Increase in Available Sublease Space Raises Office Vacancy in Metro Detroit, Paragon Finds

Apr 03, 2001, 01:00 ET from Paragon Corporate Realty Services, Inc.

    FARMINGTON HILLS, Mich., April 3 /PRNewswire/ -- Businesses with surplus
 office space were offering more than 900,000 square feet (SF) for sublease
 across metropolitan Detroit at the end of first quarter 2001, according to a
 new report from Paragon Corporate Realty Services, Inc.
     "Firms are finding they have extra office space after downsizing and
 scaling back future growth plans in anticipation of leaner times," says
 Matthew Fenster, CCIM, MCRS and Paragon CRS executive director.
     Suburban office markets accounted for 828,042 SF of the sublease
 vacancies, while the city of Detroit's available subleases totaled 73,849 SF.
 The overall suburban vacancy rate jumps to 9.2 percent from 7.4 percent with
 sublease space added to space available for lease directly from landlords.
 Detroit's vacancy rate climbs to 8.3 percent from 7 percent with the addition
 of sublease space.
     In the suburbs, sublease opportunities comprised 25.4 percent of the 3.25
 million SF available for lease.  Class-A buildings housed approximately one-
 third of the suburban sublease vacancies (282,240 SF), with the remaining two-
 thirds in class-B buildings (545,622 SF).
     Excluding sublease space, the average suburban class-A vacancy rate
 actually decreased from a year ago, falling to 8.1 percent from 9 percent in
 first quarter 2000.  The average suburban class-B vacancy rate -- at 7.3
 percent without sublease space -- increased slightly over its year-ago level.
     Other trends noted in Paragon's first quarter 2001 edition of Office
 Outlook include:
     *  Most first quarter 2001 leasing activity came from smaller, locally
 based companies seeking under 10,000 SF of space.
     *  Landlords continued to offer few rent concessions in first quarter
 2001.  Because the market is not overbuilt and more developers are more
 financially stable than in the early 1990s, most can sit longer with vacant
 space.
     *  Overall class-A asking rents were essentially unchanged from year-end
 2000, and up slightly from first quarter 2000.  Quoted class-A rents averaged
 $25.13 per SF in the suburbs and $24.22 per SF in Detroit at the end of first
 quarter 2001.
     *  Rent for sublease space is typically 10-15 percent less than asking
 rental rates for space leased directly from landlords.
 
     Additional trends and statistics are highlighted in Paragon's 1st quarter
 2001 Office Outlook, available free next week by calling Paragon at
 248-539-5800 or on its web site at www.paragoncrs.com .  Paragon is a
 Farmington Hills-based commercial real estate firm that specializes in serving
 the real estate and project management needs of corporations.
 
 

SOURCE Paragon Corporate Realty Services, Inc.
    FARMINGTON HILLS, Mich., April 3 /PRNewswire/ -- Businesses with surplus
 office space were offering more than 900,000 square feet (SF) for sublease
 across metropolitan Detroit at the end of first quarter 2001, according to a
 new report from Paragon Corporate Realty Services, Inc.
     "Firms are finding they have extra office space after downsizing and
 scaling back future growth plans in anticipation of leaner times," says
 Matthew Fenster, CCIM, MCRS and Paragon CRS executive director.
     Suburban office markets accounted for 828,042 SF of the sublease
 vacancies, while the city of Detroit's available subleases totaled 73,849 SF.
 The overall suburban vacancy rate jumps to 9.2 percent from 7.4 percent with
 sublease space added to space available for lease directly from landlords.
 Detroit's vacancy rate climbs to 8.3 percent from 7 percent with the addition
 of sublease space.
     In the suburbs, sublease opportunities comprised 25.4 percent of the 3.25
 million SF available for lease.  Class-A buildings housed approximately one-
 third of the suburban sublease vacancies (282,240 SF), with the remaining two-
 thirds in class-B buildings (545,622 SF).
     Excluding sublease space, the average suburban class-A vacancy rate
 actually decreased from a year ago, falling to 8.1 percent from 9 percent in
 first quarter 2000.  The average suburban class-B vacancy rate -- at 7.3
 percent without sublease space -- increased slightly over its year-ago level.
     Other trends noted in Paragon's first quarter 2001 edition of Office
 Outlook include:
     *  Most first quarter 2001 leasing activity came from smaller, locally
 based companies seeking under 10,000 SF of space.
     *  Landlords continued to offer few rent concessions in first quarter
 2001.  Because the market is not overbuilt and more developers are more
 financially stable than in the early 1990s, most can sit longer with vacant
 space.
     *  Overall class-A asking rents were essentially unchanged from year-end
 2000, and up slightly from first quarter 2000.  Quoted class-A rents averaged
 $25.13 per SF in the suburbs and $24.22 per SF in Detroit at the end of first
 quarter 2001.
     *  Rent for sublease space is typically 10-15 percent less than asking
 rental rates for space leased directly from landlords.
 
     Additional trends and statistics are highlighted in Paragon's 1st quarter
 2001 Office Outlook, available free next week by calling Paragon at
 248-539-5800 or on its web site at www.paragoncrs.com .  Paragon is a
 Farmington Hills-based commercial real estate firm that specializes in serving
 the real estate and project management needs of corporations.
 
 SOURCE  Paragon Corporate Realty Services, Inc.