Overall office vacancy across the metro remains elevated by historical standards, and total leasing activity is still running below the market’s long-term quarterly averages. That is the part of the story that gets repeated. What gets left out is where the activity is actually concentrated, and it is not spread evenly.
Flight to Quality Is Not a Buzzword Anymore
The gap between well-located, well-amenitized buildings and older, undifferentiated office product has been widening for several years, and it is now the single biggest factor determining whether a building is leasing or sitting. Tenants who are renewing or relocating are consolidating into fewer square feet, but they are willing to pay up for space that solves parking, access, and amenities in a way that lets them make a real case for employees to come in.
That dynamic shows up clearly in the suburban submarkets that have historically anchored the region’s office base. Buildings with modern infrastructure, covered or structured parking, and proximity to retail and dining amenities are absorbing space even in a market where the aggregate vacancy number looks unchanged. Buildings without those features are competing for a shrinking pool of price-sensitive tenants, and often losing.
Sublease Space Is Working Its Way Through the System
One of the more encouraging signals in the market is what is happening to sublease inventory. The wave of sublease space that entered the market beginning in 2020, as companies right-sized ahead of lease expirations, has been gradually shrinking as those spaces either get re-leased directly or the underlying leases simply expire. That process still has room to run, but it is a tailwind rather than a headwind at this point in the cycle, and it is one reason net absorption figures have been less negative than they were even a year ago.
What This Means If You Are a Tenant
For tenants evaluating office space heading into 2027 planning, the practical implication is straightforward: the best-positioned buildings in the best submarkets are not sitting around waiting. If your team has a real preference for quality space with strong amenities, that inventory is tightening even while the overall market vacancy number looks soft. Waiting for the headline vacancy rate to signal urgency is the wrong way to time an office search in a bifurcated market like this one.
Conversely, tenants who are flexible on building class and willing to consider older product still have meaningful leverage. Landlords of commodity office space are motivated, and there is real room to negotiate on rate, term, and tenant improvement allowances in that segment of the market.
What This Means If You Are an Owner
For owners of office product that falls into the “commodity” category, the current environment calls for an honest assessment rather than a wait-and-see approach. Capital improvements that move a building meaningfully up the quality spectrum, whether that is common area upgrades, parking, or amenity additions, are increasingly the difference between leasing at a competitive rate and losing tenants to newer or better-located buildings.
For owners of well-positioned assets, the environment is more favorable than it has been in years. Rents in the top tier of the market are firming, tenant improvement concessions are moderating, and lease terms are lengthening as tenants who have found space they like are increasingly willing to commit for the long term rather than staying on short renewals while they wait out the market.
How Friedman Can Help
Friedman Real Estate leases and manages office properties across Metro Detroit, and we track this market building by building, not just at the headline level. Whether you are a tenant trying to figure out what the flight-to-quality dynamic means for your search, or an owner trying to understand where your asset sits in the current environment, we can walk you through what we are actually seeing. Reach out at friedmanrealestate.com.
