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DETROIT-Friedman Real Estate’s midyear market report for the Detroit metropolitan area details the same doom-and-gloom about the economy and the drop-off in leasing as did previous studies. However, the Farmington Hills company does include in the report many deals that are indicative of continued interest in office properties. It also claims that local developers and owners are smart enough to keep overbuilding at bay.

David Greene, vice president of brokerage services at the company, says many of Detroit’s statistics in the first half are respectable. “Many of this market survey’s findings, including good occupancy rates, healthy rents and more than 2.1 million sf leased, clearly reflect the vitality and strength of this market,” he states.

The study points out recent, noteworthy transactions such as:

• Seven Mile Crossing in Livonia, at 335,986 sf, sold by Prentiss Properties to Kojaian Properties for $40 million;

• The Cigna Portfolio in Novi, at 345,903 sf, sold by Transwestern CGII to JFK Investments for $41.5 million;

• 2125 Butterfield Dr. in Troy, at 112,215 sf, sold by Sun Life Assurance to EAS Investments #6 for $14.25 million; and

• 301 E. Liberty in Ann Arbor, a three-building package, sold by JFK Investments to Larson Realty Group for $18.7 million.

Other statistics, such as total leases and Detroit’s 85.88% occupancy rate are also respectable, Greene reports. “The leasing market remains active, tallying 2.1 million sf in consummated leases during the first half,” he says, adding that there is little concern about overbuilding.

This runs counter to other Detroit office brokers such as Paragon Corporate Realty Services or Joel Feldman, president at First Realty Co. (formerly of Friedman). “Because the majority of this area’s developers are local individuals, they can immediately analyze current market conditions and react accordingly,” states Greene. “With the ability to put projects on hold, the supply of new office product will not outpace demand.”

However, he does agree that office sublet space has increased up to 40% in some areas of Metro Detroit. There is currently 1.8 million feet of sublets available, representing about 22% of all office space presently available, Greene says.

However, even with the increased sublet space, most markets show solid positive absorption. “We believe that the Detroit office market will continue in cautious optimism, as continued growth and expansion in more traditional industries buffer the obvious slowdowns,” he concludes.

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