DETROIT-Third-quarter reports from both Metropolitan Detroit offices of Grubb and Ellis and Colliers International indicate office vacancies are continuing to rise at a steady rate, though some cities are handling it better than others. For example, while Southfield’s vacancy rate of 11.1% is almost twice what it was in fourth quarter 2000, the difference between this year’s second and third quarter has been nil.

Also, Novi’s office market’s vacancy rate remained unchanged since fourth quarter 2000 at 13.6%.

“Stability in vulnerable times shows the strength and diversity of the Southfield and Novi regions,” says Valerie Vindici, Grubb and Ellis researchservices manager.

However, she adds, subleases are on the rise, reaching the 1.4-million-sf markfor the entire Detroit Area market — offsetting any steadiness in vacancy rates.

Southfield is the largest office submarket in Southeastern Michigan, with 16million sf.

Troy, the second largest office market with 12.3 million sf, saw its vacancy rate rise from 6.4% last year to 10.5%. Auburn Hills and Pontiac, both with about 1 million sf each including automotive company space, saw vacancy rates double (from 12% to 24% in Auburn Hills) and quadruple (from 4% to 16% in Pontiac).

Office and industrial brokers reported an immediate slowdown after the Sept. 11 terrorist attacks on the US, followed by increased activity in the last two weeks of the month, according to Colliers.

In metro Detroit’s suburban office markets, inquiries about available space increased approximately one week after Sept. 11, brokers reported. Many were from local entrepreneurial companies seeking to take advantage of falling rental rates. Most users wanted spaces ranging from 5,000 sf to 7,000 sf. Demand for office space in Detroit’s Central Business District remained flat.

The industrial sector saw increased sales, activity and interest in vacant land before and after Sept. 11, Colliers’ research found. Metro Detroit’s warehouse/manufacturing vacancy rate held steady at 10.9% despite 2.7 million sf of negative net absorption so far this year.

The overall vacancy rate in metro Detroit’s research and development/high-techsector also remained essentially unchanged at 19.3% with 517,573 sf of negative net absorption this year.

Industrial sales picked up after more properties became available than in recent years as owners chose to rid their portfolios of under-performing assets, Colliers officials say.

Local users with cash earned during the last economic boom did most of thebuying in third quarter. The average asking price for a suburban industrial building stood at $57.65 per sf, just $0.58 per sf higher than at midyear.

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