as business spending increased, commercial construction rose and the labor market continued to make positive strides,” he said. “Job growth is the catalyst to improved demand for commercial real estate leasing and new construction projects.”
