Limited construction and increased tax incentives are the two major mitigating factors that will affect Metropolitan Detroit's office and industrial markets in 2003, said Colliers officials. Oversupply was not the problem in this past downturn, which may speed recovery.
Much of the recent activity is due to consolidations and relocations as both office and industrial users re-evaluate space and location requirements and take advantage of reduced rental rates, said Colliers. This has resulted in occupancy shifts within submarkets, not increases in overall occupancy rates, the brokers said.
However, some of the recent tax incentives granted will spur positive market activity over the next year, and may also create a ripple effect as ancillary business react to decisions made by their clients - the recipients of the economic incentives, said Colliers officials.
The company reported that Metro Detroit's office market ended 2002 with over 1.8 million sf of negative absorption-nearly the same amount as in 2001. Class B space represents approximately 67% of the total absorption figure, with the North suburban markets experiencing most of the loss. The overall vacancy rate increased three points to 16.9%, and the overall asking rate has decreased nearly $3 per sf over the past year.
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