By Andy Gutman, Farbman Group
Detroit’s office market, like many other large cities across the Midwest, has experienced many shifts — specifically in the office sector. Despite the challenges Detroit has seen over the past few years, the city has also shown great resilience.
As companies continue to reconsider and revise their office needs, and workspaces evolve, Detroit is well positioned to capitalize on office occupancy in 2025 thanks to its historical assets, as well as opportunities in the city that are ripe for redevelopment.
Tech, transportation and tenacity
One of the city’s strengths in the office sector is its potential to rebound faster than many other Midwest cities. Unlike other markets that are overbuilt with more pain coming in the form of downsizing, such as Chicago, Detroit has avoided oversupply and isn’t overburdened with soaring vacancy rates. The city’s office market vacancy rate has slowly declined over the last several quarters — a positive sign for the local market.
Detroit has also benefitted from steady and incremental growth, particularly by incubation, innovation and technology-focused tenants. It’s these types of tenants who have assisted in revitalizing the city’s urban core. The market is also characterized by a higher proportion of small tenants, which has insulated the city from some of the larger downsizing waves that have impacted other markets. Companies involved in artificial intelligence and the electrification of transportation are also attracted to the city, supporting Detroit’s reputation as a hub for automotive innovation.
Big projects, leadership shifts could reshape Detroit
One of the big changes to watch closely in the region as it pertains to the office market is the election of Detroit’s new mayor. Mike Duggan and Detroit’s City Council have done an amazing job bringing critical people together to revitalize Detroit during his 11 years as mayor. Detroiters are looking for that same stability and growth under the next elected official.
There is some concern about whether the next leader can replicate or build upon what Duggan has accomplished. Depending on who is elected, it could significantly impact the city’s office momentum. That said, Detroiters are cautiously optimistic with the candidates that have thrown their hat in the ring.
Additionally, there are a handful of noteworthy redevelopment projects on the horizon. The Renaissance Center, for example, which was once the symbol of Detroit’s post-industrial hope, is now in a state of flux. Long associated with General Motors, the building has become a focal point of speculation and redevelopment potential in Detroit’s office landscape. There are talks of demolishing parts of the structure with the possibility of transforming the prime riverfront location into a mix of multifamily housing, hotels, entertainment uses and some office and public spaces. Tremendous hope prevails that this area can be the attraction that the riverfront has always had the potential of becoming.
As downtown Detroit reimagines its office market, another area for growth is Midtown. The Detroit neighborhood has held strong in many ways including residential and retail. Initially under the careful guidance of Sue Mosey, the former executive director of Midtown Detroit Inc., and now under Maureen Stapleton, there is strong momentum for continued commercial growth in that district.
New development in Midtown has been driven by significant investment from the Henry Ford Health System, Michigan State University and the Detroit Pistons, to name a few. These projects, which include a new 1.2-million-square-foot hospital and a $90 million high-tech practice facility, both transformed the area into a desirable destination. The neighborhood’s success, which has seen billions of dollars invested, shows that the region has mass appeal for businesses who are looking for office space with nearby amenities.
The opening of Ford’s research and innovation center in Detroit’s Central Station is another testament to the city’s growing reputation as an incubator for tech startups and research-driven companies. The influx of smaller startups and growing presence of automotive and other sectors signal a shift toward an innovation-driven economy. Detroit has also seen the installation of the country’s first mile of electric vehicle recharging road, which shows Detroit’s commitment to being a leader in the transportation sector.
Beyond downtown: suburban success stories
Detroit’s suburban areas like Southfield and Farmington Hills are also improving and starting to undergo transformations that can accommodate the evolving demands of today’s businesses. For example, both governments are working with developers to repurpose outdated office spaces to maintain the viability of their suburban areas.
As Detroit moves forward, the city’s office market stands at the intersection of valuing and investing in its history, while at the same time, pushing innovation. The combination of a revitalized downtown, growing investment in neighborhoods like Midtown, and a focus on technology and innovation suggests that the city will remain successful in the long term. Redevelopment projects, like the Renaissance Center, are just the beginning as Detroit continues to prove that it’s not only able to recover but thrive.
Andy Gutman is president of Farbman Group. This article originally appeared in the February 2025 issue of Heartland Real Estate Business magazine.