Farmington Hills, Michigan (March 13, 2014) – Friedman Integrated Real Estate Solutions, one of the nation’s leading providers of commercial real estate services, is pleased to announce that according to a recent report by the National Association of Realtors, the commercial real estate outlook across the U.S. is positive, but improvements are gradual.
Here in Metro Detroit, the future is more optimistic. Ironic, since Michigan started feeling the effects of the recession before the rest of the country and was one of the states hardest hit. Its recovery is ahead of the curve as well since Michigan’s economy has grown at a faster pace than the national economy and economists predict that this trend will continue for at least the next 12 to 18 months.
Signs of economic recovery are evident throughout the state, but one area in particular that is back on track is Metro Detroit’s office submarket. It has seen a flurry of activity and has finally returned to pre-recessionary levels. Total investment office sales were up an astonishing $300 million at the close of 2013, significantly higher than anything seen since 2007.
With the decline of the auto industry and the Great Recession, suburban office markets in Detroit took a big hit. Dramatically affected by the economic downturn, vacancy rates in the office submarkets began to increase, reaching an astonishing 20.3%.
Troy was one submarket that suffered greatly. When major automotive and mortgage companies vacated good buildings, much of Troy’s commercial real estate eventually fell into the hands of banks/servicers. North Troy Corporate Park, made up of eight office buildings surrounding the I-75/Crooks Road corridor, illustrates the challenges that faced the submarket. In the late 1990’s and into the mid-2000’s, these buildings provided a central location for EDS to support its major client, General Motors. In late 2007, EDS vacated 500,000 square feet in the office park, resulting in a drop in occupancy of almost 50%. At the same time, the overall Troy market vacancy was increasing substantially under the weight of the U.S. automotive crisis. Ultimately, the properties were returned to the Lender in 2011.
Today, with the returned health of the auto industry and overall economic stabilization, there has been an increase in building sales in Metro Detroit’s office submarket. Building purchases by large users have greatly influenced the rise in sales. David Friedman, President and CEO, attributes the recent buying spree to several factors. “Buyers are taking advantage of the availability of high-end office buildings in prime locations with modern, updated space along with below-market replacement costs. We have seen an increase in building sales in the suburbs, especially in Troy.”
Large sale transactions in Troy last year included: a ±95,000 square foot building at 5607 New King Drive, purchased by Dunham’s Sporting Goods to relocate their headquarters; a three-story, ±91,000 square foot building at 5750 New King Drive, purchased by Macomb Development, LLC; a 306,720 square foot signature office building known as The Centennial, located at 100 E. Big Beaver, purchased by HTC Global Services; and a 186,562 square foot building (one half of the Troy Corporate Center) located at 880 W. Long Lake Road, purchased by Molina Healthcare.
Just last week, a 248,427 square foot office building at 750 Tower Drive, located within North Troy Corporate Park, was purchased by Magna America RE Holdings, LLC, a subsidiary of Magna International Inc.
According to CNN Money, “good times seem to be back in Troy.” Auto companies’ profits are rising and formerly vacant office space in Troy is filling up.” Troy’s Economic Development Specialist, Glenn Lapin, recently reported that building vacancies in Troy had gone down to 6.2% in the fourth quarter of last year, while occupancy stands at an impressive 75.4%.
As the third largest suburban office submarket with 170 buildings totaling over 16 million square feet, Troy is particularly appealing to buyers. Troy, home to over 6,100 thriving businesses, is located just north of the city of Detroit with accessibility to I-75 and close proximity to upscale retail.
ABOUT FRIEDMAN INTEGRATED REAL ESTATE SOLUTIONS
Recognized as one of the largest privately-held commercial real estate organizations in the nation, Friedman Integrated Real Estate Solutions provides clients with a single point of contact for the full range of services it offers.
Friedman manages over 140 facilities encompassing more than 16M SF of commercial and 7,000 multi-family units across the country. Friedman’s brokerage team has over 800 current listings with $10 billion in closed transactions. As owners and managers of commercial property for 25 years, Friedman understands what it takes to achieve results that maximize the client’s objectives.
For more information, please visit: www.friedmanrealestate.com.