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DETROIT-Friedman Real Estate Group Inc. of Southfield has published its Mid-Year Market Report for the Southeast Michigan area.

For the office market, Friedman analysts say the area had a lackluster performance during the first half of 2003. Direct office market vacancy stands at 18.5% (21.25% with sublease space included) and there was 2.2 million sf of negative absorption, said the company. Rents have not declined much, however, and leasing activity has picked up since May.

Manufacturing slowdowns continue to plague the industrial market, said Friedman. Vacancy stands at about 15%, and average industrial rental rates declined as well. Friedman said tax incentives, such as brownfield redevelopment laws, should help in the future.

By contrast, retail in Southeast Michigan has been going strong, said Friedman. Many retailers, including many national chains, undertook ambitious expansion plans in the first half of 2003.

Finally, building sales for all markets declined in the metropolitan area, according to the report. Demand has exceeded supply, the company said. Low home mortgage rates have hurt the apartment market and demand was high in office. Industrial did well with quality facilities, however, and retail was selling quickly, though some tenants were forced to terminate operations altogether.

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