Swisher Commercial has released the 2025 Year-End Vacancy Report and now our brokers are here to analyze and discuss what this means for business in our community.
WHAT THE DATA TELLS US
Bart Wise, President & CEO of Swisher Commercial, answers a few questions regarding the 2025 Year-End data and foreseeable implications for decision makers in Washtenaw County.
Several sub-markets moved in different directions this year — which area surprised you the most, and why?
I was most surprised by the 2.2% increase in vacancy for the SFA. There has been consistent demand for Flex space over the last five years, so I didn’t expect the appetite for Flex space to decrease.
Several buildings were removed from the report due to owner-user purchases. What does that say about confidence in long-term property values?
For businesses who are financially capable to purchase a building, and believe that their future space needs are predictable, purchasing is less expensive than leasing in the long run. There are a lot of historic reasons to believe that Ann Arbor Area property values will continue to grow.
Vacancy increased again this year. Is this a continuation of post-2020 behavior, or are we seeing new dynamics emerge?
The increase in office vacancy is to a great extent the ongoing impact of the “work from home” dynamic that started in 2020. The increase in flex vacancy seems to be more influenced by national economic factors such as interest rates, tariffs, and political tensions.
East and West office areas saw meaningful vacancy improvements. What do these markets have in common that others can learn from?
These areas offer smaller, easy access, moderately priced office suites that appeal to health-related office tenants.
South Office Area reached vacancy levels not seen since the Great Recession — what should landlords in this sub-market be thinking about right now?
I would advise that landlords take care of their current tenants and be ready to propose favorable offers to prospective tenants.
Downtown office vacancy declined slightly. Is this a sign of stabilization, or more of a temporary pause?
We are hoping that it is a sign of stabilization.
Medical office space showed encouraging absorption. Is healthcare demand becoming a stabilizing force in the market?
Yes
What are you seeing most tenants prioritize right now when choosing or renewing space?
An office or flex suite must function very well for the tenant. But after that, the need lower rental rates is very important.
Are smaller suites outperforming larger footprints — and if so, how should owners respond operationally?
If a landlord is able to subdivide large vacancy suites, they should be ready to rent those suites to multiple smaller tenants.
If interest rates ease in the coming year, where do you expect sales activity to rebound first?
Lower interest rates would lead to less expensive credit and capital for businesses. This would likely lead to positive things for local businesses. This will have a positive effect for sales and leasing both.
What concessions or creative deal structures are becoming standard in today’s leasing environment? Nothing standard, every situation, every transaction is unique. My recommendation is to speak with a Swisher Commercial broker who understands the area, local market and aspects at play. Call our office at (734)663-0501.
