Costs

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According to the Council for Community and Economic Research (C2ER), the Detroit region’s cost of living at 95.1 is 4.9 percent below the national average. Compared with other major metropolitan areas throughout the United States, the Detroit region is a very affordable place to live.

Since the late 1990s, a renaissance of new housing has started in the Detroit region. From lofts in the Cultural Center, to townhouses near Comerica Park, to single-family residences in the suburbs, the Detroit region offers a variety of high demand housing at affordable prices.

The Detroit region is also a very affordable place to do business. Whether your company requires industrial or office space, metro Detroit offers rental rates that are lower than some of the country’s most popular metropolitan areas and vacancy rates that decreased steadily throughout 2014.

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Cost of Living Index

Industrial and Office Real Estate

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Cost Of Living Index For Select Metro Areas, 2014 Annual Average

Metro AreaIndex
Memphis, TN85.6
Columbus, OH90.2
St. Louis, MO93.7
Detroit, MI95.1
Dallas, TX95.8
Pittsburgh, PA96.4
Buffalo, NY98.2
Atlanta, GA99.6
Cleveland, OH100.9
Denver, CO107.5
Minneapolis, MN107.9
Baltimore, MD109.5
Chicago, IL116.7
Philadelphia, PA119.5
Seattle, WA126.9
Boston, MA137.6
Washington-Arlington-Alexandria, DC-VA141.6
San Francisco, CA167.5
Manhattan, NY222.6
Source: C2ER

Industrial and Office Real Estate

The Detroit region offers more than 196 million square feet of existing office inventory and 549 million square feet of industrial space.

Market Trends, Industrial

Rental Rates. The average quoted asking rental rate for available Industrial space was $4.79 per square foot per year at the end of the fourth quarter 2014 in the Detroit market area. This represented a 1.7% increase in quoted rental rates from the end of the third quarter 2014, when rents were reported at $4.71 per square foot.

The average quoted rate within the Flex sector was $8.03 per square foot at the end of the fourth quarter 2014, while Warehouse rates stood at $4.38. At the end of the third quarter 2014, Flex rates were $7.91 per square foot, and Warehouse rates were $4.31.

Vacancy Rates. The Industrial vacancy rate in the Detroit market area decreased to 7.2% at the end of the fourth quarter 2014. The vacancy rate was 7.6% at the end of the third quarter 2014, 8.5% at the end of the second quarter 2014, and 8.8% at the end of the first quarter 2014.

Flex projects reported a vacancy rate of 10.5% at the end of the fourth quarter 2014, 11.5% at the end of the third quarter 2014, 11.7% at the end of the second quarter 2014, and 11.5% at the end of the first quarter 2014. Warehouse projects reported a vacancy rate of 6.9% at the end of the fourth quarter 2014, 7.2% at the end of third quarter 2014, 8.2% at the end of the second quarter 2014, and 8.5% at the end of the first quarter 2014.

Source: CoStar Detroit Industrial Market Report Q4 2014

Market Trends, Office

Rental Rates. The average quoted asking rental rate for available office space, all classes, was $17.80 per square foot per year at the end of the fourth quarter 2014 in the Detroit market area. This represented a 0.4% increase in quoted rental rates from the end of the third quarter 2014, when rents were reported at $17.73 per square foot.

The average quoted rate within the Class-A sector was $20.51 at the end of the fourth quarter 2014, while Class-B rates stood at $17.45, and Class-C rates at $15.08. At the end of the third quarter 2014, Class-A rates were $20.73 per square foot, Class-B rates were $17.48, and Class-C rates were $14.67.

The average quoted asking rental rate in Detroit’s CBD was $20.44 at the end of the fourth quarter 2014, and $17.55 in the suburban markets. In the third quarter 2014, quoted rates were $18.92 in the CBD and $17.60 in the suburbs.

Vacancy Rates. The office vacancy rate in the Detroit market area decreased to 16.1% at the end of the fourth quarter 2014. The vacancy rate was 16.3% at the end of the third quarter 2014, 16.6% at the end of the second quarter 2014, and 16.5% at the end of the first quarter 2014. Class-A projects reported a vacancy rate of 14.3% at the end of the fourth quarter 2014, 14.2% at the end of the third quarter 2014, 14.9% at the end of the second quarter 2014, and 14.8% at the end of the first quarter 2014.

Class-B projects reported a vacancy rate of 18.6% at the end of the fourth quarter 2014, 18.8% at the end of the third quarter 2014, 19.0% at the end of the second quarter 2014, and 18.8% at the end of the first quarter 2014.

Class-C projects reported a vacancy rate of 12.3% at the end of the fourth quarter 2014, 12.7% at the end of third quarter 2014, 12.9% at the end of the first and second quarter 2014.

The overall vacancy rate in Detroit’s central business district at the end of the fourth quarter 2014 decreased to 15.7%. The vacancy rate was 15.9% at the end of the third quarter 2014, 16.1% at the end of the first and second quarter 2014. The vacancy rate in the suburban markets decreased to 16.1% in the fourth quarter 2014. The vacancy rate was 16.4% at the end of the third quarter 2014, 16.7% at the end of the second quarter 2014, and 16.5% at the end of the first quarter 2014.

Source: CoStar Detroit Office Market Report Q4 2014

Regional Detroit Industrial Real Estate, Q4 2014

ClassExisting Inventory
(million sf)
Net Absorption
(million sf)
Vacancy Rate
(%)
Lease Rate
(usd psf)
Detroit549.235.547.2$4.79
Airport/I-275 Ind123.421.447.2$4.34
Detroit Area Ind83.50 .6614.8$3.56
Downriver Ind37.41(.31) 11.0$3.76
East Area Ind116.16.88 3.1$4.67
I-96 Corridor Ind54.991.154.9$6.52
Oakland County NW Ind51.421.205.2$5.57
Royal Oak/Southfield Ind19.72 .13 7.9$6.22
Troy Area Ind30.78.523.9$5.78
Washtenaw Ind31.83 (.13) 7.5$6.20
Source: CoStar Detroit Industrial Market Report

National Industrial Real Estate, Q4 2014

MarketExisting Inventory
(million sf)
Net Absorption
(million sf)
Vacancy Rate
(%)
Detroit549.235.55 7.2
Chicago1.15 B 9.807.9
Cleveland479.942.876.4
Columbus254.93 4.016.6
Dallas802.0112.707.3
Indianapolis312.511.858.1
Memphis241.592.0112.0
Milwaukee315.022.736.0
Minneapolis372.78 1.806.2
Pittsburgh174.49.667.5
United States21.15 B264.867.2
Source: CoStar National Industrial Market Report

National Industrial Real Estate, Lease Rates, Q4 2014

MarketLease Rate
(usd psf)
Warehouse Space
(usd psf)
Tech/R&D Space
(usd psf)
Detroit$4.79 $4.38 $8.03
Chicago$5.31 $4.97 $10.57
Cleveland$3.73 $3.41 $9.01
Columbus$3.31 $3.13 $7.73
Dallas$5.34 $4.21 $9.25
Indianapolis$3.96 $3.68 $8.58
Memphis$2.77 $2.55 $6.93
Milwaukee$4.24 $4.02 $7.10
Minneapolis$6.09 $5.56 $8.32
Pittsburgh$5.46 $4.69 $12.26
United States$5.50 $4.80 $11.05
Source: CoStar National Industrial Market Report

Regional Detroit Office Real Estate, Q4 2014

MarketExisting Inventory
(million sf)
Net Absorption
(million sf)
Vacancy Rate
(%)
Lease Rate
(usd psf)
Detroit CBD26.16 .3115.7$20.44
Detroit Suburban170.121.3816.1$17.55
Ann Arbor/Washtenaw14.98.206.9$19.60
Source: CoStar Detroit Office Market Report

National Office Real Estate, Q4 2014

MarketExisting Inventory
(million sf)
Net Absorption
(million sf)
Vacancy Rate
(%)
Lease Rate
(usd psf)
Detroit196.281.6816.1$17.80
Detroit CBD26.16.3115.7$20.44
Detroit Suburban170.121.3816.1$17.55
Chicago459.412.7213.7$23.18
Cleveland144.24.7211.9$16.73
Columbus96.31.558.9$16.47
Dallas340.896.1914.3$21.62
Indianapolis99.14.39 8.6$16.80
Memphis50.01.2811.9$16.64
Milwaukee78.18.29 10.3$15.35
Minneapolis187.541.679.1$18.56
Pittsburgh124.341.198.1$20.61
United States10.47 B104.3710.9$22.65
US CBD2.43 B19.8710.2$29.03
US Suburban8.04 B84.5011.2$21.22
Source: CoStar National Office Market Report

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