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Posted on Wed, Jul 22, 2009 : 5:35 a.m.

Dan Meisler: Thomson Reuters 777 lease pushes Briarwood absorption

By Dan Meisler

A 28,000-square-foot lease at the 777 building by Thomson Reuters helped drive the vacancy rate for office buildings in the Briarwood area down by more than 2 percentage points in the second quarter, according to a report from real estate company Grub & Ellis Detroit.

Thomson Reuters Healthcare, a health data analysis division of the company, leased the entire third floor of 777 E. Eisenhower, effective June 1, said Bill Harvey of building owner Transwestern.

The company has more than 100,000 square feet in the building all told, Harvey said.

The building, one of Ann Arbor’s landmarks, had been for sale. But Harvey said that it was no longer on the market, and refused to comment more.

The Grubb & Ellis report found that office vacancy in the Briarwood corridor had dropped 2.1 percentage points from the first quarter to 13.8 percent. The central business district in Ann Arbor saw a negative absorption of 636 square feet and had a vacancy rate of 9.8 percent, unchanged from the first quarter. And the northeast Ann Arbor area saw negative absorption of 1,500 square feet, and its vacancy rate was also unchanged, at 9.1 percent, the report showed.

Aside from Birmingham, which has a much smaller office real estate market, and Auburn Hills, Ann Arbor’s northeast and CBD were the only areas in the Metro Detroit region with a vacancy rate below 10 percent. The vacancy rate for all the area’s suburbs was 23.2 percent, and it was 24.3 percent when Detroit is factored in.

The average asking rents in Ann Arbor also were higher than the regional average of $22.37 for Class A space and $19.33 for Class B.

The average asking rate for Class A space around Briarwood was $22.91, and $20.11 for Class B. In northeast Ann Arbor, the rates were $23.56 and $22.40, respectively; or $24.58 and $21.16, respectively, downtown.

Harvey said the remaining availabilities in the building are the entire second floor, a few smaller spaces on the seventh floor, and some lower level space. The asking rates are $25 per square foot for the offices, and $12 per square foot on the lower level. The total square footage available is 47,643, of which 11,477 is lower level, according to Transwestern’s Web site.

Ann Arbor also shines in CBRE report

Like the Grubb & Ellis version, CB Richard Ellis’ quarterly research reports on the industrial and office markets chalk the turmoil up to two historic events - the bankruptcies of General Motors and Chrysler. The office and industrial markets have felt a ripple effect, the CBRE reports said.

The Ann Arbor area continued to have some of the lowest vacancy rates and highest asking lease rates in the region, according to the CBRE research.

In industrial, the average lease rate was $4.93 per square foot, and the regionwide vacancy rate was 14.6 percent. In Washtenaw County, the figures were $7.17 and 13.7 percent, respectively. The local asking rate was the highest in the region.

For office space, Ann Arbor had a total vacancy rate of $13.92 percent and an average lease rate of $20.73, according to CBRE’s numbers. That compares to a regional average vacancy of 27.70 percent and asking rate of $18.46.

Ann Arbor’s net absorption of 71,146 square feet represented one of three local areas in CBRE’s study - the I-275 corridor and Rochester being the others - that had positive absorption in the second quarter. In metro Detroit as a whole, the absorption rate was a loss of 695,032 square feet of occupied office space.

-Dan Meisler writes about real estate, banking & finance and other topics for Ann Arbor Business Review.