District Detroit expansion counts on new office demand

The District Detroit's $1.5 billion build-out is relying on demand for "lifestyle" office space that aligns with a post-pandemic hybrid workforce.

Why it matters: At a time when the office market is in flux nationally, Detroit developers are suddenly making a major play to attract employers looking to upgrade their in-person spaces.

• The District's plans are on top of 400,000 square feet of office space planned at Dan Gilbert's Hudson's site.

Driving the news: The District proposal — led by the Ilitch family's Olympia Development and Stephen Ross' Related Companies — calls for three new office buildings, one incubator and six other developments with residential, retail and hotel space.

• They're asking for about $800 million in public incentives for the project.

Zoom out: Ross' bullish outlook on office space extends beyond Detroit.

• In a move Crain's Chicago characterized as an "audacious post-pandemic gamble," Ross recently switched plans for a Chicago apartment and hotel complex to a 41-story, 1 million-square-foot office building.

State of play: The District Detroit office bet hinges on companies accommodating the modern worker, one who occasionally works from home and — when in the office — expects access to local businesses, public outdoor spaces, new air ventilation systems and a work environment optimized for collaboration.

What they're saying: "Brand new office product, we believe, is very much in demand," Andrew Cantor, executive vice president at Ross' Related, tells Axios. "It's incredibly lacking in Detroit in particular."

Between the lines: The Detroit Center for Innovation, a research and entrepreneurship center going up in the District in collaboration with U of M, also is expected to drive demand to the new office buildings.

What we're watching: Will the new offerings attract companies from outside Detroit, or will new vacancies be created from businesses moving in from within the region?

The bottom line: Olympia and Related's proposed office buildings won't be complete for at least another three years, so there's time for the office market to potentially align with their vision.

• "The true demand has yet to be seen, but I think there's plenty of upside," Adam Ferguson, principal at the Southfield-based Bernard Financial Group, tells Axios.