Detroit Commercial Office Space for Rent

Q4 2025

Detroit Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Detroit commercial real estate (CRE) market is navigating a complex recovery period in late 2025, characterized by resilient industrial performance and a stabilized, albeit shifting, office sector [1, 2]. The Office market marked its third consecutive quarter of positive net absorption, though vacancy remains near 20% [1]. Industrial fundamentals are solid, with the market rebounding from early-year softness to post positive absorption and stable vacancy [1, 3]. Retail faces headwinds with negative absorption and rising availability, yet availability rates remain historically tight [4, 6]. Multifamily is a bright spot, ranking among the top national markets for rent growth as supply remains constrained [10].

TenantBase Proprietary Data [13] highlights the distribution of active tenant demand over the last 90 days (281 total deals):

  • Retail/Storefront led market activity with 63.70% of all searches [13].
  • Warehouse was the second most active sector at 23.49% [13].
  • Office accounted for 13.17% of total search volume [13].

Office Market

Market Overview Detroit's office market is showing signs of stabilization, driven by small-tenant leasing and a steady flow of renewals [1]. While the construction pipeline is minimal, the market is actively working through existing vacancy [1].

  • Vacancy & Availability: The vacancy rate stabilized at 19.7%, a 30-basis-point decrease from the previous quarter [1]. Other reports place vacancy slightly higher at 22.9%, reflecting differences in tracking methodology [2].
  • Net Absorption: The market posted positive net absorption of 159,000 SF in Q3 2025, the third straight quarter of gains [1].
  • Rental Rates: Asking rents remained stable, increasing 0.6% quarter-over-quarter to roughly $20.00 - $21.00 per SF [1]. Class A properties continue to command a significant premium [1].
  • Market Drivers: Leasing volume slowed to 631,000 SF in Q3, with activity dominated by deals under 10,000 SF [1]. However, office-using employment is ticking up, a positive leading indicator for future demand [2].

TenantBase Activity [13]

  • Demand Share: Office accounted for 13.17% of total search volume [13].
  • Lease Term Preference: Demand is heavily concentrated in short-term flexibility [13]:
    • Less than one year: 52.78% of deals [13].
    • 2-3 Years: 25.00% of deals [13].
    • 3-5 Years: 8.33% of deals [13].
  • Size Requirements: Tenants seeking shorter commitments prefer significantly smaller spaces. The average lower SF required for a Less than one year term is 1,500 SF, compared to 2,500 SF for a 3-5 Years term [13].

Industrial & Warehouse Market

Market Overview The Detroit industrial market has regained its footing, with leasing activity rebounding and vacancy remaining among the lowest in the Midwest [1, 3].

  • Vacancy & Rent: Vacancy tightened to 3.5%, decreasing 10 basis points quarter-over-quarter [3]. Other sources report a slightly higher rate of 6.4%, but note it remains well below the national average [4]. Average asking rents held steady at $7.39 - $8.86 per SF [4, 5].
  • Demand & Supply: Net absorption turned positive in Q3, totaling 441,000 SF, helping to offset losses from earlier in the year [3]. Leasing activity surged to 2.8 million SF, with significant volume in deals over 50,000 SF [3].
  • Construction: The pipeline remains active but disciplined, with 2.1 million SF under development [3].
  • Investment: Sales activity nearly doubled in Q2 to $199 million, signaling renewed investor interest [4].

TenantBase Activity [13]

  • Demand Share: Warehouse accounted for 23.49% of total search volume [13].
  • Lease Term Preference: Demand is strongest for mid-term leases [13]:
    • 3-5 Years: 33.33% of deals [13].
    • 5+ Years: 19.05% of deals [13].
    • 2-3 Years: 19.05% of deals [13].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 6,250 SF, while the 5+ Years term average requirement jumps massively to 51,250 SF [13].

Retail Market

Market Overview Detroit's retail sector is facing some turbulence with negative absorption, but limited new construction is preventing a supply glut [6].

  • Vacancy & Availability: The availability rate has hovered around 6.4% - 6.7% for nearly three years [6, 8].
  • Net Absorption: The market has seen negative net absorption for five consecutive quarters, totaling -1.1 million SF year-to-date due to big-box store closures [6].
  • Rental Rates: Rent growth is moderating, with forecasts predicting a slight decline by year-end as landlords compete for tenants [8].
  • Construction: New supply is minimal, with only 940,000 SF in the pipeline, representing just 0.4% of inventory [6]. This lack of new product is a key stabilizer for the market [6].

TenantBase Activity [13]

  • Demand Share: Retail/Storefront activity dominated with 63.70% of all search volume [13].
  • Lease Term Preference: Retail tenants show a clear preference for stability [13]:
    • 5+ Years: 28.57% of deals [13].
    • 3-5 Years: 27.14% of deals [13].
    • 2-3 Years: 21.43% of deals [13].
  • Top Locations: Tenant interest is highest in the following areas (deal counts) [13]:
    • Detroit (City): 19 [13].
    • Clinton: 7 [13].
    • Troy: 5 [13].

Multifamily Market

Market Overview Multifamily is a standout performer in Detroit, with rent growth outpacing many national peers due to constrained supply [10].

  • Vacancy & Occupancy: Vacancy remains stable as demand keeps pace with the limited new inventory entering the market [7].
  • Rents: Detroit ranked as a top U.S. market for rent growth in Q3 2025, posting a 2.7% increase [10]. Average rents are approximately $1,339 per unit [7].
  • Construction: New construction starts have fallen significantly, which will keep supply tight and support further rent gains through 2026 [9].
  • Investment: Detroit was ranked 16th nationally for investment prospects in 2026, with multifamily highlighted as a top sector due to "weak supply growth" [12].

2026 Outlook

Looking ahead to 2026, the Detroit market is positioned for steady performance, driven by its affordability and industrial backbone.

  • Investment Rise: Detroit's investment potential is rising, with the market cracking the top 20 nationally for 2026 prospects, the only Midwest market to do so [12].
  • Industrial Strength: The industrial sector is viewed as the "best buying opportunity" in the region, with vacancy expected to remain tight [12].
  • Residential Growth: The housing market is predicted to see steady appreciation, while multifamily rent growth will continue to outperform due to the lack of new supply [11, 12].

Sources

  1. Detroit Office Figures Q3 2025 | CBRE
  2. Detroit Office Market Overview - Imgix
  3. Detroit Industrial Figures Q3 2025 | CBRE
  4. MARKET REPORT Q3 25 - PA Commercial
  5. Detroit Industrial MarketBeat Q3 2025 - Cushman & Wakefield
  6. CoStar Group Retail Market Report - Detroit - NAIOP
  7. Detroit Q3 2025 Market Report - MMG Real Estate Advisors
  8. Detroit - MI USA - NAIOP
  9. Q3 2025 State of the Market – U.S. Multifamily Outlook
  10. Top U.S. Multifamily Rent Growth Markets Q3 2025 - Arbor Realty Trust
  11. Metro Detroit's Real Estate Forecast: What Experts Predict for 2026...
  12. Detroit's real estate investment potential rises in national ranking
  13. TenantBase Proprietary Market Data (Detroit - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.