The Detroit Commercial Real Estate Market

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As the largest city in Michigan, Detroit benefits from years of urban revitalization and is now ripe with opportunity for commercial real estate investment activity. 

Known as the Motor City due to its history as a hub for the automotive industry, the city hosts the three big car manufacturers: General Motors, Ford, and Chrysler. The city is situated on the Detroit River and borders Windsor, Canada and features a strong, diverse economy and a vibrant cultural scene.

Brokers, buyers, sellers, and tenants in Detroit and beyond look to Crexi’s commercial property tech tools to conduct all aspects of CRE transactions. To date, Crexi’s CRE tools have helped brokers facilitate more than $330 billion in commercial property transactions and represented over $1.2 trillion in listings.

Crexi proudly serves Detroit, Dearborn, Warren, Livonia, Southfield, Taylor, Troy, Farmington Hills, Pontiac, and the surrounding communities as the region’s fastest-growing digital CRE platform.

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The State of Detroit Commercial Real Estate 

The Detroit commercial real estate market offers investors promising opportunities to purchase property with potentially high ROI. Detroit has experienced a resurgence in recent years, with new businesses and developments popping up throughout the city. 

This growing trend makes Detroit an ideal place to invest in commercial real estate. Prices are still relatively low compared to other markets, making now a great time to get involved in the Detroit market. 

Detroit Regional Breakdown

Although the population of the City of Detroit decreased by about 11% over the past decade, the metropolitan area is home to some of the fastest-growing suburbs in the state, including Auburn Hills in the Northern/Northwest and Novi in the West:

  • Metropolitan Detroit is home to over 4.3 million, with 639,000 residing in the city.
  • The population of Detroit decreased by 1.1% between April 2020 and July 2021.
  • Detroit’s fastest-growing suburbs include Auburn Hills, New Baltimore, Novi, and Rochester.
  • Detroit is the largest city on the U.S.-Canadian border and the second most-populous city in the Midwest (after Chicago).
  • The metropolitan area comprises Lapeer, Livingston, Macomb, Oakland, St. Clair, and Wayne counties.
  • The median age in Detroit is 40.1 years, about the same figure as Michigan.
  • 38% of the residents in the Detroit metropolitan area are between the ages of 20 and 49.
  • The per capita income is $35,288 while median household income is $62,768.

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Detroit Job Market

Employment in Detroit has increased by about 3.6% year-over-year in 2022, driven by job growth in sectors such as manufacturing, information, professional and business services, and leisure and hospitality. The metro area is home to major corporations including General Motors, Quicken Loans, Ally Financial, Little Caesars, and Blue Cross Blue Shield of Michigan: 

  • The GDP of the Detroit-Warren-Dearborn MI MSA is over $254 billion, growing by 32% over the past ten years.
  • Metropolitan Detroit’s unemployment rate is 5.9% as of June 2022, according to the Bureau of Labor Statistics.
  • More than 25,000 new jobs were added to the labor force over the past 12 months.
  • Major industry clusters in Detroit include automotive, defense, distribution, health care, logistics, and transportation.
  • The top largest companies in Detroit by employment are Ford Motor Company, General Motors, Lear, Whirlpool, Meijer, The Dow Chemical Company, and Key Safety Systems.
  • University of Detroit, Wayne State University, and the University of Detroit Mercy are three of the largest institutions of higher learning in the metropolitan area.
  • Nearly 91% of the residents are high school graduates or higher, while over 32% hold a bachelor’s or advanced degree.

Geographically speaking, the transportation infrastructure in Detroit includes the Port of Detroit, five international and regional airports, and three interstate highways.

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Detroit Industrial Market

Industrial rental rates in Detroit grew by 9.6% year-over-year as the economy in the metropolitan area continues to recover. New leasing totaled 4.7 million SF through the first half of 2022, an increase of nearly 138% YoY. The Macomb North and Macomb South submarkets accounted for nearly 50% of all new industrial leases in Detroit, while the warehouse/distribution sector accounted for 60% of all new leasing in the market:

  • Total industrial inventory: 494,921,419 SF
  • Average asking rent: $6.98/SF per year, NNN
  • Vacancy rate: 4.4%
  • Absorption: 713,000 SF through Q2 2022
  • Leasing activity: 4,700,000 million SF through Q2 2022
  • Key lease transactions by tenant: Ashley Furniture 186,352 SF, Faurecia Automotive 150,000 SF, Shcalo Group 110,000 SF
  • New construction: 1,443,057 SF completed, with 5,641,994 SF under construction
  • Investment sales trends: $40 million in Q1 2022, median sales price $49/SF, market cap rate 7.2%
  • Largest industrial submarkets: Western Wayne, Detroit, Dearborn/Downriver

Discover Detroit industrial space for rent.

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Detroit Office Market

The Central Business office submarket in Detroit is the shining star of the metropolitan area. Asking rents have increased 2.5% year-over-year, the submarket has the second-highest rate of net absorption in the metro area, and the Detroit CBD is the only submarket with new construction underway:

  • Total office inventory: 110,051,289 SF
  • Overall average asking rents: $20.67/SF per year, full service gross
  • Vacancy rate: 15.2%
  • Absorption: -495,961 (through Q2 2022)
  • Leasing activity: 500,000 SF (Q2 2022)
  • Key leases by tenant: Barracuda Networks Inc. 31,728 SF, Priority Waste 16,912 SF, DoorDash Essentials 15,000 SF
  • New construction: 855,037 SF currently under construction
  • Investment sales trends: $185 million in acquisitions in Q1 2022, sales price $139/SF, market cap rate 9.1%
  • Largest office submarkets: Southfield/Bingham Farms, Central Business District, Troy

Discover Detroit office space for lease. 

Detroit Retail Market

The Detroit retail market has posted positive net absorption for five consecutive quarters, with rents growing by 8.6% year-over-year and vacancy holding steady at just 5.1%. Overall leasing activity in the metro area totaled nearly 920,000 SF from over 280 signed leases in Q2 2022: 

  • Total retail inventory: 306,232,480 SF
  • Average asking rent: $15.63/SF per year, NNN
  • Vacancy rate: 5.1%
  • Absorption: 378,477 SF YTD
  • New construction: 79,051 SF delivered through Q2 2022, with 810,372 SF under construction
  • Investment sales trends: $135 million in Q1 2022, transaction sales price $132/SF, market cap rate 7.8%
  • Largest retail submarkets: Macomb, West Wayne, Detroit/The Pointes
  • Median household income: $62,768 with 59% of households earning $50K per year or more

Discover Detroit retail property for lease.

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Detroit Multifamily Market

Development in the Detroit multifamily market continues to surge, with 21 new buildings currently under construction – bringing over 4,100 new apartment units to market. Multifamily rents in metropolitan Detroit have grown by 25.9% over the past five years, with occupancy rates at 96%: 

  • Total housing units: 1,910,964
  • Renter occupied: 31%
  • Multifamily inventory: 382,193 units
  • Average asking rent: $1,319
  • Rent growth: 7.9% year-over-year
  • Vacancy rate: 4.0%
  • Investment sales trends: $110 million in Q1 2022, median sales price per unit $75,343, 6.4% average cap rate
  • Median household income: $62,768
  • Per capita income: $35,288

Discover Detroit multifamily property for sale.

Learn more about the Detroit commercial real estate market with Crexi Intelligence.

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Jessica Ho
Jessica Ho
Jessica has 5+ years of experience in journalism and copywriting, with an emphasis on digital content. Prior to joining Crexi's content marketing team, she worked in creative marketing with a freelance portfolio focused on real estate trends and new technologies.

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