  Mrjoshua Member Username: Mrjoshua Post Number: 924 Registered: 03-2005 |
Detroit Auto Makers' Woes Dog Office Market By MAURA WEBBER SADOVI October 11, 2006; Page B6 The Wall Street Journal The Motor City's commercial real-estate market -- already one of the country's weakest -- continues to slip as its auto-dependent economy sputters. Falling or below-average rents and weak demand in the Detroit region's office, warehouse and apartment sectors aren't for the faint of heart. Prospects are a bit better in the suburbs -- and retail is a bright spot -- but overall Detroit has been passed over by the job growth that has breathed life into many other major real-estate markets nationwide since 2001. Instead, the area's economy has struggled as auto makers and their parts suppliers -- historically the region's economic engines -- have contracted.  One Kennedy Square, where Visteon, a major tenant, is trying to sublease its office space. In August, the area posted the highest unemployment rate of any major U.S. metropolitan area at 7%, according to the Bureau of Labor Statistics. The national rate was 4.6%. The region's average annual population growth rate was only 0.13% from 2000 to 2005 -- its population hit 4.49 million last year -- compared with a 1% average annual rate over the period nationally, according to Moody's Economy.com. "It's a tough sell," says Len Tosto, director of consulting and investment with Colliers International, a real-estate services firm, who says he's seen the number of buyers of industrial and office properties dry up in recent months. "The reality of what's gone on here in Detroit has sunk in and caused a lot of individual investors to step back and say, 'No thanks.' " Office buildings are fetching prices as low as $25 a square foot for older buildings in downtown Detroit to $115 to $150 for new buildings in the suburbs, says Mr. Tosto. The average price paid for office buildings nationally through late June this year was $211 a square foot, according to Real Capital Analytics, a real-estate research firm. The leasing market is weak across all sectors, with the office, warehouse and apartment sectors posting well-above-average vacancy rates and below-average rents in the second quarter, according to Boston-based Property & Portfolio Research Inc. The office market has been particularly hard hit, though just how much varies among submarkets. In the second quarter, central business district office rents commanded the lowest average rents, at $17.07 per square foot, while the suburban Birmingham and Bloomfield submarket garnered the highest rents at $22.73. Tenants are in the driver's seat, and many companies such as General Motors Corp. in recent years have trimmed costs by consolidating space. Even as GM has invested about $500 million to refurbish the Renaissance Center complex that contains its headquarters in downtown Detroit, the company has reduced the amount of office space it occupies in southeast Michigan by about one-quarter over the past 10 years, says Matthew Cullen, who oversees GM's world-wide real-estate portfolio. The company currently occupies about 23 million square feet of office space in southeast Michigan, a spokeswoman says.  Some investors remain confident that the current downturn represents an investment opportunity. Lakewood, N.J.-based Lightstone Group recently paid about $260 million for 19 apartment complexes in the Detroit suburbs. New York-based Ashley Capital has purchased older warehouse spaces at low prices, updated them and re-leased them. Retail rents are expected to rise even as new supply continues to ramp up. Some boosters argue that Detroit's long-embattled downtown, which hosted last season's Super Bowl, is poised for a turnaround thanks to new baseball and football stadiums, a new corporate headquarters for Compuware Corp., as well as a movie theater and new stores that have opened in the Renaissance Center. Still, the lackluster economy dogs even the newest projects. In April, Redico LLC, a Southfield, Mich.-based developer, completed One Kennedy Square, a 240,000-square-foot office building in downtown Detroit. Visteon Corp., an auto-parts supplier, was to have occupied nearly half the building. Instead, Visteon, which is restructuring, is working to sublease the space on which it has a 10-year-lease, though a spokesman says the company might still use some of the space. Redico has another tenant in hand for an additional 55,000 square feet but acknowledges the Detroit market is a challenging one for landlords. "This is all a game about consolidation, arbitrage between buildings and people looking to gain efficiencies," says Tysen McCarthy, a senior vice president at Redico. "You can't get complacent or someone will eat your lunch." Write to Maura Webber Sadovi at maura.sadovi@wsj.com | ||
Cambrian Member Username: Cambrian Post Number: 204 Registered: 08-2006 |
I had heard Collins and Aikman emerged from Bankruptcy, but I see their office buildings now stand Vacant at 14 & Stephenson. Did they not recover from Bankruptcy? | ||
Exmotowner Member Username: Exmotowner Post Number: 39 Registered: 06-2005 |
In Tennessee we are seeing a lot of ads for "COME TO MICHIGAN" they are advertizing heavily for business. Ive even seen where U-Haul is giving incentives for people to bring BACK the trucks since everyone is moving from there and not back. | ||
Focusonthed Member Username: Focusonthed Post Number: 522 Registered: 02-2006 |
I moved from Detroit to Chicago 2 months ago, and it was very difficult to get a truck in Detroit for a one-way move, and oppositely, very difficult for me to drop the truck off in Chicago (lots were full, no one wanted the truck). | ||
Brandon48202 Member Username: Brandon48202 Post Number: 109 Registered: 12-2004 |
I've never liked the occupancy rate figures put out by groups like NAR or CoStar. These numbers don't take into account vacant building like the David Whitney and Broderick tower. These studies only take into account vacant space in building whose owners are activly trying to lease space out. | ||
Milwaukee Member Username: Milwaukee Post Number: 243 Registered: 08-2006 |
I'm not a Detroiter, but I know how it feels when your hometown gets trashed by the media. I'm not one of those people who has their head in the sand about problems in the rustbelt, but I'm not some pessimist either. You can tell the Wall Street Journal to stick this article up their ass. Detroit's doing better especially downtown, and they're trying to piss on the parade. I can tell all of you with out a doubt, life in Michigan is so much better than life in Las Vegas or the Deep south. They may be fast growing, but are they interesting, do they possess great art and music institutions? Detroit is a great city and it's getting a hell of alot better, even if its not growing fast. Slowly but surely gets better results rather than a boom. | ||
Mayor_sekou Member Username: Mayor_sekou Post Number: 117 Registered: 09-2006 |
Good words of inspiration for downtrotten Detroiters Milwaukee. I dont know where they get their numbers from but from what I have hearing and seeing in the city there is renewed demand for downtown and more activity down there on a daily basis then I have ever seen. Also everytime I come home I see a new house here, new store there, new school and so on and so on. So you right they can shove this article up their asses. | ||
Track75 Member Username: Track75 Post Number: 2409 Registered: 10-2003 |
Right, the WSJ exists to blow sunshine up your ass. Send 'em a complaint letter -- no more news on the commercial RE market in Detroit, just write about rescued puppies and Tiger pitching and a cool new bar. The real readers of the WSJ (hint: they're not in HS or college) are looking for relevant business information. If these kind of articles hurt your feelings don't read them. | ||
Mayor_sekou Member Username: Mayor_sekou Post Number: 126 Registered: 09-2006 |
I hate stories about rescued puppies. | ||
Iheartthed Member Username: Iheartthed Post Number: 195 Registered: 04-2006 |
LOL @ the WSJ. Why don't they talk about the real estate market on... Wall Street? A lot of residential is popping up on the most famous street in the World because they can't fill it with anything else. Of course, New York is at no shortage of residential, but eventually everyone will have a place to live and no where to work... | ||
Fortress_warren Member Username: Fortress_warren Post Number: 44 Registered: 10-2006 |
They had the same stories when the Dot-Com bust hit the Bay Area. We had see-thru buildings, they left some of the lights on at night to make it look like they were occupied. The car dealers would rent the parking lot to store cars. Again, to make it look better. Why is a statement of fact trashing? If they lied about, that's different. The uhaul thing, the states around Cali have the same deal. Bring it back to Cali for free, cost and arm and leg,(Jeffery Dahlmer price) to leave Cali. |
