Construction in Detroit’s office sector continues to take off at a pace that is not typical of the metro. More than 600,000 square feet has delivered in the past 12 months, with an additional 1.4 million underway. While these numbers might be commonplace for other major cities, Detroit has seldom seen new office construction, especially in light of a struggling local economy not too long ago.
Moreover, a recent trend has been revitalizing existing inventory, which keeps the development of new office space largely at bay. However, as demand for office space continues, with more than 1.6 million square feet of space absorbed in the past 12 months alone, development is picking up.
So where exactly is development centered?
Unsurprisingly, the most-active submarket is the Central Business District, with more than 600,000 square feet underway. While the submarket has yet to see new office space come online in recent quarters, the area will house several notable developments when they are complete. The J.L. Hudson’s site will expand the inventory size by more than 365,000 square feet when it finishes construction in 2022. Another notable project with a delivery date later this year is the 234,000-square-foot Little Caesars World Headquarters.
The second submarket with heightened construction is Royal Oak Vicinity, with just over 200,000 square feet underway. New development is at an all-time high for the submarket with the delivery of more than 100,000 square feet in the past 12 months alone. Strong net absorption of 98,000 square feet in the same period suggests demand in the area is in line with the pace of new construction. The largest recent delivery of 76,288 square feet completed last month. The building is fully leased with three tenants occupying each of the three floors.
The third submarket with the highest construction levels in Detroit is Central I-96 corridor, with just over 165,000 square feet underway. The bulk of this new construction is the result of one particularly large property. Hino Trucks and Hino Motors Manufacturing Headquarters is slated to open their new offices early in 2019 with a two-story building totaling 124,000 square feet. Apart from what is under construction, the pipeline remains robust with several large buildings in the planning stages. Should these buildings come to fruition, the total inventory for Central I-96 will expand substantially.
All in all, new construction is taking off in Detroit. With development plans throughout metro Detroit, construction trends are not likely to slow down in the near-term.
