Mess

Office

occupancy

rates have

soared in

metro Detroit.

JULIE EDGAR STAFF WRITER

ffice buildings that once stood
as proud symbols of Southfield's
dominance as a commercial
center but later sunk into
malaise are experiencing a re-
naissance of sorts.
Today, the occupancy levels
in many of the buildings in the
south portion of the city are
higher than they've been in
years. In fact, a sizeable slice of
metro Detroit's office market is
on a high.
A few factors in the resur-
gence are a stable economy and
a virtual standstill in new con-
struction, said Joel I. Feldman,
senior vice president of First
Commercial Realty and Devel-
94.54
Livonia
opment Company Inc., in
90.32
Bloomfield Hills
Southfield.
92.60
Bingham Farms
Mr. Feldman just released a
86.56
Farmington Hills
semi-annual survey of the office
88.68
Auburn
Hills
market in 13 metro communi-
88.65
West
Bloomfield
ties that nearly glows with the
92.61
Dearborn
good news.
91.22
Birmingham
In Southfield, one of the
85.51
Ann Arbor
three largest office markets in
90.63
the metro area, city-wide occu-
Novi
pancy rates jumped 4.17 per-
78.39
Troy
cent since July 1994. Close to
78.79
Southfield
130,000 square feet of multi-
79.06
Detroit-CBD
tenant office space have been
(Central Business District)
absorbed during the first six
months of this year, the second-
*Source
largest amount in any office
First Comm
community surveyed.
Troy, which less than a
decade ago was plagued by va-
cant buildings that sprung up like weeds dur- centrated on renovating the buildings, lease
ing a construction frenzy in the 1980s, had rates tend to be "exceptionally attractive and
aggressive," the area is close to major thor-
the highest jump in office occupancy — 9.90
oughfares, and giant retail chains like Home
percent — from a year ago.
Bloomfield Hills, a market that has never Depot are moving into the neighborhood.
Aside from governmental agencies that
been troubled by vacant space — even with
some of the highest rental rates in the metro have relocated to some of the older buildings,
area — saw its occupancy rate rise from 90.32 the average tenant is going to be "economi-
percent last year to 93.73 percent, just below cally driven" and employ a staff that corn-
Livonia's current rate of 94.95 percent, ac- mutes by highway, Mr. Feldman said.
Average rental rates in southern Southfield
cording to Mr. Feldman's report.
"Bloomfield Hills has always led the pack range from $9.50 to $15 per square foot, com-
of all the suburban and downtown office build- pared to a minimum average rate of $15 in
ings in terms of occupancy rate and com- West Bloomfield and $13.50 in Troy.
Some of the bigger success stories:
manding the highest dollar for rental space,"
Two years ago, the 25-year-old Advance
Mr. Feldman said. "That's because rightfully
or wrongfully, the perception is you're in a Building at Nine Mile and Greenfield roads
very nice setting — you get away from con- was at 75 percent occupancy. Today, the rate
crete jungle. You'll see more landscaping, of- is 91 percent.
The 30-year-old Crossroads Office Build-
fice buildings set back, greenery, a campus-
like atmosphere, you're on a major thor- ing on Northland Drive now enjoys 87 percent
oughfare, Woodward, that is close to 1-75 and occupancy, a whopping jump of 14 percent
since January.
Telegraph."
Same with North Park Plaza on Nine Mile
But the upswing is most notable in South-
field's southern tier, one of the submarkets Road between Greenfield and Southfield
Mr. Feldman surveyed for his report. Both oc- roads, which saw a 5 percent increase in ten-
cupancy and rental rates are up in the area ancy rates since the beginning of 1995 and a
bounded by the Southfield Freeway and 17-percent jump from two years ago. The 22-
Greenfield Road to the east and west and year-old building, known as the "Rusty Buck-
Eight Mile and Ten Mile roads to the north et" for its oxidized appearance, is 73 to 75
percent occupied, according to Jay Chavey
and south.
The market there is buoyant for a few rea- of the Insignia Financial Group in Southfield,
sons, Mr. Feldman said. Landlords have con- which took over management of North Park

Plaza in January and has ne-
gotiated a lease with a new
HMO, Great Lakes Health
Plan, for 17,000 square feet.
Interior and exterior reno-
vations begun by Insignia's pre-
decessor — including a
replacement of the exterior pan-
els because the oxidization has
resulted in interior rusting —
have played a part in the build-
ing's rebound, Mr. Chavey said.
Insignia is in the process of
evaluating internal systems
that need updating, he said.
"You have to be honest in as-
sessing your property. You have
a building that's not going to be
a Class A building, so you try to
be the best in your class. A lot
of that is updating your mate-
rials," including carpeting,
paint, paneling and heating and
cooling systems.
The head of Southfield's eco-
nomic development division at-
tributed some of the progress to
the city's efforts to attract and
retain businesses.
While it cannot offer tax
abatements, Southfield alerts
companies interested in finding
office space to the city's solid in-
frastructure, its central loca-
tion, free parking, aggressive
law enforcement, and good city
services like the library and
parks, said Don Gross.
In partnership with South-
field's Downtown Development Authority, the
city has initiated an informal campaign to ad-
dress the concerns of existing businesses and
to help building owners and managers to up-
grade.
"This is just beginning to show some divi-
dends. A lot of towns, including us, were just
going out trying to get businesses and then
forgetting them for a while. Once they're in
the community, we want to make them a part
of the community, make sure they're com-
fortable and happy," Mr. Gross said.
The Congress Building on Southfield Road,
south of 13 Mile, is a "perfect example" of the
new cooperation between the city and build-
ing owners.
"We worked with them to create a capital
improvement program," Mr. Gross said. 'I3y
working with building owners and managers,
we've been able to improve the physical char-
acteristics of the older buildings."
As of last month, the Congress Building's
occupancy rate was at 97 percent.
Healthy occupancy rates can translate into
better neighborhoods, not only because emp-
ty buildings tend to have a "cancerous" effect
on area neighborhoods. Building tenants
might and do consider moving into Southfield
to be closer to work, Mr. Gross said.
Mr. Feldman's report carried some pleas-
ant surprises, he said.
"Our goal was to be at 16 percent vacancy

HIGH RISE page 52

-