Friedman President & CEO David B. Friedman was featured in
The Detroit office market, a sector of a city that has
been working out of the worst supply/demand imbalance
seen in decades, is coming back, according
to industry experts.
People and businesses that had been located in the
suburbs are moving back into the city, paralleling the
demographics of the rest of the country. David Friedman,
president and chief executive officer of Friedman
Real Estate Group, based in a Detroit suburb, told BNA
March 10 that Detroit’s central business district (CBD)
is going through a major transformation. ‘‘We recently
(August 2010) had Quicken Loans move to the CBD and
take 240,000 square feet,’’ he said, adding that he is
working with the loan company on several other urban
acquisitions. According to published reports, Quicken
will bring a reported 1,700 employees into what is becoming downtown Detroit’s newest business complex,
a rising technology center at the foot of Woodward Avenue,
which was recently nicknamed ‘‘Webward.’’
In May of this year, Blue Cross/Blue Shield will move
from its aging property in the inner ring suburb of
Southfield into Detroit’s inner core. The health care giant will bring approximately 3,000 employees into a reported 400,000 sq. ft. of the city’s riverfront Renaissance Center, which is owned and occupied by General
Motors. This will bring the property’s occupancy to
‘‘well over 90 percent,’’ according to data from Cushman
& Wakefield (C&W). The Blue Cross move will
save the company a reported $30 million in long-term
real estate costs, based on cost avoidance of updating
the Southfield buildings, and incentives—to the tune of
$35 million—from the city of Detroit.
Detroit is a Great Value – Friedman said that “things are better than they were, prices have stabilized,’’ and
he expects to see ‘‘positive absorption in Detroit,
[which] we haven’t seen in a long time.’’ He also said
that the low prices and the highly competent population
have sparked investor interest, at least more than during
the depth of the recession. ‘‘A year ago I would meet
with investors out of town and they’d say ‘no way.’ Today
you meet those investors and they say, ‘We are
looking at Detroit. Because Detroit is a great value.’ ’’
Most real estate professionals anticipate modest
progress throughout the Detroit metropolitan area for
this year, according to data from C&W.
Automakers Hiring? The auto industry, Friedman said,
is improving, ‘‘and in fact I still see a lot of companies
like Chrysler and Ford and auto suppliers hiring new
people.’’ Both Chrysler and GM have announced or
commenced with plans to hire 1,000 new workers,
mostly in the Detroit area. GM has reduced the government’s stake in their operations from 61 percent to 26 percent, and has been profitable since the beginning of
2011, according to published reports. Detroit area unemployment has dropped from 15 percent in 2009 to
14.2 percent this year, according to Moody’s Economy-
.com.
Friedman said Detroit supports other industries and
would not say the automobile sector is driving everything.
‘‘We have technology, we have some of the-
. . . defense contractors taking advantage of the brainpower here in Michigan,’’ he said.
Although Friedman estimates that there are 750,000
sq. ft. of Class A office space vacant right now, ‘‘the
CBD seems to be getting some pretty active demand for
office space, much more than we have seen in the past
year.’’ Woodward Avenue is under serious consideration
for a light rail project, which Friedman said ‘‘is going
to be a huge change and huge benefit.’’
Prices, Friedman said, ‘‘got decimated with the foreclosures and I think Detroit got hit pretty hard on the valuation side.’’ The average office rent for Detroit right now runs from $15 to $20 per sq. ft., he said. By contrast, the average cost per sq. ft. for Manhattan office was approximately $65 in the fourth quarter of 2010, according to data from Jones Lang LaSalle.
