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For a visual look at the region, check out our Regional Snapshot , an infographic with some of the region’s most important statistics.

According to the Council for Community and Economic Research (C2ER), the Detroit region’s cost of living at 96.4 is 3.6 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.

Demand for housing in the city of Detroit has created a flurry of renovations and new residential construction. In all there are more than 1,000 new units under construction in the city of Detroit and should be delivered to the market in early 2017. 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 2015.

 

Cost of Living Index for Select Metro Areas, 2015 Annual Average

Metro AreaIndex
Memphis, TN84.5
Columbus, OH90.5
St. Louis, MO92.5
Buffalo, NY95.3
Detroit, MI95.3
Dallas, TX96.1
Pittsburgh, PA98.6
Atlanta, GA99.9
Cleveland, OH101.2
Minneapolis, MN108.2
Denver, CO109.6
Baltimore, MD112.8
Chicago, IL116.2
Philadelphia, PA119.5
Seattle, WA140.3
Washington-Arlington-Alexandria, DC-VA140.3
Boston, MA144.3
San Francisco, CA176.4
Manhattan, NY227.4
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 $4.90 per square foot per year at the end of the third quarter 2015 in the Detroit market area. This represented a 1.4% decrease in quoted rental rates from the second quarter of 2015, when rents were reported at $4.97 per square foot.

The average quoted rate within the Flex sector was $7.85 per square foot at the end of the third quarter 2015, while Warehouse rates stood at $4.48. At the end of the second quarter 2015, Flex rates were $7.99 per square foot, and Warehouse rates were $4.51.

Vacancy Rates. Vacancy rates in the Detroit region continue their trend downward. For the first time in several years, vacancy rates equaled the national average in 2015. Industrial vacancy rates stood at 6.2% for the third quarter 2015 down from a high  of 13.6% in 2010.

Warehouse projects reported increased vacant sublease space from the second quarter 2015 to the third quarter 2015. Sublease vacancy went from 137,733 square feet to 160,641 square feet during that time.

Flex projects reported a vacancy rate of 10.2% at the end of the third quarter 2015,  down from 12.2% at the end of the fourth quarter 2014.

Warehouse projects reported a vacancy rate of 5.7% at the end of the third quarter 2015, down 1.0% from 6.7% vacancy reported in the fourth quarter of 2014.

Source: CoStar Detroit Industrial Market Report Q4 2015

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. While the Detroit region’s office vacancy rates are declining at a faster rate than the national average they continue to remain above the national average for 2015. The office vacancy rate in the Detroit market area decreased to 14.3% at the end of the third quarter 2015, down from 16.5% at the end of the first quarter 2014. Class-A projects reported a vacancy rate of 13.8% at the end of the third quarter 2015, down from 14.6% at the end of the fourth 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 third quarter 2015 dropped dramatically to 14.2 from 15.7% in 2014. Bedrock Real Estate has recently invested more than $2.2 billion in downtown Detroit,  across more than 85 properties and drawing more than 150 new tenants.

Source: CoStar Detroit Office Market Report Q4 2015

Regional Detroit Industrial Real Estate, Q3 2015

ClassExisting Inventory
(million sf)
Net Absorption
(million sf)
Vacancy Rate
(%)
Lease Rate
(usd psf)
Detroit556.06.786.2$4.90
Airport/I-275 Ind124.12.515.3$4.51
Detroit Area Ind83.00.514.3$3.53
Downriver Ind37.60.68.6$4.07
East Area Ind121.21.022.7$4.70
I-96 Corridor Ind55.50.334.7$6.68
Oakland County NW Ind52.20.396.1$5.60
Royal Oak/Southfield Ind19.60.276.4$6.54
Troy Area Ind31.00.173.1$6.17
Washtenaw Ind31.80.974.3$7.39
Source: CoStar Detroit Industrial Market Report

National Industrial Real Estate, Q3 2015

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, Q3 2015

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, Q3 2015

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, Q3 2015

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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    • Ladetto
    • Director, Business Research
    • aladetto@detroitchamber.com
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    • clucas@detroitchamber.com
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Contact
    • Angela
    • Ladetto
    • Director, Business Research
    • aladetto@detroitchamber.com
    • Christyn
    • Lucas
    • Business Research Analyst
    • clucas@detroitchamber.com
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