Downtown Detroit is in the midst of a renaissance, bolstered by a recent series of high-profile lease announcements, the latest of which was by Fifth Third Bank.
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JLL Detroit Office Insight
1. Office employment sectors waver in 2014
According to the most recent estimates from the BLS, total non-farm
employment in Detroit stood at ~1.9 million payrolls, representing an annualized
increase of 12,500 jobs or 66 basis points. Meanwhile, unemployment decreased
1.2 percentage points year-over-year to 7.0 percent. Office-using employment
sectors in Detroit have contracted in recent months, recording an annualized net
loss of 3,900 jobs across the metro. Professional and business services was the
only sector to record gains, adding an annualized 2,300 jobs, however these
gains were largely overshadowed by declines in the financial services sector,
where employment decreased by 3,900 jobs year-over-year.
Office employment trends (12-month change)
Source: JLL Research
Fifth Third announcement the latest in high profile leases downtown
Downtown Detroit is in the midst of a renaissance, bolstered by a recent series of
high-profile lease announcements, the latest of which was by Fifth Third Bank.
Fifth Third announced that it will lease 62,000 square feet in the One Woodward
building to serve as its regional headquarters. As part of the lease agreement,
the One Woodward building will be renamed Fifth Third Bank at One Woodward.
The move will take place over two years and will involve the relocation of over
150 full-time employees. Fifth Third will keep about 20,000 square feet and up to
40 employees in Southfield, where it currently leases 105,000 square feet.
Office vacancies
Source: JLL Research
Capital markets hot streak continues through the fourth quarter
In the fourth quarter Bedrock Real Estate Services and Meridian Health
announced a purchase agreement for the 1.1 million-square-foot Compuware
headquarters building and an attached parking deck in a deal reported at $142
million. Meridian, a managed care company, plans to consolidate employees
from two downtown locations into the building starting early in 2015. The sale is
expected to close before the end of the year and will be the largest single-
building office deal in Southeast Michigan in 2014 and second largest in terms of
cost, second only to the $177.5 million sale of the Southfield Town Center
Office sales volume ($ millions)
Source: JLL Research
25.1%
Total vacancy
987,157
YTD net absorption (s.f.)
71,999
Q4 2014 net absorption (s.f.)
1.2%
12-month rent growth
85,000
Total under construction (s.f.)
76%
Total preleased
Office Insight
Detroit | Q4 2014
CBD fundamentals firming, suburbs to follow?
28.9% 24.1%
22.2%
19.3%
17.5%
28.2% 28.7% 29.3% 28.2% 27.1%
15%
20%
25%
30%
35%
2010 2011 2012 2013 YTD 2014
CBD Suburban
$215.4
$147.1
$384.1
$466.9
$560.7
$100.0 $200.0 $300.0 $400.0 $500.0 $600.0
2010
2011
2012
2013
2014
(30.0)
(10.0)
10.0
30.0
2010 2011 2012 2013 2014
Financial Activities Professional & Business Services Information Government