Economic Overview
The Detroit metro area remained relatively stable through Q3 2026 despite a challenging economic environment, with unemployment up 70 basis points (bps) year-over-year (YOY) to 5.4%. Nonfarm employment held steady at 2.0 million jobs, down 3,200 jobs YOY. Office-using sectors were mixed in August 2026, with financial activities employment up 0.7% YOY, while professional and business services declined 1.0% YOY and information services fell 3.2% YOY.
Supply and Demand
Detroit’s overall office vacancy rate rose 10 bps YOY to 18.5% in Q3 2026 and 40 bps quarter-over-quarter (QOQ). Vacancy increased across all asset classes on both a QOQ and YOY basis. Of the 18.0 million square feet (msf) of vacant space, only 912,000 square feet (sf), approximately 5.1%, was sublease space. Class A vacancy increased 50 bps YOY to 21.3% in Q3 2026, with vacant space rising by nearly 324,000 sf, while Class B vacancy declined 40 bps to 18.2%. Vacancy decreased in eight of the 19 tracked submarkets YOY, led by Ann Arbor and Southfield/Bingham Farms, while Farmington Hills/Novi/West Bloomfield and Auburn Hills/Rochester Hills posted the largest increases.
After a strong first quarter, net absorption turned negative over the last six months, leaving year-to-date (YTD) net absorption barely positive at 75,200 sf. Leasing activity slowed in Q3 2026, totaling 232,000 sf and bringing the YTD total to 1.4 msf, down 14.8% from the same period in 2025. The average lease size increased to approximately 6,000 sf YTD, up 13.0% from the same period last year. The Southfield/Bingham Farms submarket recorded the most leasing activity YTD, totaling 433,000 sf and accounting for 30.6% of leasing volume. Leasing activity is an indicator of future quarterly net absorption.
Pricing
Across all categories, gross average asking rental rates were recorded at $20.45 per square foot (psf) in Q3 2026, which represents a 1.9% YOY increase. The Ann Arbor submarket recorded the highest rent increase in Metro Detroit, with average rents increasing by 31.2% YOY to $26.09 psf. Conversely, the Macomb County submarket posted the highest decrease in rents, with a decline of 6.5% YOY to $17.43 psf.
