Far from the gloom and doom that has come to characterize many people’s view of the Motor City over the past few years, this metro has seen nearly 100,000 jobs added over the past three years, and many submarkets are beginning to see vacancy rates plummet below 4 percent.
According to a recent report by Hendricks-Berkadia, occupancy increased by 90 basis points year over year between 2011 and 2012 to 95.5 percent, while vacancy in Central Washtenaw County—a populous suburb of Detroit—fell to 2.6 percent. Additionally, sales volume of multifamily properties have picked up dramatically since the economic downturn—rising from just over $100 million in 2010 to nearly $600 million in 2012.
And while construction of new properties has lagged considerably over the past three years, Hendricks-Berkadia projects that deliveries will rise to 360 market-rate units this year and 450 market-rate units in 2014.
The businesses and industries responsible for the uptick in employment include professional and business services and education and health services, which accounted for 22,000 of the positions created last year. Yet the city’s hallmark auto industry is also posting gains, with General Motors planning to hire 1,500 new workers in their Warren facility over the next few years.
And while the Central Washtenaw County submarket continues to post lowest vacancies, other areas like Southwest Wayne County and Southeast Oakland County are not far behind, with rates of 3.6 percent and 3.8 percent, respectively. These areas include townships such as Romulus and Birmingham.
Meanwhile the submarket with the highest rents continues to be the Farmington Hills/Troy area, with the 2012 average rent coming in at $1,033 per month. This was followed closely by the downtown Detroit submarket, coming in at $944 per month. Farmington Hills is an affluent submarket with a 2010 median household income of just under $110,000.
Looking forward, Hendricks-Berkadia expects the metro to add over 65,000 jobs, which will boost occupancies even further, ultimately driving the overall vacancy rate to 3.4 percent. This is an exceptional development, especially considering this figure has averaged 6.8 percent over the last 10 years.