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DETROIT-According to a report released Monday by Grubb & Ellis Co. the leasing activity in the Metro Detroit market is barely registering on the radar screen. The trickle of deals is due, in large part to the pending automotive company restructurings and the high unemployment rate.

Overall vacancy rose 40-basis points to 24.3% during Q2. Nearly 328,300 square feet of vacant space came to market this past quarter, and while this is almost 200,000 less space coming to market than Q1 there aren’t transactions being completed to fill the space.

“While Chrysler and GM’s fast-track bankruptcies have given Metro Detroit companies a better understanding of what the future holds, lease rates are still in decline, incentives are increasing and lease durations are shorter, all of which are factors working against landlords,” says Fred Liesveld, EVP and managing director of Grubb & Ellis’ Southfield, MI office.

Detroit’s central business district took a heavy hit, rising 70 basis points to 31.4% vacant. Grubb & Ellis brokers, and the community as a whole, are watching carefully Quicken Loans, which is said to be considering a relocation. The company is thought to be eyeing the one-million-square-foot Compuware Building downtown, with plans to more there from the suburbs. And while that deal would significantly help the downtown Grubb & Ellis executives say it will leave “significant holes in the suburban office submarkets.”

Not surprisingly, the class A space saw the largest increase in vacancy, hitting 19.5 percent. Class B space rose from 27.2% vacant in Q1 to 27.4% at the end of June. And class C space increased from 25.4% to 26.7%.

Looking ahead, Liesveld says, “Activity will likely stay low until unemployment levels stabilize and companies regain confidence.” The stabilization of both these factors is not expected in 2009.

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