by Dan Rafter
Robert Pliska, owner and managing director with Sperry Van Ness|Property Investment Advisors in Birmingham, Michigan, likes what he sees these days in Detroit. Yes, the city has plenty of work ahead of it. But it’s also on the rebound, with new leaders in the city government working closely with businesses to pump more money — and CRE activity — into the center of Detroit.
Pliska recently made a presentation before the Birmingham Bloomfield Chamber of Commerce touting the success story being told now in downtown Detroit.
“The market is very good,” Pliska said, “with downtown Detroit being a great story for a major turnaround.”
What’s the good news in Detroit? Pliska’s presentation to the chamber showed that vacancy rates and sales prices in all the major CRE types in Detroit are heading in the right direction.
For instance, the office vacancy rate in Detroit has fallen from 18.5 percent in 2011 to 16 percent in the first quarter of 2015. During the same period, the industrial vacancy rate in Detroit has dropped from 12 percent to 7 percent and the retail vacancy rate has fallen from 10.3 percent to 8.6 percent.
Sales prices are up, too, sometimes dramatically. Pliska told the chamber that the average sales price per square foot in the Detroit office sector rose from $35 in 2011 to $100 in the first quarter of this year. In industrial, that increase was from $10 to $40, while in retail it jumped from $40 to $70.
What’s behind the improvements in Detroit? The rejuvenation of downtown, which is continuing, is a key factor. Dan Gilbert of Quicken Loans has pumped $1.6 billion worth of investment dollars in downtown Detroit, while the Ilitch Family has made an impact with the new $450 million arena for hockey’s Detroit Red Wings.