Demand Up for Detroit Office Space

Demand for Detroit office space has risen, in what can be viewed as a move towards improving confidence in the troubled city.

Vacancy rates in the downtown area dipped from 33% in 2010 to around 25% in recent months. Although still a long way from the standard 10% to 12% in healthy cities, the improvement is dramatic, accourding to John DeGroot, vice president of Newmark Grubb Knight Frank in Southfield.

DeGroot believes the vacancy rate is likely to continue dropping.

"The momentum has been here for the last three years, and it looks like the momentum is going to continue to be there the next three to four years," he said.

In related news that marks further confidence, Southfield-based real estate firm Schostak Brothers have revealed plans to construct a new skyscraper in a vacant lot.

Costing significantly more than traditional low-rise buildings, the construction of a skyscraper tends to only take place when demand is high.

If fully approved, the 16 storey $111 million tower will be open in 2017.

Jeffrey Schostak, director of corporate real estate for the firm, said the new tower is to house offices of Meridian Health Plan, which currently operates out of a number of downtown spaces. The call for such a space comes as Meridian intend to consolidate their workforce into a single centre.

"They're a Detroit-based company, and they're proud of that. They're absolutely committed to being downtown and to be part of the resurgence," Schostak said.