As we gear up for the second half of 2012, we have a lot to look forward to as well take time to reflect on what has transpired so far this year. IT IS TIME FOR A MID-YEAR REVIEW!
January saw new optimism as activity increased as both corporate and locally based tenants started to come out of the woodwork and secure office and industrial space for expansion while many are now securing new space to take advantage of still the depressed real estate rental rates and values. This economic recovery is being called the jobless recovery; in light of that, we are not expecting to see a dramatic increase in rental rates in the near future.
Detroit took center stage as President Obama identified Detroit as a success story in his State of the Union speech and the International Media converged for the 2012 North American International Auto Show. The Big Three continue to show signs of growth and strengthening as General Motors reclaimed the top spot as the largest automobile manufactures from Toyota.
In March, General Motors announced a $7.6 billion profit for 2011, the highest in its 101 year history while Chrysler posted its first profits in 5 years. April and May saw Chrysler Group’s continued expansion office space in Auburn Hills while Panasonic Automotive Systems Company of America announced a consolidation of offices to lease 90,000 square feet in Farmington Hills.
As second quarter 2012 ends, Detroit’s overall Office vacancy rates decreased slightly to 18.7%; Net absorption for the overall Detroit office market was positive 497,336 square feet. This compares to 78,973 square feet in the first quarter 2012, 344,525 square feet in the fourth quarter 2011, and 118,776 square feet in the third quarter 2011. Detroit’s Central Business District is seeing continued signs of absorption Title Source relocate of 1,300 jobs to the First National Building.
As the economy continues to inch along, it will be interesting to see how the upcoming presidential campaign and election effects future growth and investment. In the meantime we will hold our breath and hope for the best.
Matthew B. Fenster, CCIM, MCR