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DETROIT
MARKETNAME
REPORT
NAI MEMBER
Office
| Third| Quarter
2007 2007
Office Report
First Quarter
DETROIT
TRENDS:
Vacancy Rate
Net Absorption
Construction
Asking Rents
Overall Vacancy (%)
OVERVIEW:
Overall Vacancy (%)
20%
Detroit submarket surpassed Suburban markets by over 500,000
square feet in the 3rd quarter. Multiple tenants left the historically
favorable suburb areas to move downtown, showing a significant
change in trends. 19%
18%
17%
16%
The strong activity in the Detroit submarket included large
transactions by Walbridge Aldinger, Health Plan of Michigan and
Marketing Associates, totaling nearly 150,000 square feet. Still an
issue for all of Metro Detroit, however, is locating tenants who are
new to the market.
15%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
Source: The CoStar Office Report- 3rd Quarter 2007
Average Asking Rental Rate
The Farmington Hills / West Bloomfield submarket showed some
positive absorption of about 65,000 square feet. The separation of
Chrysler from Daimler required Mercedes-Benz Financial to move
from Chrysler Financial’s headquarters in Farmington Hills to a nearby
former multi-tenant facility. This 153,000 square foot transaction,
combined with somewhat stable activity in the rest of the submarket,
made Farmington Hills / West Bloomfield the strongest performing
Suburban market this quarter.
The Southfield and Troy submarkets equally struggled in the 3rd
quarter. Southfield with nearly 110,000 square feet of vacant space
reentering the market, pushed vacancy over 30%. After a strong
2nd quarter, the Troy submarket saw nearly 260,000 square feet of
negative net absorption in the 3rd quarter. Vacancy rates in Troy rose
over 1% .
Average Asking Rental Rate / SF
$25
$20
$15
$10
$5
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
Net Absorption (SF)
Class C
7%
Class A
66%
Class B
27%
Major Lease Transactions
Tenant:
Building:
Daimler Mercedes-Benz Financial Services
Farmington Hills Office Center
Henry Ford Health Systems
Columbus Corporate Office Centre
Marketing R Us, Inc
Size (SF):
153,500 SF
Oakland County
129,999 SF
Oakland County
Bingham Office Center
40,725 SF
Oakland County
Hamilton Anderson Assoc., Inc
First National Building
32,000 SF
Wayne County
Vertical Lend
Troy Office Centre - Bldg A
30,557 SF
Oakland County
Source: The CoStar Office Report- 2nd Quarter 2007
Submarket:
*All rents are per SF/per YR unless otherwise noted.
NAI Farbman | 28400 Northwestern Hwy, 4th Floor | Southfield, MI 48034 | 248.353.0500 | www.naifarbman.com
DETROIT MARKET
County / Market Statistics / Market Map
Oakland County
•
•
•
•
•
Oakland County consists of 910 square miles and is located 20
miles north of downtown.
Significant entertainment and sports venues include DTE and
Meadowbrook outdoor theaters, the Palace of Auburn Hills -- home to
the Detroit Pistons, Cranbrook Institutions and the Detroit Zoological
Park.
Oakland County also ranks as the fourth wealthiest county in the
nation among counties with populations of more than one million
people.
Forty-seven percent of Fortune 500 companies have a business
located in Oakland County. Lear Corporation, Kelly Services, Delphi
Automotive, Federal-Mogul, Pulte Homes, United Auto Group, Collins
& Aikman, Arvin Meritor all have headquarters here. Daimler
Chrysler North America AG is also headquartered here.
General Motors Corporation ranks as the fifth highest revenue
generating company in the world and third in the country and is the
largest employer in Oakland County.
Oakland
Macomb
Southfield
Wayne
Detroit
Your City Submarkets:
Suburbs
City / Downtown
* Source: Fortune Magazine, Crain’s Detroit Business: 2006 Book of Lists, Detroit Free Press.
com, www.oakgov.com
HIGHLAND PARK
C
LA
WYOMING ST
MILLER RD
VD
BL
County
ST
W. WARREN AVE
IVM
AN
•
1
TIREMAN ST
153
DIL
•
•
VD
BL
Detroit
W
JOY RD
VD
BL
ND
•
ND
A
GR
A
GR
•
Wayne County consists of 623 square miles and features a vibrant
downtown and New Center Area.
Home to three major airports and one of the nation’s busiest marine
ports.
Home to the largest boat Marina in the country (Bell Isle’s Detroit
Yacht Club)
Access to Windsor, Canada by bridge or tunnel
Home to two of the world’s largest corporations, General Motors
Corporation and Ford Motor Company.
Entertainment venues include Casino gambling, Cobo Hall, and Joe
Louis Arena
96
W CHICAGO ST
JE
PLYMOUTH RD.
ST
39
E
AV
CA
N
RE
AR
EW
Y
FW
•
10
E.
SOUTHFIELD FWY
SCHOOLCRAFT ST
75
COOLIDGE HWY
5
GE
Wayne County
ST
53
FENKEL ST
LOD
* Source: www.macombcountymi.gov
W 6 MILE
ER
NN
•
W OUTER DR.
CO
•
N
97
T
TS
•
Macomb County consists of 482 square miles and is located 20
miles north of downtown.
Three of the largest communities in Michigan are located in Macomb
County: Warren, Sterling Heights, and Clinton Twp.
Manufacturing is one of Macomb County’s leading industries,
employing roughly one third of the workforce.
Features 94 industrial parks, 8 community hospitals, Macomb
Community College and University Center.
N
NA
•
CO
Macomb County
12
Population
Median Income
Oakland
1,219,426
$64,293
Macomb
845,143
$52,784
1,946,237
$38,743
Wayne
Source: SEMCOG April 2007
* Source: www.waynecounty.com
DETROIT MARKET
Office Report | Third Quarter 2007
Detroit
Office Market
FIGURES AT A GLANCE
Class A Market Statistics
Third Quarter 2007
Existing Inventory
Market
# Bldgs
Total RBA
Vacancy
Direct SF
Total SF
Vac %
YTD Net
YTD
Under
Quoted
Absorption
Deliveries
Const SF
Rates
Bloomfield
28
3,016,947
339,675
367,932
12.2%
506,460
183,884
61,303
$26.03
Detroit/The Pointes
31
11,661,323
1,759,760
1,898,187
16.3%
(230,411)
0
0
$24.52
1
43,230
0
0
0.0%
0
0
0
$0.00
Livingston/W Oakland
15
1,134,353
219,358
245,014
21.6%
177,853
56,500
203,426
$25.66
Macomb
13
588,199
265,246
265,246
45.1%
(33,692)
100,000
0
$26.88
North Oakland
15
6,360,466
285,743
535,743
8.4%
(86,252)
25,047
332,000
$22.65
Royal Oak
1
25,017
18,099
18,099
72.3%
(18,099)
0
200,000
$26.34
Southfield
31
7,330,549
1,599,697
1,694,758
23.1%
(134,318)
0
0
$22.39
Troy
32
6,334,077
1,240,878
1,284,795
20.3%
(114,800)
0
26,144
$22.95
Washtenaw
33
3,755,750
506,422
531,916
14.2%
98,320
127,360
73,000
$25.55
34,315
$22.49
930,188
$23.89
Downriver
West Wayne
Totals
28
5,538,584
228
45,788,495
492,053
6,726,931
494,900
7,336,590
8.9%
16.0%
33,340
0
198,401
492,791
YTD Net
YTD
Under
Source: CoStar Property®
Class B Market Statistics
Third Quarter 2007
Existing Inventory
Market
# Bldgs
Total RBA
Vacancy
Quoted
Direct SF
Total SF
Vac %
Absorption
Deliveries
Const SF
Rates
Bloomfield
323
10,629,648
1,421,763
1,473,289
13.9%
(70,739)
0
0
$21.78
Detroit/The Pointes
238
19,664,032
3,657,940
3,669,813
18.7%
590,991
0
0
$17.24
79
1,431,908
295,470
297,720
20.8%
28,595
21,832
0
$20.14
215
3,764,178
775,131
871,297
23.1%
29,801
102,438
386,983
$21.65
Macomb
421
8,441,578
1,182,221
1,217,306
14.4%
182,364
170,979
26,685
$19.47
North Oakland
217
7,250,272
1,345,614
1,349,762
18.6%
2,745
10,100
102,000
$19.73
Royal Oak
143
2,152,065
419,732
422,995
19.7%
26,240
0
0
$18.57
Southfield
179
12,084,683
2,360,748
2,514,874
20.8%
(381,257)
0
0
$18.55
Troy
170
9,772,114
2,870,758
3,090,940
31.6%
(125,418)
0
8,283
$19.78
Washtenaw
264
5,855,041
917,555
921,555
15.7%
204,111
8,854
129,660
$20.47
West Wayne
350
9,837,777
1,626,947
1,664,010
16.9%
(221,027)
0
0
$18.69
19.2%
266,406
Downriver
Totals
2,599
90,883,296
16,873,879
17,493,561
314,203
653,611
$19.26
Some of the data in this report has been gathered from third party sources and has not been independently verified by NAI Farbman. NAI Farbman makes no warranties or
representations as to the completeness or accuracy thereof.
DETROIT MARKET
Detroit
Office Market
FIGURES AT A GLANCE
Class C Market Statistics
Third Quarter 2007
Existing Inventory
Market
# Bldgs
Total RBA
Vacancy
YTD Net
YTD
Under
Quoted
Direct SF
Total SF
Vac %
Absorption
Deliveries
Const SF
Rates
Bloomfield
224
2,300,289
225,595
225,595
9.8%
(12,771)
0
0
$21.63
Detroit/The Pointes
297
5,427,003
924,678
926,678
17.1%
67,406
0
0
$15.65
Downriver
117
787,435
140,394
140,394
17.8%
(53,818)
0
0
$16.58
152
1,137,207
128,512
128,512
11.3%
38,690
9,594
34,920
$20.04
Macomb
440
3,801,548
477,195
485,795
12.8%
(52,040)
0
6,670
$17.11
North Oakland
232
3,011,657
428,457
435,670
14.5%
116,381
0
0
$14.66
Royal Oak
205
1,843,945
134,411
139,698
7.6%
24,585
0
0
$16.70
Southfield
218
4,221,358
454,895
483,507
11.5%
(35,908)
0
0
$15.27
90
1,214,085
173,097
178,076
14.7%
(71,614)
0
0
$17.37
181
1,729,156
218,780
219,180
12.7%
(4,313)
34,371
9,191
$19.18
0
$17.39
Troy
Washtenaw
West Wayne
Totals
461
2,617
5,360,526
30,834,209
429,568
3,735,582
436,423
3,799,528
8.1%
12.3%
(42,939)
(26,341)
0
43,965
50,781
$16.79
Total Office Market Statistics
Third Quarter 2007
Existing Inventory
Market
# Bldgs
Total RBA
Vacancy
Direct SF
Total SF
Vac %
YTD Net
YTD
Under
Absorption
Deliveries
Const SF
Quoted
Rates
Bloomfield
575
15,946,884
1,987,033
2,066,816
13.0%
422,950
183,884
61,303
$23.02
Detroit/The Pointes
566
36,752,358
6,342,378
6,494,678
17.7%
427,986
0
0
$19.26
Downriver
197
2,262,573
435,864
438,114
19.4%
(25,223)
21,832
0
$19.55
382
6,035,738
1,123,001
1,244,823
20.6%
246,344
168,532
625,329
$22.55
Macomb
874
12,831,325
1,924,662
1,968,347
15.3%
96,632
270,979
33,355
$19.69
North Oakland
464
16,622,395
2,059,814
2,321,175
14.0%
32,874
35,147
434,000
$19.41
Royal Oak
349
4,021,027
572,242
580,792
14.4%
32,726
0
200,000
$18.27
Southfield
428
23,636,590
4,415,340
4,693,139
19.9%
(551,483)
0
0
$19.40
Troy
292
17,320,276
4,284,733
4,553,811
26.3%
(311,832)
0
34,427
$20.81
Washtenaw
478
11,339,947
1,642,757
1,672,651
14.8%
298,118
170,585
211,851
$22.25
West Wayne
839
20,736,887
2,548,568
2,595,333
12.5%
(230,626)
0
34,315
$19.15
17.1%
438,466
Totals
5,444
167,506,000
27,336,392
28,629,679
850,959
1,634,580
$20.23
Some of the data in this report has been gathered from third party sources and has not been independently verified by NAI Farbman. NAI Farbman makes no warranties or
representations as to the completeness or accuracy thereof.
DETROIT MARKET
Office Report | Second
First Quarter
Third
Quarter
Quarter
2007
2007
2007
Detroit
Office Market
SALES ACTIVITY
The Optimist Sales Index
Average of Two Highest Price/SF's and Two Lowest Cap Rates Per
Cap Rate
12.0%
Quarter
Price/SF
$350
$300
$250
8.0%
$200
6.0%
$150
4.0%
Do lla rs/S F
Ca p Ra te Pe rc ent age
10.0%
$100
2.0%
$50
0.0%
$0
2004 3q
2004 4q
2005 1q
2005 2q
2005 3q
2005 4q
2006 1q
2006 2q
2006 3q
2006 4q
2007 1q
2007 2q
Source: CoStar COMPS®
Sales Volume & Price
Sales Analysis by Building Size
Based on Office Building Sales of 15,000 SF and Larger
Based on Office Building Sales From July 2006 - June 2007
Sales Volume
Bldg Size
Price/SF
$200
$180
$140
$160
RBA
$ Volume
Price/SF
$140
< 50,000 SF
98
1,183,383
$
144,909,788
$ 122.45
8.40%
50K-249K SF
13
1,313,192
$
140,942,289
$ 107.33
7.94%
250K-499K SF
3
1,178,404
$
67,000,000
$
56.86
7.00%
>500K SF
1
598,000
$
30,000,000
$
50.17
$100
$120
$100
$80
$80
$60
$60
$40
$40
$20
$20
$0
$0
2002
3q
2003
1q
2003
3q
2004
1q
2004
3q
2005
1q
2005
3q
2006
1q
2006
3q
2007
1q
-
U.S. Price/SF Comparison
U.S. Cap Rate Comparison
Detroit
$320
US
Detroit
13.5%
US
12.5%
Ca p Ra te Pe rc ent age
$270
Do lla rs pe r SF
Cap Rate
$120
Pr ice/ SF
Millions of Sales Volume Dollars
#
$160
$220
$170
$120
$70
11.5%
10.5%
9.5%
8.5%
7.5%
6.5%
5.5%
$20
4.5%
2002
3q
2003
1q
2003
3q
2004
1q
2004
3q
2005
1q
2005
3q
2006
1q
2006
3q
2007
1q
2002
3q
2003
1q
2003
3q
2004
1q
2004
3q
2005
1q
2005
3q
2006
1q
2006
3q
2007
1q
DETROIT MARKET
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