Troy's Strong Office Market Suffering With Rest

"Like everybody else, we had a bad year," said Doug Smith, director of realestate for the city. "We went from 4-5% to more than 18%vacant in about two years."

The city has more than 17 million sf of office space, with morethan 3 million vacant and another 4% being sub-leased, Smith said.Of course, other cities in the area are also suffering. The Detroit CentralBusiness District office market is registering 30% vacant, and thePontiac market has more than 35% vacant.

"Given the slowdown of the economy, the vacancies are not surprising," Smithtold GlobeSt.com.However, he said half of the disuse comes from two buildings that may havebeen bought and built at just the wrong time."Kojaian Cos. bought the Bank One building and put a lot of investment moneyinto it, but it was just put back on the market at the wrong time. They areslowly filling the building," Smith said. "They also demolished the TroyHilton on Stephenson and built a beautiful new office complex."

While those two buildings are struggling to find new leases, Smith said thefacilities are going to be very competitive over the long term when themarket rebounds.That bounce may take another year, he said."Even if the economy gets strong, there are a lot of capital expenditures bybusinesses. There's still a lag in both employment and in terms of vacancyrates. Assuming a strong return in the second half of 2003, it should stillbe a while before we see substantial movement."

Another problem of the Troy market is the exodus of Electronic Data Systems,a General Motors Corp. supplier that's moving employees from offices allaround the city into one of the Renaissance Center towers in DowntownDetroit.