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DETROIT-Although the economy continues soft in Southeast Michigan–with the recent announcement of layoffs from General Motors likely not helping the area to any great extent–the news for office real estate in the area isn’t necessarily all bad.

According to the Q3 MarketScope report, issued by Trammell Crow Co.’s Detroit office, some areas are fairly strong, such as Automation Alley, the area’s technology cluster, and the 12 Mile Corridor, extending into Farmington Hills.

Additionally, vacancy rates and rental rates are remaining steady, with the YTD vacancy average at 15.6% and rents averaging approximately $21.16 per sf. The highest vacancy rates were in Southfield, at 19.5% and the lowest in the CBD, at 14.2%. In regard to rental rates, Oakland and Macomb counties showed a slight less than average rental rate.

Demand, in the meantime, has taken somewhat of a downturn, with total net absorption rates in the quarter at a negative 77,000 sf. Not all areas were in the red, however–Washtenaw County had an absorption of 56,000 sf, while Macomb County was at 51,000 sf.

Interestingly enough, despite the sluggish showing, construction and inventory are on the increase. Twenty-six buildings are currently under construction, boasting more than 1.5 million sf. The report noted that little change in figures is anticipated during the final quarter of 2005, though concessions such as free rent and shorter lease terms could encourage growth.

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